Regulatory Alerts2023-07-23
Added
FEPD Circular Letter No. 07: Export incentive against export in CMT basis in RMG/Textile sector
The document clarifies that export incentives and cash assistance for readymade garments and textile exports on a Cut, Make, and Trim (CMT) basis are calculated on the net FOB value of the exported product, derived by adding the repatriated CMT value (excluding freight, commission, and insurance) to the customs-assessed value of non-no-cost imported materials and any other locally sourced materials. It mandates that the applicable local value addition threshold of 20% must be maintained for eligibility, calculated based on the combined value of locally sourced materials and the adjusted CMT value relative to the net FOB value. All other applicable instructions regarding incentives in the sector remain unchanged.
Foreign Exchange Policy Department Bangladesh Bank Head Office Dhaka. Ref. No. FEPD Circular Letter No. 07 Date: ----------------
To All Approved Dealer Banks engaged in Foreign Exchange Transactions Head Office / Principal Office.
Dear Sir,
Regarding the provision of export incentives/cash assistance for exports in the garment sector on the CMT (Cut, Make, and Trim) basis.
According to FE Circular No. 21, dated November 09, 2010; FE Circular No. 1, dated January 07, 2020, and other applicable FE Circulars/Letters regarding cash assistance in the garment sector, export incentives/cash assistance including duty drawback/bond facility are available. On the other hand, according to FE Circular No. 35, dated August 25, 2020, and other applicable FE Circulars/Letters regarding the same, cash assistance is available on the local value addition percentage for the export of products produced by small and medium manufacturer-exporter industrial establishments using both foreign and domestic yarn/fabrics, provided there is a minimum 30% local value addition (reduced to 20% through FE Circular No. 08, dated May 09, 2022).
- In accordance with the government's decision, it is clarified that, subject to compliance with the regulations amended in the General Import Policy Order, the following instructions shall be followed for calculating the applicable export incentive/cash assistance on the CMT value for the export of readymade garments/textile products through the procurement of materials on a non-no-cost basis:
(a) Cash assistance shall be provided on the repatriated CMT value [after deducting [freight (if borne by the exporter), commission payable in foreign currency, insurance, etc.];
(b) The customs-assessed value of materials imported on a non-no-cost basis, along with the value of other materials procured under the back-to-back system used in exports (if any), shall be added to the repatriated CMT value (as per 'a' above) to determine the net FOB value of the exported product;
(c) The applicable rate of local value addition must be maintained for eligibility for export incentives/cash assistance. In this regard, the rate of local value addition shall be as follows:
[Locally sourced other materials procured under the back-to-back system used in exports (if any) + CMT value (as per 'a' above)]
Net FOB value of the exported product (as per 'b' above)
All other applicable instructions of the circulars concerning export incentives/cash assistance in the garment sector shall remain unchanged. All concerned parties are requested to be informed of the above instructions.
Yours faithfully,
(Md. Sarowar Hossain) Director (FEPD) Phone: 9530123
Dhaka July 23, 2023 Shraban 08, 1430