FEPD Circular No. 33: Export Subsidy Against Export of Pharmaceutical Goods

Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka.

Ref. No. FEPD Circular No. 33
All Approved Dealers in Foreign Exchange Transactions.

Dear Sirs,

Regarding the provision of subsidy against the export of Pharmaceutical goods.

With reference to the subject matter, it is informed to all concerned that the Government has decided to provide a subsidy against the export of domestically produced Pharmaceutical goods to encourage the country's export trade. This facility will be applicable for goods shipped during the fiscal year 2018-2019. The instructions to be followed by Approved Dealer Banks regarding the payment of subsidy are described in the following paragraphs:

2. Recipient of Subsidy and Extent of Entitlement: In the case of export of Pharmaceutical goods produced in own factories, the manufacturer-exporter will be entitled to a subsidy at the rate of 10% on the net FOB value. The aforementioned facility will not be applicable for exports from establishments located in Special Zones (EPZ, EZ).

3. Level of Local Value Addition: In the case of export of Pharmaceutical goods, the rate of local value addition must be at least 30%. The export subsidy and Duty Drawback/Customs Bond facility will not be applicable simultaneously in the aforementioned sector.

4. Deadline for Submission of Export Subsidy Application:
   (a) The aforementioned subsidy will be payable according to the DTDO rules against the expenses incurred for handling, improvement, processing of exported goods, and domestic and international transportation and freight charges. (b) Exporters may submit applications for export subsidy in Form-K at the branch of the Approved Dealer Bank against the export earnings repatriated after the export under the Export Credit Letter/Contract or through Documentary Collection. In the case of export against Export Credit Letter/Contract with advance payment repatriation through TT, the Approved Dealer Bank branch must ensure the authenticity/reliability of the foreign buyer, correctness of the price, and repatriation of advance price through TT for genuine export from Bangladesh based on the TT advice 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 advice must mention information related to the import. In all cases, the subsidy application must be submitted to the concerned Approved Dealer Bank branch within 180 days from the date of assessment of export value (repatriation of export value). However, regarding the submission of subsidy applications against exports through different shipments for the same export, the instructions of FE Circular No. 12, dated December 20, 2012, will be followed. (c) Necessary documents in favor of export, such as Bill of Lading/Airway Bill issued and certified by the transport authority as proof of shipment, Commercial Invoice, Packing List, Bill of Exporter (issued and examined by Customs authority and certified by transport authority as proof of loading/unloading), etc., must be submitted.

5. Receipt, Examination, and Settlement of Payment of Application by Approved Dealer Bank Branch:
   (a) The Approved Dealer Bank will ensure in the initial examination that all documents, certificates, and attestations mentioned in various paragraphs of the export subsidy application form are attached in complete and full form. A certificate must be submitted along with the subsidy application according to the attached table (Form-K) from the Bangladesh Pharmaceutical Industries Association. The concerned bank branch will also ensure the authenticity of the documents processed by the bank branch and the correctness of the information mentioned therein. The Approved Dealer Bank branch will inform the applying institution in writing within 03 (three) working days of receipt of the application regarding any error/incompleteness observed in the initial examination.

