The Commerce ministry requested the finance ministry to provide a monetary incentive of at least a 5% increment for the export of non-cotton, man-made fiber garments (MMF).
The move occurred after the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) sent a letter to the commerce ministry requesting a 10% cash incentive on the export of non-cotton garment items, as the demand for MMF-made apparel products is increasing globally and the prices are better than cotton-based products.
The government provides a 5% financial incentive for garments manufactured from locally spun yarn, a 1% incentive for exports in all countries, and a 4% incentive for non-traditional markets. Except for the United States, the European Union, the United Kingdom, and Canada, Bangladesh considers all markets as non-traditional.
Faruque Hassan, president of the BGMEA, said the increasing demand for non-cotton garments is a result of a shift in fashion and style. In Bangladesh, however, cotton fiber garments account for a disproportionately significant proportion of overall garment shipments compared to those made from non-cotton fibers. He also added that “any form of incentive at the time of the war will definitely help the sector grow.”
The price disparity between cotton and MMF-made products is also substantial. For example, if a cotton-made clothing item sells for $5 per piece, the asking price for an MMF garment item is $10. So the exporters of our nation are getting very low prices.
China is currently leading the $700-billion global market of MMF-made garments. In addition to increasing the monetary incentive, Mohammad Ali Khokon, the head of the Bangladesh Textile Mills Association, recommended modifying the laws governing the import of non-cotton raw materials to facilitate the transition to MMF.
To encourage the expansion of the textile industry, the government has reduced the value-added tax on MMF sales from Tk 6 per kilogram to Tk 3 per kilogram and prolonged the industry’s 15 percent corporation tax rate until 2025. Until now, entrepreneurs have spent 20 billion USD in the primary textile industry.