Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Director Mohiuddin Rubel on Tuesday said since the growth curve of global clothing trade falters every year, we believe that 2024 will be a year of turnaround since 2023 was a weaker year for this industry globally, and there are some indications that consumption and spending may rebound.

The positive side is that despite all the challenges the industry continued its commitment and efforts toward sustainability, he said.

The minimum wage was declared which came into effect from 1 December 2023; the transformation of green industrialization continues with more robust performance; and the industry is making visible progress in reducing emission.

"The diversification in export diversification in terms of markets, products and fiber makes us confident about the future. We hope that more strategic investments will continue flowing in in this year, and a qualitative shift toward a more innovative and technology-based industry will be visible," Rubel said.

He said there are certain challenges that our economy is facing currently. "I believe 2024 will bring a breath of fresh air in it as we expect a positive shift in our our. We do have new opportunities, which the industry is pursuing and exploring further; and we do have new challenges as well."

"We need continued support and collaboration from all stakeholders including government, development partners and others," he added.

The month-wise export performance for the year 2023 shows that the year started well with modest growth in January and February. After having consecutive dips in March and April, the positive trend in growth was restored and maintained during May-September, and the export performance in the final quarter of the year went below the level of 2022.

Though the year ended with a decline of 2.35% in December, export in this single month was US$ 4.56 billion. The decline in November and December happened primarily because of the unusually higher export in November and December 2022.

Detailed data on country-wise export performance is yet to be published.

"Let me put in record the export performance for July-December of the 2023-24 Fiscal Year. During the mentioned period, Bangladesh’s RMG export reached US$ 23.39 billion, and the growth came down to 1.72%," Rubel said.

The RMG export turnover in 2023 remains historic in a single year, and considering the global economic and geo-political crisis, he said.

"I would say Bangladesh did fairly well. However, imports of our major markets declined as most of the advanced economies are struggling due to high inflation and impact on consumers due to monetary policy measures taken to contain inflation," Rubel said.

Bangladesh's readymade garment (RMG) export reached US$ 47.39 billion, which is US$ 1.68 billion more than 2022, according to the year-end export data for 2023 published by the Export Promotion Bureau (EPB).

During this year, Bangladesh’s total export earning increased by 2%, meaning that this growth is mostly contributed by the RMG export.

This growth in RMG export was solely contributed by the growth of knitwear export which grew by 7.47%, while woven export declined by 0.81%.

MSH

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."