Tuesday, July 23, 2024

Local industry would be impacted by reduction in export incentives, businesses warn

Government Decision to Cut Export Incentives Sparks Mixed Reactions from Business Leaders

The recent government decision to cut export incentives in various sectors has sparked a debate among business leaders in Bangladesh. The move, aimed at reducing pressure on state expenditures and encouraging exporters to compete globally, has received mixed reactions.

Mohammad Hatem, executive president of BKMEA, expressed concern over the impact of reduced export incentives on the garment sector, a major export earner for the country. He likened the sector to being in the ICU and emphasized the need for proper support to prevent it from deteriorating further.

On the other hand, Mahbubul Alam, president of FBCCI, supported the government’s decision, stating that it was necessary to push exporters to enhance their competitiveness on the global stage. However, he also highlighted the challenges faced by domestic industries, such as high interest rates and utility bills, which are increasing production costs.

The reduced export incentives, effective from July 1, 2024, will impact various sectors including jute, leather, frozen fish, and agro products. The maximum rate of export incentive has been set at 10 percent, with the minimum at 0.3 percent. Cash assistance for apparel makers has been halved, and subsidies for venturing into new markets have also been reduced.

As the country prepares to graduate from LDC status in 2026, the government is taking steps to align with IMF recommendations and prepare exporters for global competition. While the decision may pose challenges for some sectors, it is essential for the long-term sustainability and growth of the export industry.

Overall, the debate surrounding the government’s decision to cut export incentives highlights the complexities of balancing economic priorities and supporting local industries. It remains to be seen how businesses will adapt to the changes and what alternative strategies the government may implement to mitigate any adverse effects.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. The content is based on general research and may not be accurate, reliable, or up-to-date. Before making any financial decisions, it is recommended to consult with a professional financial advisor or conduct thorough research to verify the accuracy of the information presented. The author and publisher disclaim any liability for any financial losses or damages incurred as a result of relying on the information provided in this article. Readers are encouraged to independently verify the facts and information before making any financial decisions.

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