Bangladesh: garment sector fears withdrawal of government cash
07/02/2024
Bangladesh’s status as a Least Developed Country is coming to an end. The United Nations Committee for Development Policy recommended Bangladesh’s ‘graduation’ from Least Developed Country status in 2021, but it has allowed a preparatory period of five years for this change to take effect rather than the expected three, owing to the covid-19 pandemic.
As things stand, Bangladesh will cease to qualify as a Least Developed Country in October 2026. Part of the significance of this is that the government will then no longer be able to offer cash incentives to boost export performance.
In total, more than 40 product categories have been eligible for cash incentives from the government in Bangladesh, including a number of apparel products, with the money ranging from 1% of export revenues to 20%.
At the start of February, the government of Bangladesh announced that it would begin a process of phasing out the cash incentive programme right away to prepare companies gradually for its removal in 2026.
A vice-president of the Bangladesh Garment Manufacturers and Exporters Association, Shahidullah Azim, told local media that the withdrawal of the incentives would be disastrous for the sector, which has been the biggest beneficiary of the programme.
Share this story:
