Business leaders have called on the government to overhaul the existing cash incentive scheme for the local textile sector in order to remove ambiguity in the system.
The export-oriented local textile sector is now enjoying 4 per cent cash incentives as an alternative to duty bonds and duty drawback. Basically, knitwear exporters get the incentive against value addition to their products produced in the country using local yarn and fabrics.
But the business leaders urged the government to provide the cash incentive on f.o.b (free on board) value of exports instead of value addition to help them avail the facility without any hassle and harassment.
They also recommended for issuing a fresh master circular on the cash incentive scheme saying that exporters are being harassed due to the ambiguity in the existing FE circular-25 issued by the central bank on 18 September 2017.
Presidents of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA) and Exporters Association of Bangladesh (EAB) came up with the plea in a joint letter to both the Finance and Commerce Ministers on September 26.
“The central bank issued a number of circulars on different occasions on the cash incentive scheme and all these circulars have created new ambiguity due to lack of clarity and for complex words. Therefore, officials of the corresponding banks, audit firms, Bangladesh Bank, local and revenue audit directorate and related government offices have made wishful interpretation on these circulars creating various complexity in the whole process. As, a result, the exporters are facing hassle and harassment in getting the incentive,” reads the letter.
It adds: “The audit system in providing cash incentive is ‘more complex and the exporters have to face a wide range of
harassment because of the system. Moreover, exporters need six months to one year to get certificate on incentive. On the other hand, one year passed since incentive claims sent to the central bank with certification.”
When contacted, EAB president Abdus Salam Murshedy said, “We have written a letter to two senior ministers to solve the currently emerged problem and harassment in providing cash incentive for the export-oriented local textile sector.”
He added, “The country’s all other export-oriented sectors are getting cash incentive against their export proceeds. But the incentive for apparel sector is calculating 80 per cent of its repatriation. Exporters get 3.2 per cent incentive under the process, not 4 per cent.”
In this situation, Murshedy said, “We urge the government to bring changes in the system considering interest of the country’s apparel export business.”
According to a National Board of Revenue (NBR) report, 35 banks disbursed Tk 1,384 crore as alternative cash assistance to the export-oriented local textile sector in the last three years.
Eralier, the Customs Valuation and Internal Audit Commissionerate, a wing under the NBR, suggested revoking the scheme facility terming it ‘against the rules’.
It also launched an investigation into the alleged misuse of the facility by readymade garment exporters.
