RMG exporters to get stimulus in a month, Bangladesh

“To finalise the package for the RMG sector within the stipulated time, another taskforce, with the central bank officials at the helm, has already been formed,” Muhith told reporters after a meeting with the leaders of BGMEA and BKMEA at his office in Dhaka yesterday.

On a query, the minister pointed to the government's decision to make some changes in the original documents of the stimulus that was declared last November. “Now we'll offer stimulus to small and medium enterprises (SMEs), which were not incorporated in the original documents.”

Any garment factory owner exporting clothes worth $250 million would be considered an SME.

There are at least 1,500 SMEs in the apparel sector, according to the industry people.

Under the bailout plan, such SMEs will be entitled to exemption of licence renewal fee for captive power plants, the finance minister said, adding that RMG exporters would also enjoy a cut in taxes on house rent and loan rescheduling facilities.

On the minister's assurance, Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and Exporters Association, said, “We'll be very happy, if the package is implemented within the set time.”

Pointing to the energy crunch in the industrial sector, Abdus Salam Murshedy, president of Bangladesh Garment Manufacturers and Exporters Association, demanded that the government withdraw the peak hour rate, minimum charges and recently increased gas and power tariffs for the RMG sector.

"We still experience a negative growth in RMG exports, so stimulus is necessary for the revival of the sector," he said.

The November 25 bailout plan, which aims to cushion global recession fallout, earmarks compensation package for the captive power plants used in industrial units from November 1, 2009 to June 30, 2010.

It also offers bank loan re-scheduling facility without any down payment up to June 30, 2010 from October 2009 at a 10 percent interest rate instead of the current 13 percent for the RMG and textile sectors and 5 percent cash incentives for new export destinations for three years.

The exporters will get 5 percent cash incentives in the first year, 4 percent in the second year and 2 percent in the third and final year.

According to the package document, members of Bangladesh Textile Mills Association (BTMA) will receive this facility only for direct export of yarn.

Forward exchange booking is a must for exporting home textile in other currencies than dollar. This sub-sector will also receive the bank loan re-scheduling facility.

Source: STAR