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Date:--------------------
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(b) To ensure consistency between the production capacity of the applying institution and the export mentioned in the application, the Approved Dealer will determine the payable amount after the application is received in complete and full form, attaching additional explanations/documents from the applicant and information/certificates collected from other bank branches as necessary from the bank branch's own records regarding export and repatriation of export value. This process will be completed by following the instructions in the reserved section for use by the Approved Dealer Bank branch in the application form sequentially. (c) The appointed external auditor must examine each application through the firm. After completing the audit program, the claim for the payable amount for export subsidy must be sent to the Accounts and Budgeting Department of the Head Office of Bangladesh Bank in Form-G through the Head Office of the Approved Dealer Bank. The statement of the amount paid in favor of the applying institution against the subsidy released from Bangladesh Bank must be submitted to the Foreign Exchange Inspection Department of the Head Office of Bangladesh Bank in Form-D through the Head Office of the Bank within the second week of the following month. (d) In every case, along with the approval of subsidy payment, the subsidy amount must be stamped and the signature of the authorized officer approving the payment must be placed on the Export Value Repatriation Certificate (Appendix-5/36 of Guidelines for Foreign Exchange Transactions-2018, Volume-1), Bill of Lading/Airway Bill as proof of shipment, Commercial Invoice, Packing List, and Bill of Exporter certified by the Customs authority, in a place easily visible, so that there is no scope for misuse of such documents. The Approved Dealer Bank branch must take special care that a PRD is not issued multiple times for the same benefit under the same export. Additionally, before processing the application, the Approved Dealer Bank must ensure that the export value of the concerned exporter has not remained unrepatriated according to the instructions of FE Circular No. 30, dated August 16, 2017, from the Bangladesh Bank's Online Exporter Monitoring System. (e) All documents regarding the settlement of subsidy payment must be preserved at the branch for at least 03 (three) years from the date of payment for inspection by the Bangladesh Bank's Inspector/Official Commercial Audit Department. (f) In case of any ambiguity regarding export or need for information collection, the concerned bank and audit firm will take advice from the Export Promotion Bureau, TCB Bhaban, 1 Kawran Bazar, Dhaka, or the Directorate of Drug Administration, Drug Bhaban, Mohakhali, Dhaka.

6. Punitive Measures for Payment of Subsidy Outside Regulations:
   (a) If subsidy is paid outside regulations, the paid amount will be recovered by closing the account of the paying bank maintained with Bangladesh Bank.
   (b) Appropriate punitive measures will be taken against bank officers/officials involved in the irregularity committed.
   (c) If any officer of the Exporter Association is involved in the irregularity committed or cooperates in the irregularity by providing false information, appropriate punitive measures may be taken against the Exporter Association/officer.

7. Process of Payment of Subsidy Amount: The amount will be provided to the concerned bank against the submitted application for subsidy from the funds released against the Government budget allocation.

It is requested to inform all concerned parties about this matter.

Yours faithfully,

Enclosure: As per distribution.

(Md. Harun-Or-Rashid)
Deputy General Manager
Phone: 9530625

(Form-K)
(Application for Subsidy Against Export of Pharmaceutical Goods) (See Paragraph 04(b) of FE Circular No. 33/2018)

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

(b) Export Credit Letter/Contract Number, Date and Value ------------------------------------- (Must submit a legible certified copy)

(c) Source, Quantity and Value of Locally Sourced Goods Used in Production of Exported Goods:
Name and Address of Supplier Quantity Value Payment Method 1 2 3 4 (Certificate from Bangladesh Pharmaceutical Industries Association regarding distribution, value and source of export goods must be submitted. Necessary documents in favor of payment method must be submitted.)

(d) Imported Materials Used in Production of Exported Goods: (In Foreign Currency) 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 certified copy of the LC in column 3. A declaration by the exporter must be submitted that Customs Bond facility/Duty Drawback facility has not been availed/utilized for materials used in the production process and will not be applied for in the future.)

(e) Details of Export Shipments:
Description 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 [Legible certified copies of Commercial Invoice, Packing List, Bill of Lading/Airway Bill issued and certified by transport authority as proof of shipment, Bill of Exporter (issued and examined by Customs authority and certified by transport authority as proof of loading/unloading), etc., and Export Value Repatriation Certificate must be submitted.]

(f) Amount Applied for Subsidy:
Amount of Ship Freight in case of Repatriated Export Value Commission, Insurance, etc. payable in Foreign Currency (if any) Net FOB Export Value 1-(2+3) 1 2 3 4 (Must submit a legible copy of the Freight Certificate mentioning ship freight, if applicable)

Value of Goods Used in Production of Export Goods Rate of Local Value Addition [(4-6)/4] x 100 Payable Subsidy 4 x 10% Domestic Goods Imported Goods 5 6 7 8 (Subsidy will be payable subject to consistency with Paragraph 3 of the aforementioned Circular regarding the rate in column 7. If imported goods are unused or previously imported goods are used, the relevant production cost calculation must be mentioned in column 6 above. A production cost calculation must be submitted regarding this matter.)

