In a bid to explore new export destinations, the Bangladesh government has taken the decision to increase cash incentives for apparel exporters to 4% from 3% to new markets.
Figure: Bangladesh government has taken the decision to increase cash incentives to 4% from 3% to new markets responding to the call of manufacturers.
Addressing a press conference, Commerce Minister Tofail Ahmed made the announcement on 8 August in the capital. He was talking about the export target for the financial year 2018-19.
In a meeting held on Wednesday, presided over by Finance Ministry AMA Muhith, the Ministry of Finance has taken the decision to increase the cash incentives responding to the call of manufacturers.
The new rate of incentives will be effective for the current fiscal. After getting instruction from the Finance Ministry, Bangladesh Bank soon will issue a circular in this regard.
The move is aimed to encourage apparel manufacturers to encourage exports to new markets, which would be effective for the financial year 2018-29.
“Non-traditional export market is very crucial for Bangladesh to reduce export dependence on traditional markets. In increasing exports volume, we need to explore more export destinations. And to encourage exporters to explore new markets, the government has increased cash incentives to 4 percent from 3 percent,” said Tofail Ahmed.
“I think, it would encourage exploring new export destinations and enlarge the export earnings of the country significantly,” said the minister.
As of last fiscal year, new export markets known as non-traditional markets contributed $4.67 billion or 15.26% to the total apparel exports of $30.61 billion in the last fiscal year. While, the European Union (EU) contributed $19.62 billion or 64.12%, $5.35 billion or 17.48% and Canada 963.15 million or 3.15% in the same period.
“It is a good initiative for the sector and I hope it will help Bangladesh to tap the opportunity in non-traditional export markets,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Md Siddiqur Rahman said. Rahman was present at the media briefing as a stakeholder representative.
Japan, China, and India are very potential markets for Bangladesh. And the incentives will increase our export to non-traditional market, said Rahman.
In the financial year 2017-18, Bangladesh earned $4.67 billion exporting apparel products to non-traditional markets, which 9.92% higher compared to $4.24 billion in the FY17.
As a new market, Japan is a potential market for Bangladeshi apparel goods. In the last fiscal, RMG exports to Japan have seen a 13.73% rise to 846.73 million compared to previous year earnings of $744.48 million.
While, in FY18 Bangladesh’s RMG exports to India rose to $279.19 million, up by 115% compared to $129.81 million in the FY17.
Non-traditional or new export markets include China, Russia, Japan, India, South Africa, Australia, Turkey, Brazil, Chile, Mexico, South Korea, Malaysia and New Zealand for the Bangladeshi garment sector.