Exports of RMG will decline in the next couple of months, said Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The lobby group predicted a fall in exports and said 1.5 percent tax at source would add an additional 7.5 percent to cutting and making charges for knitwear and woven sectors.
In the first 10 months of the current fiscal year, RMG exports grew 42.30 percent. But BGMEA said due to high interest rate, 80 percent increase in labour cost and raging international competition, exports might fall eventually.
The RMG apex body urged 0.25 percent tax at source, which was in force in 2009-10, instead of 1.5 percent proposed in the new budget.
Echoing the BGMEA, Bangladesh Jute Mills Association said 1.5 percent tax imposed at source would hurt the export of jute products. It also requested the government to double export subsidies to 20 percent.
Mahmudul Islam Chowdhury, president of International Business Forum of Bangladesh (IBFB), said to meet the budget deficit, the government would have to depend on domestic borrowing.
“This may lead to a liquidity crisis and hike bank interest rate further. As a result, the industrial sector may not get enough loans.”
Chowdhury said raising tax at source from the present 0.40 percent would have a negative impact on exports.
He also said cuts in agriculture subsidy might affect farm production, which may jeopardise the government policy of attaining food sufficiency.
“Foreign remittance is also declining which may affect foreign currency reserve. Steps should be taken to augment earning from the sector,” the IBFB boss said.
News: The Daily Star, Sun, 12/06/2011
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