Illogical cash plea of already incentivised apparel sector


APPAREL manufactures and exporters at a meeting with the government on Thursday on the 29 committees set up on January 21 to monitor the implementation of the wage structure for apparel workers, notified on November 25, 2018 and then revised on January 13, demanded further government facilities. They wanted more facilities to implement the worker wage structure on the pretext of receiving nothing but a 4 per cent cash incentive on exports to new markets which they think is inadequate. The Bangladesh Garment Manufacturers and Exporters’ Association president seeks to say that the government would need to provide them with some facilities, even for a while, so that they could implement the new wage structure. But the direct and indirect incentives that the apparel exporters receive are, in effect, more than what they claim.
Official data show that the 4 per cent incentive on export to new markets in the 2017–2018 financial year, on the total sectoral export of $4.67 billion, stood at Tk 17 billion. The government reduced the tax at source on export proceeds to 0.25 per cent from 1 per cent for the 2018–2019 financial year, with the National Board of Revenue estimating that export-oriented sectors would enjoy the benefit of Tk 30 billion exemption in the year. And the apparel sector, which fetches about $31 billion in foreign exchanges, would be the prime beneficiary of the tax reduction as the apparel sector accounts for 83 per cent of Bangladesh’s total exports. A Policy Research Institute report further shows that export-oriented industries enjoyed Tk 348.8 billion in tax exemption on raw material import in 2016–2017 under the bonded warehouse facilities, with the apparel sector alone having Tk 336.12 billion in tax exemption on import worth Tk 477.95 billion. The apparel sector also enjoys a reduced rate of corporate tax and a full exemption of value added tax on utilities. It was often reported that successive governments in two decades till 2015 dished out more than Tk 100 billion in cash incentives to apparel-sector industries. All this put together and the deprivation of the apparel workers show that while the apparel exporters kept gulping direct and indirect government incentives, hardly any noticeable portion of the incentives trickled down to apparel workers. In view of all this, the exporters’ demand for a 20 per cent cash incentive does not only sound illogical but also ludicrous. More than 4,000 apparel units are now reported to be employing about 4.4 million workers, mostly female, who have remained as vulnerable as ever, with about 5,000 workers coming to lose their job in the latest spate for making a noise for a decent living wage.
The November wage structure did not only fall short of ensuring a living wage, it decreased basic wages for workers of some grades which were minimally revised upwards in January after the workers had taken to the streets, for which some of them lost their job. While exporters have not offered any benefits to the workers, successive governments have also failed to afford workers any benefits. It appears logical that the government should offer the workers a portion of the benefits given to the exporters in direct and indirect means, as it has failed to force the exporters to do so. The government should also in no way agree the exporters’ demand for further incentives.