Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) has demanded reconsidering the decision regarding the change in the rate of cash incentives for the industry.
In a statement, 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 change of the decision on an urgent basis before having a major negative impact on exports and maintaining 10 percent cash support against the export of plastic products until 2026.
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The statement came against the backdrop reduction of cash incentives for the plastic sector from 10 percent to 8 percent through Bangladesh Bank's FE circular number-02 dated January 30.
It said that the plastic sector is an emerging and promising sector. It is diversifying export products according to the needs of foreign buyers and earning foreign exchange by exporting 150 varieties of plastic products to about 126 countries using modern technology.
Direct exports in FY 2022-2023 amount to USD 209.86 million. As a backward linkage industry exports to the country's largest export sector garments and other industries, earns about US$ 950 million.
That is, the export volume (Direct and Deemed) is above 1.2 billion US dollars. Some 1.5 million people are employed here in which 30 percent of them are women. It has been growing at a rate of 20 percent for the past two decades. The position of the plastic sector in exports is 12th.
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The current government has also included the plastic sector as a priority sector in the Import and Export Policy-2024.
The circular does not mention the introduction of alternative incentives in the duty-compliant system post-LDC transition, the statement said.
However, many middle-income countries have been providing alternative incentives rather than direct incentives for their industries.
The issue of providing alternative incentives has come up in various government and private studies of the country.
"We do not think that sudden reduction of the existing system, without an alternative system, is a helpful step for industry and economy", Shamim said.
On the other hand, he said, 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 the USA, cotton cultivation is subsidized to encourage export trade. Bangladesh will face the challenge of double transformation after 2029.
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At such a time, as long as the 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, BPGMEA president Shamim said.
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 the whole world, he added.