Bangladesh garment makers ask government to extend export subsidy

Bangladesh garment makers ask government to extend export subsidy

Bangladesh garment industry
A tailor sews a dress before he breaks fast on the first day of the holy month of Ramadan in Old Dhaka on Jun 30, 2014. (REUTERS/Andrew Biraj/File Photo)

DHAKA: Bangladesh’s garment manufacturers have asked the government to extend a five per cent export subsidy for the industry, saying they are being squeezed between low international prices for clothing and rising production costs.

The country's garment industry, the world's second biggest producer, currently receives a five per cent cash incentive for exports but that is due to end on Jun 30.

Siddiqur Rahman, the president of the Bangladesh Garment Manufacturers and Exporters Association, told reporters on Wednesday (Apr 17) that without the subsidy, more garment makers would go out of business. The association says that 1,200 garment factories have closed down in Bangladesh in the past five years.

Siddiqur said another five per cent cash incentive on exports would cost the government US$1.67 billion.

Commerce Minister Tipu Munshi told Reuters that he would talk to the finance minister about including the proposal in the budget for the fiscal year beginning Jul 1.

“After the enhancement of wages since December last year there is a pressure to the owners and if they get some cash incentive that would be a relief,” said Tipu.

Siddiqur said that the prices of readymade garments in 2018 were 7.4 per cent lower in the US market and 3.64 per cent less in the European market than they had been in 2012.

At the same time the manufacturers' costs have been climbing, mainly driven by labour costs.

Last year, there was a big increase in the minimum wage for Bangladesh garment makers and that drove the costs of production higher.

Bangladesh earns about US$30 billion annually by exporting ready-made garments.

Source: Reuters