Bangladesh Govt. Panning Cash Incentive for Non-Cotton RMG Manufacturers

Non-cotton RMG export is rapidly growing in Bangladesh. The government is looking to promote further growth through additional incentives, this will reduce the economic impact of the Russia-Ukraine war on garment shipments.

According to sources, a file from the commerce ministry was sent to the finance ministry recommending at least a 5% additional cash incentive for non-cotton garments export. These types of items are made from man-made fibre (MMF).

Govt. aims to provide relief to exporters who are facing difficulties due to the war. Govt. decided to take this route after, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) sent a letter to the commerce ministry, recommending a 10% cash incentive on the export of MMF items. This letter also highlighted that MMF would allow Bangladesh garments export to diversify and remain competitive after LDC graduation.

The German Ambassador to Bangladesh expects prolonged war, energy crisis and rising inflation to slow down current export momentum to Germany. Inflation is becoming a major barrier to export. In May US inflation was at 8.6% and in the EU it was 8.1%. US and EU regions are the two biggest export destinations of Bangladesh.

Currently, Govt. pays a 5$ cash incentive on garments item sales made from local yarn, a further 1% cash incentive for exporting to all markets and 4% for non-traditional markets export.

Globally, MMF represents 78% of all garments items whereas cotton-made items are only 22%. MMF items also bring in more profit, market analysis shows that MMF items are usually sold at double the price of cotton items.