It is hereby declared that an application is made for subsidy against the export of Pharmaceutical goods produced in our own factory. All information/declarations provided in this application are complete and correct. If any error/false information/fraud/forgery is detected later, the entire amount or part thereof of the received subsidy may be recovered from me/us and/or from my/our bank account.

Date: --------------------- ---------------------------------- Signature and Designation of Owner/Authorized Officer of Applying Institution.

(g) To be filled by the Subsidy Providing Bank Branch:
Amount of Ship Freight in case of Repatriated Export Value Commission, Insurance, etc. payable in Foreign Currency (if any) Net FOB Export Value 1-(2+3) 1 2 3 4 Rate of Local Value Addition [(4-6)/4] x 100 Amount of Payable Subsidy (in Taka) Domestic Goods Imported Goods 4 x 10% x 5 6 7 8 (Subsidy will be payable subject to consistency with Paragraph 3 of the aforementioned Circular regarding the rate in column 7.)

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

Signature, Name and Designation of Bank Officer Authorized to Approve Subsidy (At the date of repatriation of export value, the relevant OD Site Purchase Price of Foreign Currency)

(Form-K)
(Certification Certificate Issued by Bangladesh Pharmaceutical Industries Association) (See Paragraph 05(a) of FE Circular No. 33/2018)

Certification Certificate for Receiving Export Subsidy Against Export of Pharmaceutical Goods

1. Name, ERC Number and Address of Applicant:
2. Export Credit Letter/Contract Number: Date: Value:
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: Value:
6. Source of Local Materials Used in Production of Exported Pharmaceutical Goods (Name and Address of Supplier):
   Quantity: Value:
7. Source of Imported Materials Used in Production of Exported Pharmaceutical Goods (Name and Address of Supplier):
   Quantity: Value:
8. Description of Export Goods: Quantity: Value:
9. Date of Shipment: Destination Port:
10. EXPI Number: Value: Date:
11. Total Repatriated Export Value (In Foreign Currency): Net FOB Export Value (In Foreign Currency):
12. Export Value Repatriation Certificate Number: Date:

Signature and Date of Exporter

Hereby it is certified that the statements mentioned in the aforementioned paragraphs are correct and true regarding the application for export subsidy against the export of Pharmaceutical goods produced in our own factory by sourcing materials from the sources mentioned in serial numbers 6 and 7 above. The authenticity/reliability of the purchase order of the foreign buyer/importer has also been ensured.

Signature and Date of Exporter

Upon verification, the exporter's aforementioned declaration has been found correct. The declared export value mentioned in serial number 8 has been found logical and consistent with the existing 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 value (Net FOB Value).

Signature, Date and Seal of Two Suitable Officers of Bangladesh Pharmaceutical Industries Association

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

(Form-G)
(See Paragraph 04(g), FE Circular No. 33/2018)

Claim Proposal for Payable Amount for Export Subsidy in the Export of Pharmaceutical Goods in accordance with FE Circular No. 33/2018

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

Name and Address of Subsidy Applying Institution Information Related to Export Date of Receipt of Application by Branch Amount of Application Amount of Payable Claim Description of Goods Date of Shipment and Destination EXPI Number Total Repatriated Export Value (In Foreign Currency) Net FOB Value (In Foreign Currency) Date of Value Repatriation 1 2 3 4 5 6 7 8 9 10

Official Seal Signature, Date, Name and Designation of Bank Officer with Authority

(Form-D)
(See Paragraph 05(g), FE Circular No. 33/2018)

Statement of Payment of Amount for Export Subsidy in the Export of Pharmaceutical Goods in accordance with FE Circular No. 33/2018 for the month of.......... of the year.........

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

Name and Address of Subsidy Applying Institution Information Related to Export Paid Subsidy (Taka) Date of Payment Unsettled Applications Received at Branch Description of Goods Date of Shipment and Destination EXPI Number Total Repatriated Export Value (In Foreign Currency) Net FOB Value (In Foreign Currency) Number Claimed Amount (Taka) 1 2 3 4 5 6 7 8 9 10 -------- ----------------------------- Official Seal Signature, Name, Designation and Date of Authorized Officer