Review decision to cut cash export incentive: BPGMEA

 
Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) has demanded a review of the decision to cuts cash incentives against exports for plastic goods industry.

In a statement on Thursday, BPGMEA president Shamim Ahmed said the change in the rate of cash incentives is not helpful and timely for the industry. "Rather, it will bring unintended risks and disasters to other industries including the plastics sector", he added.
He also demanded to amend the decision on an urgent basis before having a major negative impact on exports and demanded to maintain 10 percent cash support against the export of plastic products until the year 2026.

The amount of cash incentives for plastic sector has been reduced from 10 percent to 8 percent through Bangladesh Banks FE circular number-02 on 30/01/2024.

The statement said the plastic sector is a prominent and emerging sector. It is diversifying export according to the needs of foreign buyers and is earning foreign exchange by exporting 150 varieties of plastic products to about 126 countries using modern technology.

Direct exports in FY 2022-2023 amounted to USD 209.86 million As a backward linkage industry, exports by the countrys largest export sector garments and other industries, earns about US$ 950 million.

That is, export volume (Direct + Deemed) is above 1.2 billion US dollars. 1.5 million Men and women are employed in the industry in which 30 percent are women. It has been growing at a rate of 20 percent for the past two decades.
 
Plastic sector rank 12 in the countrys export. The present government has also included the plastic sector as a priority sector in Import, Export Policy-2024.

Shamim Ahmed said the industry does not agree with the move to sudden reduction of existing system, without alternative system. This will not be helpful for industry and economy.

On the other hand, while the incentive package is being cut, competing countries are increasing support for their industries such as Export development fund in India, Vietnam Trade Policy and Promotion Project, and even in rich countries like USA, cotton cultivation is subsidized to encourage export trade.

He said Bangladesh will face the challenge of double transformation after 2029.  At such a time, as long as LDCs were enjoying benefits as per the provisions, it would have been more reasonable to extend other facilities, including cash incentives through which the industry could be sustained.

In the past two years, due to various reasons including the Covid-19 epidemic, Ukraine-Russia war, Palestine-Israel war, economic instability and deadlock have been created in Bangladesh, like all over the whole world.

As an internal challenge, due to increase in price of gas electricity, increase in loan interest in bank and insurance financial institutions, increase in labor wages, increase in transport fare, etc., a major problem has arisen in export of plastic products. Even trade competitiveness in international market would decrease.

The price of export product is determined by calculating the subsidy at the time of placing the export purchase order. Export incentives will face financial loss from January to 30th June 2024 without prior announcement. Thus there will be a major problem in export of plastic products due to sudden withdrawal of subsidy midway.

In such a situation, the industry leaders have demanded to maintain 10 percent  cash incentives against the export of plastic products till 2026.