The finance ministry is against the release of a single paisa from the proposed incentive package at the present moment, saying that additional financial assistance is not essential for the garment exporters.

It has ruled out the need for additional fund for the exporters in the position paper which will be submitted to a taskforce meeting on the global financial meltdown, said finance ministry officials.

Finance minister AMA Muhit has already announced that the taskforce’s meeting will take a decision on the demand of garment exporters who have insisted on the release of Tk 3,000 crore from the special incentive package to apparently enable them to pay the arrears and festival bonuses to the workers. The special package of Tk 5,000 crore was announced in the annual budget in order to tackle any adverse situation in the country’s $15.5 billion garment export business because of the delayed impact of the global financial recession.

In its position paper, the finance ministry opined that the country’s overall export led by RMG sector registered an encouraging growth of 10.3 per cent in the last fiscal year amidst tumbling exports by countries like India, China and Vietnam. The knitwear and woven garments sector, which accounted for 77 per cent of the country’s exports, recorded 16.21 per cent and 14.54 per cent growth respectively in 2008-09.

The finance ministry also opined that the Bangladesh Garment Manufacturers and Exporters Association statement on price reduction of Bangladeshi garments by 20-25 per cent was not substantiated by any data. While reading the report of the US-based Office of Textile and Apparel, it found that the unit price (per square metre) of Bangladeshi garments in the American market rose to $2.51 in the first quarter of 2009 from $2.28 in the first quarter of 2007. The finance ministry’s position paper, however, supported the quick disbursement of cash incentive to the apparel exporters to maintain the pace of export growth. Besides it stressed the need for greater policy support to them. The budget wing of the finance ministry has already decided to release a big amount from the regular cash incentive fund before the Eid festival.

BGMEA’s president Abdus Salam Murshedi, however, observed that regular cash incentive would not be enough to maintain the growth of the garment sector. He told New Age that the government should meet their demand for an additional benefit of Tk 10 per dollar in the exchange rate for 30 per cent of the total export earnings, and Tk 10 per litre of diesel until the power and gas supply situations have improved. He claimed that 50,000 RMG factory workers had been laid off because of the closure of 107 factories due to the global financial meltdown. The government provides cash incentive against the export of 15 products in the current fiscal year. The rate of cash incentives varies from five to 25 per cent, and the RMG sector receives the lowest rate of five per cent. In the last fiscal year the finance ministry released some Tk 1,500 crore as cash incentive. The amount might reach Tk 2,000 crore in the current fiscal year.

-New Age