APPAREL exporters have sought more facilities from the government to implement the new wages board for the workers, claiming that the export-oriented apparel sector received no incentive but a four per cent cash incentive only on exports to new markets. We think, the businesspeople having blissful facilities from the government are still asking for more and more facilities. The BGMEA, however, said people have a wrong perception that the apparel sector receives huge incentives, but in reality the sector receives nothing but nominal cash incentive (4%).
According to official data, the apparel sector exported goods worth $4.67 billion to newly exposed markets in the 2017-18 financial year. Against the export, the amount of incentives was about Tk 17,000 crore. In 2019, the government cut source tax on export earnings twice in export-oriented sectors, including the apparel sector, and lowered the source tax on export products to 0.25 per cent from 1 per cent. The export sector would get the benefit worth Tk 3,000 crore for reduction in the tax rate. The apparel sector that annually earns around $31 billion in foreign exchange would be the key beneficiary of the tax cut as the sector alone accounts for 83 per cent of the country’s total exports. Other than cash incentive, cuts in source tax and bonded warehouse facility, the apparel sector enjoys a reduced rate of corporate tax and a waiver on value added tax on utilities.
The government on September 14, 2018 announced Tk 8,000 as minimum monthly wage for the apparel workers. A few days before the announcement, factory owners had received bonanza from the government of source tax cut to 0.60 per cent from 1 per cent and corporate tax being reduced to 12 per cent from 15 per cent. Workers alleged that the wages in all grades did not increase proportionately and in some cases, basic wages decreased.
Like the apparel sector, leather and foot wear, ceramic, pharmaceuticals, and some other informal sectors, including small and medium enterprises, need incentives and policy support to become formal as the sectors pose high potential to generate new employment.
