Exporters to sit at PMO Thursday to resolve cash incentive dispute

A contentious meeting on export subsidy entitlement to some 500 exporters ended indecisively at the commerce ministry on Wednesday as stakeholders agreed to sit at the Prime Minister’s Office Thursday to settle the dispute, exporters said.

The problem brewed as the National Board of Revenue, the tax authority of the state, abruptly asked the Bangladesh Bank to cease export subsidies to some 500 non-bonded exporters due what they referred to a ‘lack of a policy’.

Those non-bonded exporters---who primarily procure their raw materials from the local sources and then ship apparel products--- have been realising cash incentives since 1997, exporters said.

Salman F Rahman, the Private Sector Industry and Investment Adviser to Prime Minister Sheikh Hasina, summoned the Thursday’s meeting asking the NBR to join it to resolve the dispute.

Recently, NBR issued a letter to Bangladesh Bank to stop the cash assistance to 500 non-bonded businesses who were able to open back-to-back Letter of credit (LC) documents, as done by the bonded beneficiaries to ship their foreign-bound products.

“The meeting has ended without a conclusion. In the meeting, the stakeholders have placed their opinions and cited various problems. I hope in tomorrow’s meeting our problem will be solved,” said Muhammad Ali Khokon, President of Bangladesh Textile Mills Association (BTMA).

Under a bonded facility apparel manufacturers import fabrics from the host nation and ship it there after sewing apparels without paying duties for the fabric.

“Considering the growth of the local industries, the commerce minister and the adviser agreed in principle to continue the cash support to the exporters. If need, they will amend the law,” Muhammad Hatem, First Vice President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told the Business Insider Bangladesh on Wednesday.

The government has allocated Tk 6,825 crore in cash incentives for various export products under FY ‘20-’21, as incorporated in the national budget.

Commerce Minister Tipu Munshi, leaders of Bangladesh Garment Manufacturers and Exporters Association, BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and BTMA were present in the meeting.

Hatem said the incentives had been there. But, suddenly, based on a report of customs intelligence, NBR issued a letter recently to the Bangladesh Bank asking it to stop the cash assistance to the non-bonded businesses that are small and medium in size. And they are doing business based on 100 percent local raw materials.

“Now the NBR wants to stop the assistance. I am not able to understand their intention,” BKMEA Vice President said.

Exporters of Bangladesh receive 2 to 15 percent cash subsidy for their shipment depending on what products they are exporting.

Other than farm products, electronics, shrimp and sea fish, the apparel exporters and the spinners had been enjoying varying degrees of incentives.