Bangladesh export incentive payments remain delayed as Tk1,958 crore stays unpaid

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Bangladesh export incentive delay

Highlights

Bangladesh Bank documents show Tk1,958 crore in export cash incentives for July-September remain unpaid to exporters, causing significant delays.
Exporters face an average 18-month wait for incentive payments, with the documentation process alone taking about a year and Tk5,000 crore arrears at the peak.
Garment exporters' support fell in 2024 as part of phased reductions ahead of Bangladesh's 2026 LDC graduation, disrupting budget and investment planning in 43 eligible sectors.

Outstanding incentive dues and payment process

As reported by The Business Standard, a Bangladesh Bank document shows the government still owes commercial banks Tk1,958 crore in cash incentives for exports of goods and services, with payments for the July-September quarter remaining outstanding. Unlike the 2.5% incentive on remittances, which banks pay from their own funds before reimbursement, export incentives are released to exporters only after the government sends the money through the central bank.

Industry representatives say the delay weakens the purpose of the scheme because exporters cannot predict when support will arrive. Imran Kader Turjo, director of the Bangladesh Knitwear Manufacturers and Exporters Association and managing director of Southern Knitwear, says exporters in India and Vietnam receive incentives more quickly, helping them expand operations and make new investments.

BKMEA President Mohammad Hatem says exporters typically receive the money about 18 months after shipping goods. After export proceeds reach Bangladesh, firms apply through commercial banks, which then send the files to audit firms for verification before forwarding them to Bangladesh Bank, a process he says can take around a year at the documentation stage alone.

Pressure on exporters and policy backdrop

According to Bangladesh Bank data cited in the report, the outstanding amount includes Tk112 crore through 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. Hatem says arrears had once climbed to Tk5,000 crore, although the backlog has since narrowed partly because the government cut incentive rates.

Under the current central bank policy for FY27, exporters in 43 sectors remain eligible for cash incentives ranging from 0.30% to 10%, with readymade garments and textiles among the biggest recipients. Garment exporters receive a 5% incentive, but support was reduced in two phases in 2024 as Bangladesh prepared for its 2026 graduation from least developed country status, after which World Trade Organization rules restrict the country's ability to maintain export subsidies.

Exporters say irregular disbursement continues to disrupt budget preparation, investment decisions and business expansion. Turjo says payments often arrive around the two Eid festivals instead of being released regularly through the year, limiting the scheme's usefulness for day-to-day business planning.

In our earlier article on the WTO’s assessment of conflict-driven trade disruption, we highlighted how wars and tariff uncertainty are pushing companies to rethink shipping routes and redesign supply chains for resilience, even at higher cost. We also noted the WTO’s view that some of these shifts could persist and that the global trade outlook remains sensitive to geopolitical risks despite pockets of growth support such as AI-related demand.

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