The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has proposed a broad set of policy measures for the FY2026–27 national budget, urging immediate government support to help stabilize the country’s export-oriented ready-made garment (RMG) sector amid mounting economic pressures.
Presenting the proposals to National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan in Dhaka, BGMEA President Mahmud Hasan Khan said the industry is grappling with declining global demand, rising production costs, and increasing financial strain on factories.
He noted that the RMG sector, which contributes around 83 percent of Bangladesh’s total export earnings, has experienced a downturn in the July–February period of FY2025–26, with garment exports falling by 3.73 percent year-on-year.
According to him, the sector is under intense cost pressure. Bank lending rates have surged to between 12 and 15 percent, while gas prices rose by 286 percent between 2017 and 2023 and electricity tariffs increased by 33 percent over the past five years.
At the same time, the minimum wage in the sector was raised by 56 percent in 2024, alongside an increase in annual wage increments from 5 percent to 9 percent.
Reflecting the strain, around 400 garment factories have shut down over the past three years, he added.
To support recovery, BGMEA proposed reducing the source tax on exports from 1 percent to 0.65 percent and keeping it unchanged for the next five years to ensure policy stability.
It also called for a full exemption from the existing 10 percent income tax on cash incentives provided to exporters.
The association further recommended introducing a uniform 12 percent corporate tax rate across all income streams in the RMG sector, including earnings from asset sales and subcontracting, to address inconsistencies in taxation.
In addition, BGMEA urged the government to simplify customs and VAT procedures, remove double taxation on subcontracting activities, and ease bonded warehouse regulations.
It also proposed automatic approval of raw material imports listed in Utilization Declarations to reduce bureaucratic delays.
On sustainability, the BGMEA president highlighted Bangladesh’s strong position in green garment manufacturing, noting that the country has 275 USGBC LEED-certified factories, including 70 ranked among the world’s top 100.
To accelerate the sector’s green transition, he proposed reducing the overall tax burden on solar photovoltaic equipment to 1 percent and allowing duty-free imports of key chemicals used in effluent and water treatment plants.
He stressed that these measures are crucial to maintaining Bangladesh’s competitiveness against rival exporters such as Vietnam and Cambodia, which are currently posting stronger export growth.
The BGMEA leader argued that enhancing competitiveness would boost export volumes and ultimately increase government revenue, even if certain tax rates are lowered.
He also underscored the importance of sustaining the RMG sector for foreign exchange earnings, employment generation, and overall economic stability.