Foreign buyers are shifting garment orders away from Bangladesh to countries like India amid growing concerns over a potential energy crisis, President of the Bangladesh Chamber of Industries (BCI) Anwar-ul Alam Chowdhury Parvez warned on Wednesday.
Speaking at a pre-budget discussion at the conference centre of the National Board of Revenue (NBR) in the capital, Parvez said uncertainty surrounding electricity and fuel supply—exacerbated by geopolitical tensions in the Middle East—is prompting international buyers to reconsider sourcing from BangladeEsh.
Citing a recent conversation with a buyer, he said concerns over possible power shortages in the coming months have already influenced sourcing decisions at the top management level. “We are being told that orders are now starting to move to India,” he noted.
According to the BCI chief, the impact is already visible, with expected work orders for July and August either slowing significantly or being put on hold. Several large buying houses have started sending negative signals, and negotiations to secure new orders have become increasingly difficult.
He cautioned that if the situation persists, Bangladesh’s ready-made garment sector—the country’s largest export earner—could face serious risks, affecting foreign exchange earnings and overall economic stability.
Parvez also criticised the existing tax structure, describing it as burdensome and not business-friendly. He urged the government to reduce the source tax on export earnings from 1 percent to 0.5 percent and reconsider the mandatory minimum turnover tax of 1 percent, which applies regardless of profit or loss.
“Even loss-making firms are required to pay this tax, which is particularly challenging for small and medium enterprises,” he said, calling for a restructuring of the tax regime to support smaller উদ্যpreneurs.
He further raised concerns over Section 147 of the Income Tax Act 2023, which allows authorities broad powers to seize company documents and computer systems during tax audits. Such provisions, he argued, are creating uncertainty and undermining business confidence.
Responding to the proposal, NBR Chairman Md Abdur Rahman Khan rejected the call to lower the source tax on export earnings.
At the same discussion, the Dhaka Chamber of Commerce and Industry (DCCI) proposed reducing source tax on interest income from bank deposits to 10 percent and gradually phasing out the surcharge on net wealth.
It also called for a more business-supportive tax framework without increasing the overall tax burden.
Industry leaders warned that without stable energy supply and meaningful tax reforms, Bangladesh’s export competitiveness could weaken further, potentially leading to a loss of market share in the global apparel trade.