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'Government should back RMG sector after MFA era' |
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News |
April 3, 2000
The government should classify the ready-made garment industry as and essential sector and support it when incentives are withdrawn in 2005, says a government report.
The report, which was prepared by the Project Management Institute, a private consulting firm, made 13 recommendations to help the sector in the post Multi-Fibre Agreement era. They include the creation of backward linkage industries, demand pull for backward linkage, an enabling investment climate and an appropriate tariff structure.
The report also said the government should improve the sector's infrastructure, create a fashion technology institute and testing facility, strengthen the textile cell of the Export Promotion Bureau and inter-ministerial inter-organizational relationships and create awareness about the impact of the General Agreement on Tariffs and Trade.
The in-depth study, which was submitted to Ministry of Commerce and the Export Promotion Bureau recently, also assessed the growth of the sector after 2005 and estimated its demand for fabric and yarn.
The study said implementation of the GATT would open up new market for Bangladesh's textile and clothing exports, but competition with China and India would also increase. This places Bangladesh at a disadvantage, since there is a huge gap between the supply and demand for fabric and yarn in the sector.
The reported said the government should provide incentives to encourage ready made garment factories to use local materials. It also recommended lowering the interest rate on long-term loans to 6 percent from 11 percent.
The tariff structure should be export based. Backward linkage industries should be allowed to import the materials they need without having to pay the VAT.
World level efficiency and cost effectiveness are other crucial factors for the survival of the sector in a quota free market. The government should improve the transportation system, ports and ensure uninterrupted electricity and gas supplies.
The government should also place the sector under the control of a single agency, eliminating bureaucratic red tape and overlap. Spinning, weaving, dying, printing and finishing are governed currently by the Ministry of Textile while the ready made garment sector falls under the Export Promotion Bureau and the Ministry of Commerce.
Political parties should also except the essential sector from hartal and other political programs. Police should give preferential treatment to the transportation of the sectors material and finished products.
Source: The Daily Star
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