The country’s apparel exporters have urged the government to allow 4 per cent cash incentive to the knitwear exporters against their repatriation of export proceeds instead of value addition.
Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association, Bangladesh Textile Mills Association and Exporters Association of Bangladesh on Sunday sent a joint letter to the finance ministry, demanding the issuance of a master circular on the cash incentive as the exporters were being harassed due to the ambiguity in the existing finance ministry’s circular in this regard.
Currently, knitwear manufacturers and exporters get 4 per cent alternative cash incentive against value addition to their products produced in the country using local yarn.
In the letter, the trade bodies said currently the cash incentive was being calculated on 80 per cent of their repatriated export proceeds, which meant they were getting maximum 3.2 per cent incentive.
‘All other export sectors in the country are getting cash incentive against their repatriation of export proceeds while the incentive for apparel sector is calculated on value addition (80 per cent of proceeds repatriation),’ the letter said.
They claimed that the calculation of cash incentive on value addition made the process cumbersome.
The trade bodies said that the Bangladesh Bank issued a number of circulars several times in this regard and all the circulars created new ambiguity with using complex words.
Exporters said that cash incentives could be given against freight on board instead of value addition as there was no realistic methodology for determining value addition to products.
‘Different methodology is used in determining products’ prices based on the variation of design and quality of fabric. And the issue is very much technical as the charges for knitting and dying are variable,’ the letter said.
BGMEA president Rubana Huq, BKMEA president AKM Salim Osman, BTMA president Mohammad Ali Khokon and EAB president Abdus Salam Murshedy signed the letter.
In 2017, the Bangladesh Trade and Tariff Commission had suggested that the government give cash incentive to the knitwear exporters against their export proceeds instead of value addition as 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 4 per cent keeping the government allocation for the purpose unchanged.
The then BB deputy director, Mohammad Arafat Ali, had said that the proposal for cash incentive against the FOB price could be accepted if the measure did not result in any additional government spending.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Apparel