Bangladesh Tariff Commission has suggested that the government give cash incentive to the country’s knitwear exporters against their export proceeds instead of value addition.
Currently, knitwear manufacturers and exporters get 4 per cent cash incentive against value addition to their products produced in the country using local yarn.
At a recent meeting on the issue, the commission decided that the cash incentive could be given against freight on board instead of value addition as the exporters claimed that there was no realistic methodology for determining value addition to products.
In a letter to the commerce ministry the commission also suggested resetting the rate of the cash incentive from the present 4 per cent keeping the government allocation for the purpose unchanged.
Commerce ministry officials said that they received the opinion from the tariff commission but the ministry was yet to take any decision on the issue.
In the tariff commission meeting, former Bangladesh Knitwear Manufacturers and Exporters Association vice-president Mohammad Hatem demanded that the government set the rate of the cash incentive at 3.2 per cent against FoB price instead of the current 4 per cent against value addition.
As per the government circular, knitwear exporters get 4 per cent cash incentive against value addition to their products but the process of determining the percentage of value addition was complex, he said.
Hatem said the exporters were facing hassles to realise the cash incentive due to an ambiguity in the circulars issued by Bangladesh Bank and other government agencies in this connection.
According to the resolution of the tariff commission meeting, currently knitwear exporters are getting cash incentive at the rate of 4 per cent of 80 per cent of FOB price as 80 per cent of FOB price is taken as value addition.
In the meeting commission member Abdul Kayum said that cash incentive against FOB price might encourage exporters to manipulate their invoices.
Opposing Kayum’s apprehension, Hatem said that amid tight competition in local and global markets it was very difficult to receive export orders at break-even prices and there was no scope for over invoicing.
Mohammad Arafat Ali, deputy director of the BB, said that the proposal for cash incentive against FOB price could be accepted if the measure did not result in any additional government expending.
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