Incentives to export oriented and export linkage industries

1. Introduction

1.1 The word export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an “exporter” who is based in the country of export whereas the overseas based is referred to as an “importer” (foreign buyer). In international trade “exports” refers to selling goods and services produced in home country to other foreign markets.

1.2 Bangladesh exports about 168 different products and services to almost 186 countries. The main exportable are Readymade Garments, Knitwear, Home Textile, Frozen Food, Leather & Leather goods, Jute and goods which contribute near about 89% of our total export. On the other hand the main export destination of Bangladesh are USA, Canada, EU Countries including U.K, Germany, France, Italy, Sweeten etc contributing almost 93% of total export. The export statistics reveals that Bangladesh is proceeding with positive export growth since 1974-75 . Anexxure-17 presents the export trend from the year1974-75 to 2010-11 as well as the export performance in July-June, 2011.

2.1 A company or individual businessmen with trade license is capable of doing export business. But before that he/the company has to obtain export registration certificate (ERC) from the office of Chief Controller of Import and Export (CCI&E), 111-113 Motijheel Commercial Area, Dhaka. Generally Trade License, Bank Balance Certificate, Membership from respective trade associations are required for obtaining ERC.

2.2 For starting a business in Bangladesh, it starts with registering the company name at the Office of the Registrar of Joint Stock Companies & Firms. The office is located at 24-25 Dilkusha, Commercial Area, Dhaka. This Office accords registration of Companies, Associations and Partnership Firms under the Companies Act, other related acts, rules, orders and ensures lawful administration of them.

2.3.1 The new entities should also obtain trade license from the city corporation where it is located. Depending on the type of the business it may also have to obtain license or certificate from BSTI, BRTA, etc.

2.3.2 For some products the exporters have obtain quality assurance certificate from BSTI/ Department of Fisheries (DOF)/ Respective Trade Associations etc.

2.4 The exporter can export with or without Letter of Credit (LC). The Contract/ Agreement with foreign buyer or CAD or Advance TT methods etc. are also allowed for export. The exporters then submit EXP form to bank and prepare bill of export. With all these documents exporters then approach at the customs authority of the port through which they want to ship his exportable. After examining all the papers the customs authority allows them to export and after boarding the products the authority gives them a bill of lading. After shipment the customs authority assures them stamping a seal in the back of bill of lading and provide Export General Manifest (EGM).

The Export and Import Control Act 1950 (Annexure-1) provide the Government power to administer the import and export of Bangladesh under which a three yearly Export Policy is published. The Export Policy (Export Policy 2009-12, Annexure-2) generally guide the over all export of Bangladesh and help facilitate the exporters. The salient features of the Export Policy 2009-12 are as follows:

3.1 Products which cannot be exported and which can be freely exportable

3.1.1 Export Prohibited Products: Some Products cannot be exported. The list of such prohibited products can be found in Annex -1 of the Export Policy 2009-12.

3.1.2 Products under Conditional Export: Products which are exportable under some conditions can be exported only after fulfilling those conditions. Such products have been listed in Annex-2 of Export Policy 2009-12.

3.1.3 Exportable Products: All other products except the products enlisted in Annex-1 and Annex-2 of the Export Policy 2009-12 i.e. export prohibited products and the products under conditional export shall be freely exportable.

3.1.4 Export of Samples which don't have commercial values: Samples of exportable can be exported freely but with some conditions outlined in para 2.2.1.2 of Export Policy 2009-2012.

3.2 Entre-pôt and Re-export Trade

Entre-pôt trade and re-export shall have to be conducted under the procedures stipulated in the Public Notice No. 42 (2003-2006)/import dated June 28, 2005 (14 Ashar 1412 Bangla) (Annexure-3) issued by the Office of the Chief Controller of Import and Export.

3.2.1 Entre-pôt trade means the export of an imported product at a price at least 5% higher than the import price. No change whatsoever in the quality, quantity, shape or any other aspect is necessary in this respect. Products under entre-pôt trade shall not come out of the port boundary. However, the products can be brought out of the port boundary under special authorization.

3.2.2 “Re-export” means the export of an imported product within a specific period of time with a value addition of at least 10% to the imported price by changing the quality or shape or both of the products by means of local reprocessing.

The government formulates the Export Policy principally with a view to facilitate the exporters so as to develop and promote export of Bangladesh. Chapter 3-7 of the Export Policy detail the techniques of export development and of providing facilities to the exporters. The policy details the lists of export facilities. Chapter-1 of the Export Policy 2009-12 introduces the title of the policy, its scope and strategy, Chapter-2 describes the general rules of export, Chapter-3 explain export diversification mechanism, Chapter-4 lists the general facilities of export, Chapter-5 describes about sector based facility, Chapter-6 presents about service export and Chapter-7 highlights some special facilities and incentives.

3.3.1 Cash incentives: As listed in Annexure-4, for 17 exportable, the government is providing 5-20% cash incentives against FOB price of exported items. The exporter can directly claim for cash incentive in his merchant bank.

3.3.2 Duty Drawback: Duties which are paid at customs authority is refundable in case of re-export business or imported materials which after making finished products will be exported.

3.3.3 Bonded Facilities: For bonded ware house with a view to 100% export materials can be imported without any duties.

3.3.4 Assistance in searching for foreign market: For exploring foreign market Export Promotion bureau (EPB) organize/help the exporters participate about 30-35 international trade fair every year. EPB generally bear the costs of stalls including other incidental costs. Normally the exporters will have to bear only traveling and their accommodation cost. Besides, EPB and Ministry of Commerce often organize Marketing Mission abroad for searching new export market. The Mission comprises representatives from business leaders and exporters.

3.3.5 Export Loan at lower rate of interest: At only 7% rate of interest export loans are being provided. Besides, there is a fund named Export Promotion Fund (EPF) in Export Promotion Bureau (EPB) which provide export loan for ICT and handicrafts exportable at only 4.5% rate of interest without any co-lateral. There is an Export Development Fund (EDF) in Bangladesh Bank to provide export loans up to USD 400 million(Annexure-5).

3.3.6 Awarding CIP status and National Export Trophy: Every year CIP status (Annexure-6) and National Export Trophy (Annexure-7) are awarded to the best exporters of different sectors in recognition of producing new products, diversifying of products, enhancing exports, etc.

Bangladesh maintains excellent trade relations with foreign countries. Bangladesh became a member of World Trade Organization (WTO) from its inception. Bangladesh is also the member of South Asian Free Trade Area (SAFTA), Asia Pacific Trade Agreement (APTA), BIMSTEC and, Organization of Islamic Conference (OIC). Through those organizations and some times bilaterally Bangladesh enjoy preferential treatment on export trade. Of all those preferential treatments the most important one is Generalized System of Preference (GSP). In this system as an LDC, we get some preferential advantages including duty free or concession and quota free access. We are getting GSP in 37 Countries including 27 EU countries and 10 others like USA, Canada, Japan, Norway, Switzerland etc.