FEPD Circular No. 04: Export Subsidy Against Export of Footwear Made of Synthetic and Fabrics

Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka.
Ref. No. FEPD Circular No. 04
Date: February 08, 2018

To All Approved Dealers in Foreign Exchange Transactions.

Dear Sir,

Regarding the provision of export subsidy against the export of footwear made of a mixture of synthetic and fabrics.

Attention is drawn to all concerned regarding the subject matter mentioned above. It is informed that the Government has decided to provide a subsidy against the export of footwear made of a mixture of synthetic and fabrics within the country to encourage the country's export trade. This facility will be applicable to goods shipped from the 2017-2018 fiscal year. The following paragraphs describe the guidelines to be followed by approved dealer banks regarding the payment of subsidy:

2. Recipient of Subsidy and Extent of Entitlement: In the case of exporting footwear manufactured in own factories made of a mixture of synthetic and fabrics, the manufacturer-exporter will be entitled to a subsidy at the rate of 15% on the Net FOB value. The aforementioned facility will not be applicable in the case of exports from establishments located in Special Areas (EPZ, EZ).

3. Extent of Local Value Addition: In the case of exporting footwear made of a mixture of synthetic and fabrics, a minimum of 30% local value addition percentage will be applicable. The export subsidy and duty drawback/duty bond facility will not be applicable together in the aforementioned sector.

4. Deadline for Submission of Export Subsidy Application:
   (a) The aforementioned subsidy will be provided according to the DUSI Rules against the expenses incurred for handling, quality inspection, processing of exported goods, and domestic and international transportation and freight charges. (b) Exporters can submit applications for subsidy in Form-C at the branch of the approved dealer bank against the repatriation of export proceeds prepared under export letters of credit/contracts or through documentary collection. In the case of exports against export letters of credit/contracts involving advance repatriation of export price through TT, the approved dealer bank branch must ensure the authenticity/reliability of the foreign buyer, accuracy of price, and actual export from Bangladesh based on the TT remitter's comment and other documents. Advance price payment through TT must be made directly through banking channels (excluding exchange houses) by the exporter or importer, and the TT remitter's comment must mention information related to the import. In all cases, the subsidy application must be submitted to the relevant approved dealer bank branch within 180 days from the date of assessment of the export price (repatriation of export price) in the relevant bank's Nostro account abroad. Along with this, in the case of submitting subsidy applications against exports through different shipments for the same export, the instructions of FEPD Circular No. 12, dated December 20, 2012, will be followed. However, in cases where the time limit for submitting applications for the aforementioned facility has already expired, applications for the subsidy facility can be submitted within 60 (sixty) days from the date of issuance of this circular. (c) Documents required for export, such as the full set of Bill of Lading/Air Waybill issued and endorsed by the carrier as proof of shipment, Commercial Invoice, Packing List, Bill of Exporter (issued and examined by Customs and endorsed by the carrier for delivery), etc., must be submitted.

5. Receipt, Examination, and Payment Decision of Application by Approved Dealer Bank Branch:
   (a) The approved dealer bank will ensure in the initial examination that all documents, certificates, and endorsements mentioned in various paragraphs of the export subsidy application form are attached with the application in complete and full form. A certificate must be submitted along with the subsidy application according to the attached table (Form-B) from the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh. The relevant bank branch will also ensure the authenticity of the documents processed by the bank branch and the accuracy of the information mentioned therein. The approved dealer bank branch will inform the applicant institution in writing within 03 (three) working days of receiving the application regarding any defect/incompleteness observed in the initial examination (if any).

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(b) In case additional explanation/information is required to ensure consistency between the production capacity of the applicant institution and the export mentioned in the application, and to collect information from the bank branch's own records or other bank branches regarding export and export price repatriation, the application will be considered complete and full after attaching the required documents. The approved dealer will determine the payable amount after the application form is complete and full by following the instructions in the section designated for use by the approved dealer bank branch in the relevant application form sequentially. (c) Each application must be examined by the appointed external audit firm regarding the accuracy of the amount payable according to the subsidy application. After conducting the examination, the claim for the amount payable as export subsidy must be sent to the Accounts and Budgeting Department of the Head Office of Bangladesh Bank via the Head Office of the approved dealer bank in Form-G. The statement of amounts paid in favor of the applicant institution with respect to the subsidy drawn by Bangladesh Bank must be submitted to the Foreign Exchange Policy Department of the Head Office of Bangladesh Bank via the Head Office of the bank in Form-D within the second week of the following month. (d) Along with the approval of subsidy payment in each case, the relevant export price repatriation certificate (according to Appendix-5/23 of Guidelines for Foreign Exchange Transactions-2009, Volume-1), Bill of Lading/Air Waybill as proof of shipment, Commercial Invoice, Packing List, and Bill of Exporter endorsed by Customs must be stamped with the seal of the amount of subsidy paid and signed by the authorized officer at an easily visible location so that these documents are not misused. The approved dealer bank branch must take special care to ensure that a PRS is not issued multiple times for the same facility under the same export. Additionally, before processing the application, the approved dealer bank must ensure that the export price of the relevant exporter has not remained unrepatriated according to the instructions of FEPD Circular No. 30, dated August 16, 2017, from the Bangladesh Bank's Online Exporter Monitoring System. (e) All documents related to the decision of subsidy payment must be preserved at the branch for at least 03 (three) years from the date of payment for examination by the audit department of Bangladesh Bank/Government Commercial Audit Department. (f) If any ambiguity arises regarding export or if information is needed, the relevant bank and audit firm will consult the Export Promotion Bureau, TSC Building, 1 Kawran Bazar, Dhaka.

6. Punitive Measures for Illegal Payment of Subsidy:
   (a) If subsidy is paid illegally, the paid amount will be recovered by closing the account of the paying bank kept with Bangladesh Bank.
   (b) Appropriate punitive measures will be taken against the bank officials/employees involved in the committed irregularity.
   (c) If any official of the Exporters Association is involved in the committed irregularity or assists in the irregularity by providing false information, appropriate punitive measures will be taken against the Exporters Association/official.

7. Process of Payment of Amount for Subsidy: The amount will be provided in favor of the relevant bank against the submitted application for subsidy from the funds drawn against the government budget allocation.

All concerned are requested to be informed about the matter.

Yours faithfully,

Attachment: As per description.

(Md. Harun-Or-Rashid)
Deputy General Manager
Phone: 9530142

(Note: See Paragraph 04(b) of FEPD Circular No. 04/2018) Form-'C' Application for Subsidy Against Export of Footwear Made of Mixture of Synthetic and Fabrics

(a) Name and Address of Applicant Institution: ---------------------------------- Export Registration Certificate (ERC) Number: -----------------------------------------------

(b) Export Letter of Credit/Contract Number, Date and Price ------------------------------------- (Must submit a legible verified copy)

(c) Local sourcing source, quantity and value of goods used in the production of exported goods:
Name and Address of Supplier | Quantity | Value 1 | 2 | 3

(Must submit endorsement from the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh regarding the description, value, and sourcing of exported goods.)

(d) Imported ancillary materials used in the production of exported goods:
Name and Address of Supplier | Name and Quantity of Goods | LC/Back to Back LC/Documentary Collection Number, Date | Value 1 | 2 | 3 | 4

(Must submit a legible verified copy of the LC in column 3. Must submit a declaration by the exporter stating that duty bond facility has not been availed for materials used in the production process/duty drawback facility has not been taken and no application will be made in the future.)

(e) Details of Export Shipments:
Description of Goods | Quantity | Name of Importer's Country | Invoice Value (Foreign Currency) | Date of Shipment | EXPI Number | Repatriated Export Price and Date of Repatriation (Foreign Currency) 1 | 2 | 3 | 4 | 5 | 6 | 7

(Must submit legible verified copies of Commercial Invoice, Packing List, full set of Bill of Lading/Air Waybill issued and endorsed by the carrier as proof of shipment, Bill of Exporter (issued and examined by Customs and endorsed by the carrier for delivery), etc., and export price repatriation certificate.)

(f) Applied Amount of Subsidy:
Amount of Ship Hire (if applicable for repatriated export price) | Commission, Insurance, etc. payable in Foreign Currency (if any) | Net FOB Export Price 1-(2+3) | 1 | 2 | 3 | 4

(Must submit a legible verified copy of the Freight Surcharge containing details of ship hire, if applicable)

Value of Goods Used in Production of Export Goods | Local Value Addition Rate [(4-6)/4]*100 |

Payable Subsidy* | 4*15% |
Domestic Goods | Imported Goods | 5 | 6 | 7 | 8

(*Subsidy will be payable if the rate in column 7 is consistent with Paragraph 3 of the aforementioned circular.)

I hereby declare that, an application for subsidy has been made against the export of footwear made of a mixture of synthetic and fabrics in our own factory. All information/declarations provided in this application are complete and correct. If any error/false information/fraud/forgery is discovered later, the entire amount or part thereof of the availed subsidy will be recovered from me/us and/or from my/our bank account.

Date: --------------------- ---------------------------------- Signature and Designation of Owner/Authorized Official of Applicant Institution.

