FEPD Circular No. 25: Payment of additional cash incentive against export of RMG of Textile Industry

Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka.
Jyeshtha 25, 1421
FEP Circular No. 25 Date: --------------
June 08, 2014

All Approved Dealers.

Dear Sirs,

Regarding the provision of additional cash incentive in the garment sector of the textile industry.

To provide support to the Ready-Made Garment (RMG) industry, the government has decided to provide additional financial assistance to all exporters in this sector as follows:

(a) In addition to the existing cash assistance scheme in the RMG industry, a mandatory cash assistance of 0.25% will be provided on the value of RMG exports (FOB value).

(b) The existing rate of assistance for new product/new market (textile sector) expansion (excluding USA/Canada/EU) has been increased from 2% to 3%. The relevant circular applicable for the payment of market expansion assistance will be followed. If market expansion assistance was received or applied for at the rate of 2% for goods shipped from January 01, 2014, to the date of issuance of this circular, the mandatory 1% specified in the prescribed form may be claimed for such exports, and it will be payable based on the previous audit certificate.

(c) The aforementioned mandatory cash assistance will be applicable for goods shipped during the period from January 01, 2014, to June 30, 2015.

(d) If an exporter is eligible for assistance in three existing sectors (existing cash assistance, additional assistance for small and medium textile industries, and market expansion assistance) for the same export, the total cash assistance under the mandatory/proposed measures in the three sectors will be maximum 11%.

2. Submission deadline for application for mandatory cash assistance according to the above clause (a):

(a) Exporters may submit the application form for mandatory cash assistance in Form-C to the relevant approved dealer bank branch within 180 days from the date of repatriation of export proceeds. For goods shipped between January 01, 2014, and the date of issuance of this circular, the application for the mandatory facility may be submitted within the specified 180 days.

(b) Export proceeds repatriated against export documents prepared for subsequent stages of export under the Letter of Credit/Export Contract, or advance repatriated export proceeds through TT, will be considered eligible export proceeds for mandatory cash assistance. In the case of advance repatriated export proceeds, the name of the importer and source of import information must be mentioned in the TT cancellation voucher.

(c) Necessary documents for export, such as Bill of Lading/Air Way Bill, Commercial Invoice, Packing List, Bill of Exporter, etc., must be submitted.

(d) The aforementioned mandatory/additional 0.25% assistance will be applicable to garment industry establishments located outside the EPZ. In addition to the Customs Bond/Duty Drawback facility, the aforementioned assistance will be payable.

3. Receipt, verification, and payment decision of application by Approved Dealer Bank Branch:

(a) The Approved Dealer Bank must ensure in the initial verification that all documents, certificates, and vouchers mentioned in various clauses of the form are attached completely and fully with the application for mandatory cash assistance. The relevant bank branch must also ensure the authenticity of documents approved by the bank branch during document negotiation and the accuracy of the information mentioned therein. The Approved Dealer Bank branch must inform the applicant institution in writing within 03 (three) working days of receiving the application regarding any error/incompleteness observed during initial verification (if any).

(b) To ensure consistency between the production capacity of the applicant institution and the exports mentioned in the application, additional explanations/information and information/certificates from the bank branch's own records regarding exports and repatriation of export proceeds may be required. After the application is complete and fully verified, the Approved Dealer will determine the payable amount.

Continued on page-02

-02-

(c) Before providing mandatory cash assistance, each application must be audited by the appointed external auditor firm. After completing the audit work, the claim for mandatory cash assistance must be sent through the relevant bank's Head Office to the Accounts and Budgeting Department of the Head Office of Bangladesh Bank. In respect of mandatory cash assistance released by Bangladesh Bank, the details of the amount paid in favor of the applicant institution must be submitted to the Foreign Exchange Inspection Department of the Head Office of Bangladesh Bank through the relevant bank's Head Office in the second week of the following month according to Form-B.

