The Procedure of Cash Incentive and Its Role in the RMG Sector in Bangladesh: Evidence from Bangladesh

Abstract

The journey of Ready-Made Garment (RMG) was started in Bangladesh in the late 1970s and still it’s become one of the major earning source in Bangladesh. More than 76% of the total income is generating from RMG. The availability of cheap labor and the export-quotas system are the main reason behind the success in this sector in Bangladesh. After getting independence in 1971, many observers of the newly country took a negative view or opinion about the development prospect of Bangladesh. They thought the country will remain permanently under the poverty line. But the scenery has changed; today more than 90 percent women are connected to the RMG sector for Economic development in Bangladesh. The RMG plays a pivotal role in the economic development in Bangladesh. 4.2 million Of Bangladeshis are employed in RMG sector and 13% of total GDP of nation comes from the RMG sector. To accelerate this RMG sector in Bangladesh, our government provide some facility which help the RMG industrialist to expand the market and contributing more to the economic development. Actually there are three types of facility provided to the RMG exported goods which are; bonded warehouse, duty drawback and cash incentive. To get this type of subsidy from the government some rules and regulation have to maintain. In case of textile sector there are three independent Associations are responsible. Those are Bangladesh Textile Manufacturing Associations (BTMA), where the core responsibility of this association are concentrate on Woven fabrics manufacturing, spinners and dying units; the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) which represent on Cutting and sewing units and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) which represent on Knitwear cutting and sewing, knitwear manufacturer and the fabric dying units.