DHAKA : The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) today placed a set of comprehensive proposals for the fiscal year 2026–27 (FY27) national budget, seeking urgent policy support to stabilize the country’s export-driven Ready-Made Garment (RMG) industry amid rising costs and weakening global demand, reports BSS.
“The industry is currently facing significant pressure due to declining global demand, rising production costs, and increasing financial stress on factories,” said BGMEA President Mahmud Hasan Khan.
The president made the remarks while placing the budget proposals before the National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan at NBR headquarters in the city.
Mahmud Hasan Khan mentioned that the RMG sector, which accounts for about 83 percent of Bangladesh’s total export earnings, has experienced a downturn during the July–February period of the 2025–26 fiscal year, with overall garment exports falling by 3.73 percent compared to the previous year.
He explained that the industry is under pressure from rising operational costs, including a sharp increase in bank interest rates between 12 and 15 percent.
“Gas prices have increased by 286 percent between 2017 and 2023, while electricity costs have risen by 33 percent over the last five years. In addition, the minimum wage in the sector was increased by 56 percent in 2024, along with a rise in annual wage increments from 5 percent to 9 percent,” he added.
He also reported that around 400 garment factories have closed in the last three years due to financial instability.
To address these challenges, the BGMEA president recommended reducing the source tax on exports from 1 percent to 0.65 percent and maintaining this rate for the next five years to ensure stability and predictability for exporters.
He also called for a full exemption of the 10 percent income tax currently imposed on cash assistance and incentives provided to exporters, arguing that such support is essential for maintaining competitiveness in the global market.
In addition, he proposed a uniform corporate tax rate of 12 percent for all income categories within the RMG sector, including gains from asset disposal and subcontracting income, to eliminate inconsistencies in tax assessments.
He urged simplification of customs and VAT procedures, including the removal of double taxation on subcontracting activities and the easing of bonded warehouse regulations.
The BGMEA President suggested that raw materials listed in Utilization Declarations should be automatically approved for import without requiring repeated manual entries in bond licenses.
On environmental sustainability, he highlighted Bangladesh’s global leadership in green garment manufacturing, noting that the country currently has 275 USGBC LEED-certified green factories, including 70 among the world’s top 100.
To support further green transition, he proposed reducing the total tax incidence on solar photovoltaic equipment to 1 percent to encourage renewable energy adoption.
He also recommended duty-free import facilities for essential chemicals used in effluent treatment plants and water treatment plants to ensure environmental compliance with international standards.
The BGMEA leader stated that these policy measures are necessary to strengthen the competitiveness of Bangladesh’s RMG sector in comparison to competing countries such as Vietnam and Cambodia, which are currently experiencing stronger export growth.
He argued that improved competitiveness would increase export volumes and ultimately enhance government revenue, even if certain tax rates are reduced.
He also emphasized that sustaining the RMG sector is vital for maintaining foreign exchange earnings, supporting employment, and ensuring overall economic stability in Bangladesh.
