The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) has described the proposed national budget for the 2026–27 fiscal year as satisfactory overall, saying it contains several positive measures that could help revive the economy during a challenging period.

The trade body said the ready-made garment sector had two major expectations from the budget–reform of the tax system and easier import procedures for solar power systems to address the ongoing gas and electricity crisis, said a press release.

According to BKMEA, the budget addressed both concerns in a constructive way.

The association welcomed the government’s decision to expand tax incentives for solar power systems, mounting structures, and related components. It said the move would support industries seeking alternative energy sources amid persistent energy shortages.

BKMEA also praised the proposal to move toward a more medium-term policy framework and thanked the government, the finance minister, and the National Board of Revenue (NBR) for incorporating the industry’s recommendations.

One long-standing demand from the industrial sector, the statement noted, was the introduction of an effective system for adjusting, carrying forward, or refunding advance income tax (AIT) deducted at source.

BKMEA said delays in refunding or adjusting AIT create liquidity problems for businesses by tying up working capital and increasing dependence on bank loans.

The organisation further welcomed the proposal allowing export-oriented non-bonded companies to import raw materials duty-free and collect inputs from domestic bonded companies, calling it a positive step for boosting exports.

Maintaining existing incentives for export-oriented industries and extending various policy benefits and incentives for three to five years would help strengthen investor confidence and support long-term business planning, the association added.

However, BKMEA raised concerns about the proposed 5% tax on imported polyester staple fiber. It argued that domestic production currently meets less than 10% of national demand and warned that excessive protection could reduce the competitiveness of local exporters.

The trade body also said the budget lacks sufficiently specific measures to resolve the country’s gas and electricity shortages, which remain major obstacles to industrial expansion and investment.

While solar energy can provide partial relief, BKMEA stressed the need for increased domestic gas exploration and production as a long-term solution.

High lending rates were identified as another major challenge. The association said borrowing at interest rates of 13% to 15% is unsustainable for businesses and has already slowed private-sector credit growth.

BKMEA also noted that Bangladesh faces increasing competition from neighboring countries in attracting foreign investment, as many regional competitors offer incentives such as industrial land, capital support, wage subsidies, and export benefits.

Despite these concerns, the association said the budget includes encouraging initiatives for employment generation, particularly support programs for distressed and closed factories. If implemented effectively, these measures could help restore industrial production and create new jobs.

Overall, BKMEA described the budget as positive from a policy perspective but emphasised that its success will depend on effective implementation by Bangladesh Bank and other financial institutions.