Garment and textile manufacturers and exporters have expressed concerns over the decision not to grant electricity and gas connections to new industrial units located outside government-specified economic zones.

"Such a decision will definitely affect the investment flow to the country," said SM Mannan Kochi, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

"This is because most of the economic zones are yet to be ready for the setting up of industrial units since no water and electricity supplies and other infrastructures have been put in place."

On March 21, the cabinet committee on economic affairs took the decision not to provide electricity and gas supply to new factories if they are set up in any other places except in government-designated economic zones or industrial enclaves.

The Bangladesh Bank issued a circular to this effect on April 8. The central bank also directed banks to ensure mandatory clearance certificates from utility service providers before approving loans.

In 2020, the energy and mineral resources ministry issued a circular to stop providing new gas connections to industries outside economic zones and industrial parks from April 2021. However, the government did not implement the decision strictly in the last three years.

Kochi held a meeting with the leaders of the Bangladesh Textile Mills Association and the Bangladesh Knitwear Manufacturers and Exporters Association to discuss the pressing issues in the garment and textile sectors at the BGMEA office on Wednesday, according to a press release.

It said the garment industry, the main foreign currency earning sector of Bangladesh, is at a crossroads due to the current geopolitical crisis, which is disrupting global trade.

The leaders said many garment factories set up outside the designated economic zones or areas are undergoing expansion and new factories are under construction.

Therefore, implementing the circular would exacerbate the crisis in the garment industry, hindering its growth and discouraging entrepreneurs from setting up new factories.

The leaders urged the government to exempt the garment industry from the provision for at least five more years and reiterated the demand for uninterrupted power and gas supply.

The issues of customs, VAT, and income tax linked to the garment industry were also discussed at the meeting, the press releases said.

The business leaders urged the National Board of Revenue to make customs, VAT, bonds, and tax-related processes faster, easier and hassle-free to facilitate the sustainable industry development and help it attain the target of exporting goods worth $100 billion by 2030.

Garment exports stood at a record $47 billion in 2023.

The association leaders recommended reducing the tax at source from 1 percent to 0.5 percent to mitigate the impacts of the spike in the production cost and retain competitiveness.

They expressed their optimism that their demands would be considered in the upcoming budget scheduled to be unveiled in June.

The leaders also talked about Bangladesh's graduation from the category of least-developed countries and possible strategies to retain competitiveness in the post-graduation era and emphasised the importance of policy support to attract more investments in promising sectors.