(g) To be filled by the Subsidy Providing Bank Branch:
Amount of Ship Hire (if applicable for repatriated export price) | Commission, Insurance, etc. payable in Foreign Currency (if any) | Net FOB Export Price 1-(2+3) | 1 | 2 | 3 | 4

(Must submit a legible verified copy of the Freight Surcharge containing details of ship hire, if applicable)

Value of Goods Used in Production of Export Goods | Local Value Addition Rate [(4-6)/4]* 100 |

Amount of Payable Subsidy (in Taka)* |
Domestic Goods | 415% | (Foreign Currency)
Imported Goods | (Foreign Currency) | 5 | 6 | 7 | 8

(*Subsidy will be payable if the rate in column 7 is consistent with Paragraph 3 of the aforementioned circular.)

Amount of Subsidy --------------- Taka (In words: -----------------).
Date of Payment: --------------------

Signature, Name and Designation of Authorized Bank Officer for Subsidy Approval

(Rate of ODI Purchase of Relevant Foreign Currency on the Date of Repatriation of Export Price)

(Note: See Paragraph 05(a), FEPD Circular No. 04/2018) Form - 'B' Endorsement Certificate Issued by Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh Endorsement Certificate for Receiving Export Subsidy Against Export of Footwear Made of Mixture of Synthetic and Fabrics

1. Name, ERC Number and Address of Applicant:
2. Export Letter of Credit/Contract Number: Date: Price:
3. Name and Address of Foreign Buyer:
4. Name and Address of Foreign Buyer's Bank:
5. (a) Invoice Number: Date:
   (b) Quantity of Goods Mentioned in Invoice: Price:
6. Sourcing Source of Local Materials Used in Exported Footwear (Name and Address of Supplier):
   Quantity: Price:
7. Sourcing Source of Imported Ancillary Materials Used in Exported Footwear (Name and Address of Supplier):
   Quantity: Price:
8. Description of Exported Goods: Quantity: Price:
9. Date of Shipment: Destination Port:
10. EXPI Number: Price: Date:
11. Total Repatriated Export Price (Foreign Currency): Net FOB Export Price (Foreign Currency):
12. Certificate Number of Repatriated Export Price: Date:

Signature and Date of Exporter

Hereby certify that, we have sourced materials from the sources mentioned in serial numbers 6 and 7 above through our own factory for the export of footwear mentioned above, and the details mentioned in the aforementioned paragraphs are correct and reliable for the purpose of applying for subsidy. We have also ensured the authenticity/reliability of the foreign buyer/importer's purchase order.

Signature and Date of Exporter

It has been verified that the above declaration by the exporter is correct. The declared export price in serial number 8 has been found consistent with the actual and current international market price, and the authenticity/reliability of the foreign buyer has also been ensured. It is recommended to pay export subsidy on the repatriated export price (Net FOB Value).

Signature, Date and Seal of Two Appropriate Officials of Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh

[If any rubbing, cutting, or correction is made, this endorsement certificate will be considered void.]

Form-'G'
(Note: See Paragraph 5(g), FEPD Circular No. 04/2018) Proposal for Claim of Amount Payable as Export Subsidy in the Export Sector of Footwear Made of Mixture of Synthetic and Fabrics According to FEPD Circular No. 04/2018

.............................................. Bank, Head Office, Dhaka.

Subsidy

Name and Address of Applicant Institution | Date of Receipt of Application by Branch | Applied Amount | Amount of Claim Payable | Details of Goods | Date of Shipment and Destination | EXPI Number | Total Repatriated Export Price (Foreign Currency) | Net FOB Value (Foreign Currency) | Date of Price Repatriation 1 | 2 | 3 | 4 | 5 | 6 | 6 | 7 | 8 | 9

Official Seal, Signature, Date, Name and Designation of Authorized Bank Officer

Form-'D'
(Note: See Paragraph 05(g), FEPD Circular No. 04/2018) Statement of Paid Subsidy for the Month of......... of the Year......... in the Export Sector of Footwear Made of Mixture of Synthetic and Fabrics According to FEPD Circular No. 04/2018

Name of Approved Dealer Bank Branch: ............................................................................

Subsidy

Name and Address of Applicant Institution | Paid Subsidy (Taka) | Date of Payment | Pending Applications at Branch | Details of Goods | Date of Shipment and Destination | EXPI Number | Total Repatriated Export Price (Foreign Currency) | Net FOB Value (Foreign Currency) | Number | Claimed Amount (Taka) 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

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Official Seal, Signature, Name, Designation and Date of Authorized Officer