The government will continue to provide incentives to 12 sectors as an alternative to direct cash support on export receipts with a view to helping exporters tackle potential challenges in the post-LDC era, a top official said yesterday.

The sectors are garment, pharmaceuticals and active pharmaceuticals ingredient, leather and leather goods, non-leather footwear, light engineering, electronics and electrical goods, plastic, ship-building, agricultural products and processed foods, fisheries and livestock, software and IT-enabled services, tourism and nursing and midwifery services.

Bangladesh is set to make the United Nations status graduation from an LDC (least-developed country) to a developing country in 2026.

Under the rules of the World Trade Organisation (WTO), a graduating country or one that has graduated from the LDC status can't give direct incentives like cash on export receipts.

So, nations provide incentives to exporters in alternative ways so that they can become competitive in the global supply chain. Bangladesh is one of the founding members of the WTO.

"Primarily, the government will give incentives in four formats," Senior Commerce Secretary Tapan Kanti Ghosh told The Daily Star over the phone.

For instance, incentives will be given to the sectors for the use of manmade fibres (MMF) and recycled products and for taking eco-friendly and renewable energy initiatives, said Ghosh.

Garment exporters have been demanding duty waivers on the import of MMF, recycled yarns and fabrics and import of solar panels to generate renewable energy for their factories.

"We will send our recommendations to the finance ministry and the National Board of Revenue soon so that some of the decisions come into effect in the budget for the upcoming fiscal year," Ghosh said.

A decision on the reduction of the duty on the import of MMF may come into effect from the next fiscal year, he said.

"However, all of the 12 sectors will enjoy the benefit so that they can stage a strong performance even in the post-LDC period."

The secretary made the comments at an event styled "Study on policy support and incentives before and after the LDC graduation for RMG sector", organised by the Bangladesh Foreign Trade Institute (BFTI) on its premises in Dhaka.

A panel of experts has analysed the incentive packages provided by four countries, including India, Vietnam and Cambodia, said the senior commerce secretary.

The panel found that the incentives can be given in alternative ways so the exports of the country remain robust and become more competitive after graduation, he said.

However, different sectors will enjoy different benefits that fit the sectors well, he said, adding that the garment sector may be given the duty waiver on the import of MMF from the next year's budget, for example.

"It is not possible to offer zero duty on the import of solar panels that businesses have demanded."

However, the government will have to reduce the duty on the import of solar panels to increase the use of renewable energy and meet a condition of the European Union.

The rules on getting refunds, such as that related to the advance income tax, will be simplified for exporters so that they can receive the money easily without any hassle, he added.

The continuation of policy support for the garment industry in the post-LDC period needs to be ensured as the country's largest foreign currency earner will face difficulties after graduation, Ghosh also said.

Bangladesh may face barriers to the export of garment items in the post-LDC period. So, it is important to continue the policy support to maintain robust export growth and to be more competitive in the post-LDC period, said a statement from the BFTI.