The central bank has made clear the calculation method of cash incentive for the readymade garment sector as commercial banks are facing trouble due to complexity in the previous circular.
The Bangladesh Bank issued a circular in this regard on Sunday.
The central bank in its circular said that exporters will be eligible to get incentive on at least 20 per cent or more value addition from their export earnings.
Incentive will be countable on a Cut, Make and Trim (CMT) basis. It means that exporters will become eligible for incentive after deducting shipping costs (if paid by exporters), and commission if paid in foreign currency and insurance premium.
The circular also mentioned that to count cash incentive value, commercial banks consider the value of raw materials which are sourced locally through back-to-back letters of credits (LCs) to export plus CMT values divided by net Freight on Board (FoB) price of export multiplied by 100.
Commenting on the matter, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim told The Business Post that the decision will relieve them from a big hassle.
“Before the circular, there were not any specific directions to count cash incentive. That is why commercial banks held up our incentive claims. But thanks to the new circular, there is no complexity to get incentive as per on-no-cost import raw material and export goods.”
The central bank in a circular on May 09, 2022 announced that exporters will be eligible to claim cash incentive if they could retain at least 20 per cent value addition. Before the circular, the minimum value addition requirement was 30 per cent.
The change came following an application submitted by three apex bodies of the textile and apparel sectors--Bangladesh Textile Mills Association (BTMA), BGMEA and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), citing a slowdown in exports due to the ongoing global economic crisis caused by Russia-Ukraine war.
But the circular did not mention the incentive calculation method. Finally, the central bank clarified the matter on Sunday.
