The government of Bangladesh currently owes commercial banks Tk1,958 crore in export incentive payments for the July-September quarter, according to a recent document from Bangladesh Bank. While payments for exports up to June have been settled, the subsequent quarter’s incentives remain unpaid, placing financial strain on exporters who rely on these funds to maintain operations and plan future investments.

Export incentives, unlike remittance incentives which banks provide upfront, are disbursed to exporters only after the government releases funds through Bangladesh Bank, often leading to payment delays. Exporters argue that these delays undermine the intended support, weakening their competitive position compared to counterparts in India and Vietnam, where incentive payments are delivered more reliably and in a timely manner.

Imran Kader Turjo, director of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and managing director of Southern Knitwear, highlighted the challenges created by the delays. He noted that exporters in rival countries generally receive incentives promptly, which facilitates business expansion and investment. In Bangladesh, delayed payments force exporters into uncertainty, hampering budgeting and growth plans. Turjo also mentioned that incentive payments are frequently concentrated around the Eid holidays instead of being disbursed regularly throughout the year. He suggested that releasing at least 60% of incentives monthly would improve the scheme’s effectiveness.

BKMEA President Mohammad Hatem added that exporters typically endure a wait of approximately 18 months from shipment to receipt of incentive payments. The process begins when exporters apply through commercial banks after receiving export proceeds. These applications are scrutinized by audit firms before Bangladesh Bank authorizes payment. The audit and verification steps alone can take around a year, and exporters generally wait six months for export proceeds to arrive after shipment. While delays formerly extended up to two years, the current timeframe continues to disrupt business planning. Hatem recalled that outstanding export incentives once peaked at Tk5,000 crore before declining due to government reductions in incentive rates.

Bangladesh Bank’s latest data indicates outstanding export incentives distributed through various commercial banks, including Tk112 crore via City Bank, Tk32.45 crore through Mutual Trust Bank, Tk98 crore through Islami Bank Bangladesh, Tk33.86 crore through Dutch-Bangla Bank, and Tk100 crore through Eastern Bank.

Currently, the government provides cash incentives ranging from 0.30% to 10% for exports across 43 sectors under the fiscal year 2026-27 policy. The ready-made garment and textile industries are among the largest recipients, with garment exporters receiving a 5% incentive. The government reduced export incentives in two phases during 2024, citing Bangladesh’s impending graduation from the Least Developed Country (LDC) category in 2026. Following this transition, the country will face new restrictions on export subsidies under World Trade Organization regulations.