The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) urged the central bank to set a Tk 1 difference between their USD encashment rate, and the rate available to remitters and their beneficiaries.
When a remitter sends money home, their beneficiary gets Tk 108 – which becomes Tk 110.7 with cash incentive – against per USD. However, an exporter gets only Tk 99 for per USD as export earnings.
The BKMEA had made the request in a letter sent to the Bangladesh Bank on Monday, pointing out that the exporters are facing inequality because of the big difference between the USD encashment rates.
In the letter, signed by BKMEA Executive Director Mohammad Hatem, the organisation further demanded that the fixing of USD rates should rest only on the central bank’s shoulders.
Although the price of USD for importers is Tk 104.5, the banks are making import payments by buying USD at Tk 105 to Tk 106 – under back-to-bank letters of credit (LC) or any other import liabilities.
The maximum rate of export income encashment through USD is Tk 99. The letter mentions that the exporters are facing huge losses because of this policy, and this will create huge shortfalls that the businesses will not be able to adjust to. It adds that the entrepreneurs are facing big losses due to the gap in payout.
Bangladesh’s export earnings from knitwear stood at $23.21 billion in FY22, which was 36.88 per cent higher than the previous year.
The letter highlighted that the production costs have jumped due to the increase in fuel prices globally, rising transportation costs and skyrocketing prices of other goods such as industrial raw materials.