The International Labor Organisation has urged the Bangladesh government to waive around $1 million of value-added tax generated from the spending on a project involving readymade garment factory inspection. ILO made this appeal to the finance ministry through the labour and employment ministry saying that development partners were giving $7.5 million for factory inspections. But they are not willing pay VAT.
The government has taken a three-and-a-half-year initiative under the ILO’s program for improving working conditions in the readymade garment sector to ensure fire, electrical and building safety. The ILO has hinted at further investment by development partners from countries like the UK, Japan and Canada for repairing faults at the factory buildings. However, further investment depends on a VAT waiver.
The factory compliance issue is also linked to the demand for duty-free access of readymade garment products to the US market. The US has already scrapped duty advantage under the GSP for a few Bangladeshi products since June 2013. A team comprising teachers from the Bangladesh University of Engineering and Technology has been appointed for inspecting more than 1,500 readymade garment factories.
