B Mirror Report: The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) today placed a set of comprehensive proposals for the fiscal year 2026–27 (FY27) national budget, seeking urgent policy support to stabilize the country’s export-driven Ready-Made Garment (RMG) sector amid rising costs and weakening global demand.

BGMEA President Mahmud Hasan Khan said the industry is under significant pressure due to declining global demand, rising production costs, and mounting financial stress on factories.

He made the remarks while presenting the budget proposals to National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan at the NBR headquarters in Dhaka.

The BGMEA president noted that the RMG sector, which accounts for around 83 percent of Bangladesh’s total export earnings, saw a decline during the July–February period of FY2025–26, with garment exports falling by 3.73 percent compared to the previous year.

He highlighted several cost pressures, including bank interest rates of 12–15 percent, a 286 percent increase in gas prices between 2017 and 2023, and a 33 percent rise in electricity costs over the last five years. He also pointed to the 56 percent hike in minimum wages in 2024 and the increase in annual wage increments from 5 percent to 9 percent.

According to him, around 400 garment factories have closed in the last three years due to financial instability.

To address the challenges, BGMEA proposed reducing the source tax on exports from 1 percent to 0.65 percent for the next five years to ensure policy stability. It also recommended full exemption of the 10 percent income tax on cash assistance and incentives provided to exporters.

The association further suggested a uniform corporate tax rate of 12 percent across all income categories in the RMG sector, along with simplification of customs and VAT procedures and removal of double taxation on subcontracting activities.

BGMEA also called for easing bonded warehouse regulations and allowing automatic import approval of raw materials listed in Utilization Declarations.

On environmental issues, the association highlighted Bangladesh’s leadership in green garment manufacturing, noting that the country has 275 USGBC LEED-certified factories, including 70 among the world’s top 100.

To support green transition, it proposed reducing the total tax incidence on solar photovoltaic equipment to 1 percent and allowing duty-free import of essential chemicals used in effluent and water treatment plants.

BGMEA said these measures are necessary to maintain competitiveness against rival export countries such as Vietnam and Cambodia. It added that improved competitiveness would ultimately boost export earnings and government revenue while safeguarding jobs, foreign exchange earnings, and overall economic stability.