(d) Along with the approval of payment of mandatory cash assistance in each case, the seal of the amount of mandatory cash assistance paid and the signature of the authorized officer must be placed on the original export proceeds repatriation certificate (PRC), Bill of Lading/Air Way Bill, Commercial Invoice, Packing List, and Bill of Exporter in a visible place so that there is no scope for misuse of those documents. The Approved Dealer Bank branch must take special care to ensure that the PRC is not issued multiple times for the same facility under the same export. For this purpose, the branch must conveniently record the PRC issuance information with date along with other information of the relevant supply in the register maintained at the branch.

(e) All documents regarding the payment decision of mandatory cash assistance must be preserved at the branch for at least 03 (three) years from the date of payment for inspection by the inspection department of Bangladesh Bank/Government Commercial Audit Department.

5. Punitive measures for irregular payment of mandatory cash assistance:

(a) If mandatory cash assistance is paid illegally, the amount paid will be recovered by closing the account of the paying bank maintained with Bangladesh Bank.

(b) Appropriate punitive measures will be taken against the bank officers/employees involved in the committed irregularity.

All concerned are requested to be informed about this matter.

Yours faithfully,

Annexure: As per text.

(Md. Zakir Hossain Chowdhury)
Deputy General Manager
Phone: 9530250

(Form-C)
(Application for Mandatory Cash Assistance)
(See Clause 02(a) of FEP Circular No. 25/2014)

(a) Name and address of the applicant institution: ---------------------------------- Export Registration Certificate Number: -----------------------------------------------

(b) Letter of Credit/Contract Number, Date and Value ------------------------------------- (A legible certified copy must be submitted)

(c) Source of collection of 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 (A legible certified copy of the LC in column 3 must be submitted. A certificate from the respective textile associations (BGMEA/BKMEA) regarding the description, value, and source of the exported goods must be submitted.)

(d) Details of export shipment:
Name of goods | Quantity | Name of importer's country | Invoice Value (in Foreign Currency) | Date of Shipment | EXPI Number | Repatriated Export Value and Date of Repatriation (in Foreign Currency) 1 | 2 | 3 | 4 | 5 | 6 | 7 (Certified legible copies of Commercial Invoice, Packing List, Bill of Lading/Air Way Bill, etc., and Export Proceeds Repatriation Certificate (PRC) must be submitted.)

(e) Amount applied for mandatory cash assistance:
Repatriated Export Value | Amount of Ship Freight (if applicable) | Commission, Insurance, etc. payable in Foreign Currency (if any) | Net FOB Export Value 1 | 2 | 3 | 1-(2+3)

Payable Assistance
0.25 / 100 * 4 = 5

(A certified copy of the Freight Surcharge Certificate mentioning ship freight must be submitted, if applicable.)

I hereby undertake that the application for mandatory cash assistance is made against the final export produced in our own factory. All information/declarations provided in this application are complete and correct. If any wrong/false information/fraud/forgery is discovered later, the entire amount or part thereof of the mandatory cash assistance received will be recovered from me/us and/or from my/our bank account.

Date: --------------------- ---------------------------------- Signature and Title of the Owner/Authorized Officer of the Applicant Institution.

(c) To be filled by the Bank Branch providing Mandatory Cash Assistance:
Repatriated Export Value (in Foreign Currency) | Commission, Insurance, etc. payable in Foreign Currency (if any) | Net FOB Export Value (1-2) | Amount of Mandatory Cash Assistance Payable (in Taka): 0.25 / 100 * 3 = 4 (Rate of the relevant foreign currency at the OD site on the date of repatriation of export proceeds) 1 | 2 | 3 | 4

Amount of Mandatory Cash Assistance --------------- Taka (In words: -------------------------------------------------------------).
Date of Payment: --------------------
Signature, Name and Title of the Authorized Bank Officer for Approval of Mandatory Cash Assistance

(Form-B)
(See Clause 03(c) of FEP Circular No. 25/2014)

Name and Address of the Applicant Institution for Mandatory Assistance | Details of Local Supply | Paid Mandatory Cash Assistance (Taka) | Date of Payment | Pending Applications Received at Branch Product Description | Date of Shipment and Destination | EXPI Number | Total Repatriated Export Value (Foreign Currency) | Net FOB Value (Foreign Currency) | Number | Claimed Amount (Taka) 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 -------- ----------------------------- Official Seal, Signature, Name, Title and Date of the Responsible Officer