Sounding the alarm on a deepening crisis in the country’s export sector, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) revealed that roughly 400 factories have shuttered over the last three years.
The apex body of the apparel sector also warned that many more factories are now financially vulnerable and called for policy support in the upcoming budget to help the sector cope with mounting pressures.
BGMEA President Mahmud Hasan Khan Babu came up with the remarks while speaking at a pre-budget discussion at the headquarters of the National Board of Revenue (NBR) in Agargaon on Sunday.
Outlining a set of proposals aimed at easing the burden on the sector, he said the industry is facing “unprecedented challenges” both domestically and globally, citing the impact of a global slowdown, geopolitical tensions and tariff-related pressures on exports.
Garment exports declined by 3.73 percent during the July–February period of the current fiscal year compared to the same period a year earlier, he said.
Since August 2025, export orders have been on a downward trend, forcing many factories to operate below capacity.
This has driven up fixed costs and overall production expenses, further squeezing margins, he added.
According to BGMEA, lending rates have climbed to between 12 percent and 15 percent, while energy costs have surged significantly. Gas prices rose by 286 percent between 2017 and 2023, and electricity tariffs increased by 33 percent over the past five years.
In addition, the minimum wage was raised by 56 percent in 2024, while annual increments were increased to 9 percent in December the same year.
The sector has also been hit by a 41 percent hike in Chattogram port tariffs and a gradual reduction of export incentives by around 60 percent since July 2023.
To help restore competitiveness, BGMEA proposed a range of fiscal measures, including exemption from 10 percent tax deduction at source on cash incentives and a reduction in source tax on exports from 1 percent to 0.65 percent for five years.
It also suggested lowering the source tax on export proceeds to 0.5 percent and scrapping advance income tax on export subsidies.
The association further called for duty benefits on raw materials used in solar PV systems and environmentally compliant production, including effluent treatment plants.
At the same meeting, Bangladesh Textile Mills Association (BTMA) President Showkat Aziz Russell said imposing taxes on incentives contradicts the very purpose of offering them.
“Taxing incentives goes against the idea of incentivising businesses,” he said.
He also pointed out that multiple layers of taxation across the value chain—from cotton to yarn, fabric and finally garments—are creating an effective tax burden of 12 to 14 percent on the same product, undermining competitiveness.
Russell further said that nearly 70 percent of global apparel is now dominated by man-made fibres, while Bangladesh has minimal presence in this segment.
He urged the government to ease duties on new materials and allow greater flexibility under the bonded warehouse facility to support diversification.
The BTMA president also highlighted regulatory complexities in setting up solar systems, saying that multiple HS codes for components create unnecessary hurdles.
Responding to the concerns, NBR Chairman Abdur Rahman Khan said the tax authority has already moved to digitise corporate return filing and is working to simplify the system further.
“A transparent and simplified tax regime will boost business confidence and help expand the tax base,” he said.
