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Apparel makers demand withdrawal of Ipc tax

Export sector will be in trouble: BGMEA

Star Business Report
Any rise in tax at source will slow down exports, as it will cost apparel production more, and the prime foreign exchange earner will lose global competitiveness, the sector's trade body has feared.
The Bangladesh Garment Manufacturers and Exporters Association demanded withdrawal of the 1 percent such tax, as proposed in the new budget placed in parliament last Thursday.
Instead, the government can continue the existing 0.25 percent tax, suggested Abdus Salam Murshedy, the BGMEA president, at a post-budget press briefing at its office in Dhaka yesterday.
The apparel makers also raise their voice to demand not to finalise the budget proposal for a 15 percent VAT (value-added tax) on the rented floor space of a garment factory.
Such VAT imposition will hit hard the small and medium garment facto-
ries because the majority of those are set up on rented space, Murshedy said.
"If the new proposal for raising such tax comes into effect, the cost of garment production will be upped further. But, buyers are not ready to pay any extra amount now, as they are still struggling for recovery from the global recession," he said.
"So, we demand withdrawal of 15 percent VAT on rented floor space and continuation of tax at source at 0.25 percent instead ofproposed 1 percent"
Moreover, the government should give a certain percentage of subsidy in diesel purchase, as the factory owners can hardly use full production capacity because of the shortage of gas supply and frequent outages of power, added the garment sector leader.
He urged the government to set up central effluent treatment plant for the factories located in Ashulia, Savar, Konabari, Gazipur, Bhaluka and Narayanganj, as those are expensive.
The BGMEA chief in this context also pointed to the sector's more than
Tkl ,962 crore loss a year on an average due to the energy crunch.
Elaborating the increased cost of production, he said the manufacturers have now no alternative to air shipment for meeting the lead-time, which cost Tkl,311crore between December 9,2009 and April 10,2010.
During the period, the amount of such shipment was 45,882 tonnes of apparel items.
"We’re losing our competitiveness in international market for such unexpected costs," Murshedy said.
However, the BGMEA welcomes the Tk 6,115 crore budgetary allocation for power sector, more fund for publicprivate partnership and the Tk 2,000 crore stimulus.
Terming the proposed budget 'business and export- friendly', he also welcomed more fund in agriculture and rural economy, education, health, poverty reduction, infrastructure development, employment generation, human resources development and local government.