The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has welcomed the proposed national budget for FY2026-27, describing it as business-friendly and reform-oriented, while urging the government to address five critical policy demands aimed at strengthening the country’s apparel sector.
In a statement issued on Friday, BGMEA said the budget contains several positive measures, including policy stability, tax system digitalisation, simplified business startup procedures, incentives for renewable energy, modernization of the bond and VAT systems, and tax benefits for SMEs and women entrepreneurs.
The association noted that these initiatives send encouraging signals to investors and businesses at a time when the economy is facing both global and domestic challenges.
However, BGMEA emphasized that the ready-made garment (RMG) sector continues to face mounting pressure from weak global demand, rising production costs, and increasing competitive challenges.
According to the association, Bangladesh’s RMG exports declined by 3.41 percent during the current fiscal year, while average export unit prices fell by 1.55 percent. In addition, back-to-back letters of credit (L/Cs) opened for raw material imports dropped by 7.93 percent, and nearly 400 garment factories have reportedly ceased operations over the past three years.
To improve the sector’s competitiveness, BGMEA urged the government to consider five key policy reforms.
The association called for reducing the export source tax on garment shipments from 1 percent to 0.65 percent and maintaining the rate for at least five years. It also requested the complete withdrawal of the remaining 5 percent tax deduction at source on export cash incentives.
BGMEA further sought the removal of the 1 percent double source tax on subcontracting transactions and simplification of VAT exemption procedures for small and medium-sized factories.
Another demand focused on ensuring that the existing corporate tax rates—12 percent for garment manufacturers and 10 percent for green factories—remain unchanged, regardless of income from other sources.
The industry body also opposed the proposed increase in import duties on polyester staple fibre (PSF), PVC resin, and PET resin, arguing that such measures could undermine the growth potential of Bangladesh’s man-made fibre-based apparel exports.
Looking ahead to the country’s graduation from Least Developed Country (LDC) status, BGMEA stressed the importance of reducing production costs, ensuring affordable energy supplies, and further streamlining customs and port procedures to sustain Bangladesh’s global competitiveness in the apparel market.
The association expressed hope that the government would incorporate these recommendations in the final budget to support the long-term growth and resilience of the country’s largest export sector.
