Bangladesh plans to cut taxes for the garment industry. The targeted growth rate is more than seven per cent for the second year running. Gross Domestic Product growth is expected to edge up to 7.05 per cent this fiscal year on the back of increased spending in infrastructure and the energy sector and a hike in private investment.
Although a quarter of its 160 million people still live below the poverty level, Bangladesh has registered an annual growth of around six per cent nearly every year since the turn of the millennium. But it needs at least eight per cent growth to provide work for the two million people who enter the job market every year.
And the garment industry -- which has continued to thrive despite recent deadly disasters and political strife -- is crucial to the prospects of keeping growth ticking along and generating employment. Bangladesh’s exports of garments and clothing in 2015 rose by around 10 per cent.
Acknowledging this, Bangladesh is providing substantial tax benefits to this sector. The tax rate of the readymade garment sector will be reduced from 35 per cent to 20 per cent.
Budgetary spending for the financial year beginning in July would be 30 per cent higher on the previous 12 months.