RMG looking for stimulus

THE Bangladesh Garments Manufacturers' Association (BGMEA) have applied for a comprehensive incentive package that will help weather the effects of countrywide blockades enforced by the combined 14-party alliance for past couple of months. Details are yet to be finalised, but may include reducing export tax to 0.5 per cent from the current 0.8 per cent and raising banks' cash credit up to 40 per cent from the current 25 per cent and cash incentive on export proceeds may go up from the present 5 per cent to 6 per cent. Though BGMEA had wanted the stimuli package to be in effect for a period of three years, in all probability, it will be effective for a period of 18 months.
The movement launched by the political opposition has been hurting all sectors of the economy, particularly the 100 per cent export oriented RMG sector. The failure to transport goods normally, raising of tariff manifold by truckers associations which must account for arson attacks, shipping by air when road links are often disrupted to the port city have all colluded to make many a manufacturer defaulter of bank loans.
The central bank in collaboration with the ministry of finance will undoubtedly have to take all these into consideration when coming to a final decision on the many demands made by the sector. Prudence dictates that a political settlement to the current crisis would spare the economy much of the hurt being experienced. No amount of bailout package can save the country unless the differences are hammered out over a negotiation table.