A government-appointed taskforce has recommended a package of incentives that included doubling cash and extending tax holidays to make Bangladesh's textiles business more competitive. The recommendations come as the United States and EU plan to waive export restrictions on China in two and a half years.
"The growth of the country's knitted and woven textile exports over the years have been marvellous and the incentives would help keep up that trend," said M.A. Awal, chairman of Bangladesh Textile Mills Association, on Saturday.
"We have recommended doubling cash incentives to 10 per cent from the present 5 per cent (of export values), bank loans with low interest, duty-free import of spares and raw materials, and a tax holiday," he told Reuters.
Awal is also a member of a 13-man taskforce headed by Textiles Minister Shahjahan Siraj. The taskforce submitted its report to Prime Minister Begum Khaleda Zia last week, and she vowed to implement major recommendations before the current government ends its five-year term next October, Awal said.
Bangladesh is due to hold its parliamentary election in January 2007. "Implementation of the incentives will help us gain strength when facing global challenges in 2008, when there will be no restrictions on the export of textile products to any country," Awal said.
The primary textile sector, which has $3.5 billion in investments and a workforce of 1.75 million, is capable of supplying up to 80 percent of fabrics for export-oriented knitwear and 40 percent for woven garments markets, Awal said.
The taskforce recommended that the tax holiday be extended by another five years, when the country expects to raise textile exports to $15 billion, from more than $7 billion currently. It also proposed allowing the sector to import all kinds of spares and raw materials without paying customs duty and value- added tax. "At present we are enjoying such facilities in a limited way," Awal said.
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