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The proposed budget for the fiscal year 2005-06,
which was announced on 9th June 2005, has given
significant attention to the country's highest
export earning sector, the textile and apparel
sector. Although most of the bodies representing
textile and apparel sector have appreciated the
budget, some felt that the provisions were not
enough to attract entrepreneurs.
Some of the provisions, proposed by Finance and
Planning Minister Saifur Rahman in his budget
proposal were total withdrawal of duties and
taxes on some textile machineries and spare
parts, extension of tax holiday, VAT exemptions
from electricity, gas and water bills in
factories in Export Processing Zone (EPZ) areas.
It was also proposed that the cash subsidy
existing in the sector would continue.
Tax holiday on textile, high value readymade
garments, textile machinery, boilers and
compressor up to June 30, 2008 were proposed in
the budget to promote the garment sector. The
Finance Minister also proposed concessionary
rate of customs duty for some dyes and chemicals
essential for textile sector.
The total VAT exemption on electricity, gas and
water is an improvement to the previous VAT
exemption up to 80 percent on gas and
electricity and 60 percent on water bills for
export oriented industries.
Moreover, the textile owners will not have to
pay VAT for the services rendered by insurance,
C&F agent, freight forwarders, shipping agent
and port services in case of both export and
import.
Concerned platforms of apparel entrepreneurs of
the country, BGMEA (Bangladesh Garment
Manufacturer and Exporters Association), BTMA
(Bangladesh Textile Mills Association) and BKMEA
(Bangladesh Knitwear Manufacturer and Exporters
Associ-ation) had raised all these issues in
their pre-budget meeting with the Finance and
Planning Minister.
BGMEA leaders have complimented the Finance and
Planning Minister for the provisions in the
proposed budget. In an instant press release,
they appreciated the decision of total
withdrawal of duties and taxes on some textile
machineries and spare parts, hundred percent VAT
exemptions on utility services and concessionary
duty rate on some chemicals and dyes. Textile
leaders expressed their happiness to see the
continuation of five percent cash subsidy for
the export-oriented entrepreneurs.
Bangladesh Textile Mills Associ-ation (BTMA),
however, expressed that the proposed budget
could have more incentive mechanisms for textile
entrepreneurs of the country. They demanded
extension of cash incentive from five percent to
15 percent in textile sector. According to them,
the concessionary duties on some chemical and
dyes will not be beneficial for the sector
unless that can be put down to zero tariff
level. As the price of yarn is increasing in
international market, they vented frustration in
absence of any measure in the budget to scale
down the price of raw cotton. Unless these
demands are met, the proposed budget cannot be
termed as 'investment friendly', a BTMA leader
told the correspondent.
Bangladesh Chamber of Industries (BCI) President
A K Azad also urged the government to fix the
customs duty rate on raw materials of
manufacturing industries at zero tariff level.
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