The government, in order to tackle the global recession, is planning to provide incentive of one taka for every dollar earned by exporters and by expatriate Bangladeshi workers who send home remittances, said official sources.

‘We are examining the decision taken by the parliamentary standing committee on the finance ministry to provide incentives to the exporters and expatriates,’ said a senior official of the finance ministry.

He also said that the finance minister would take the final decision about the incentive after consulting various stakeholders. Sources said the finance ministry last week sought the opinion of the Bangladesh Bank on the parliamentary standing committee’s decision which, if implemented, is going to cost the government an estimated Tk 3,000 crore per year.

The standing committee recommended that the government should provide incentive of one taka for each dollar earned by exporters and remitted by expatriate Bangladeshis. Local producers and manufacturers who export items through back-to-back letters of credit will not be eligible for the incentive, according to the proposal of the committee.

The government has set aside Tk 5,000 crore in the current budget as a stimulus package for the business sectors affected by the recent global recession. Meanwhile, the country’s exports slipped by 6.80 per cent in July compared to exports of the same month last year. The monthly export earnings in July stood at $1.44 billion, down from $1.54 billion last year, largely due to poorer performance of the garment sector.

The country logged $15.8 billion in export earnings for 2008-09, falling 4.5 per cent short of the targeted $16.3 billion. But the remittances increased by 18.22 per cent in the first two months of the current fiscal year, which the Bangladesh Bank officials described as ‘moderately good’. According to statistics, remittances soared by 30 per cent to $937.91 million in August this year, up from $721.92 million in the same month of the previous year.

‘Without enhancing the efficiency of the former channels, remittances through the legal channels will not increase and incentives will not persuade the expatriates to send home their remittances through them,’ said the Bangladesh Development Studies’ director general and the central bank’s former chief economist, Mustafa K Mujeri.

He also said the demand for the country’s export items depends on the competitiveness of the local exporters and their ability to get new orders in the importing countries. The Bangladesh Garment Manufacturer and Exporters Association’s former president, Anwar-Ul-Alam Parvez, said the government’s incentive to exporters would increase their competitiveness in the global market. ‘We also need the incentive to enhance the technical efficiency of the garment exporters,’ he added.

-New Age