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Impact of Government Incentives on Some Selected Exporting Industries of Bangladesh

The concentration of the economy on the blooming RMG sector has become a crucial concern as a simple nudge in this sector is likely to bring about a serious upheaval in the entire export arena of Bangladesh. Clearly, this kind of vulnerability is not acceptable in an export driven economy like Bangladesh.  This issue seriously brings our attention to the need for diversification of the exporting commodities. In this regard, it is necessary to identify those exporting products other than the well-established RMG products that are in need of further appreciation (funding, tax cuts, cash incentives, backward linkage facilities etc.). The government has categorized different export products according to priorities: Leading Sectors, Thrust Sectors and Specialized Sectors. There had been different incentive schemes/programmes provided by the government to these exporting industries. Cash Incentives, Duty Drawbacks and Bonded Warehouse Facilities are the three major incentives. These incentives are provided at different scale across different industries and the rate also changes over time. It is necessary to examine how these incentive packages are facilitating the recipient industries.

The main objectives of the study are to conduct comparative advantage analysis of the export oriented industries and to recommend some plausible policy implications.

These objectives will be focused on addressing some specific research questions like which products have comparative advantage over others in the export sector, what are the exporting products other than the well-established RMG products that are in need of further appreciation (Funding, tax cuts, cash incentives, backward linkage facilities etc.) and how do the incentive programs of government affect different exporting industries.

Study Team: Tahreen Tahrima Chowdhury and Rizwana Islam.

Time line: 20th January, 2017 to 20th May, 2017. 

Sponsored by:    BIDS Research Endowment Fund.

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