FEPD Circular No. 36: Export subsidy against export of Chemicals

Foreign Exchange Policy Department
Bangladesh Bank
Head Office
Dhaka.
Ref. No. FEPD Circular No. 36
To All Approved Dealers in Foreign Exchange Transactions.

Dear Sir,

Regarding the provision of export subsidy for the export of Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide).

With reference to the subject matter, it is informed to all concerned that the Government has decided to provide an export subsidy against the export of domestically produced chemical products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) to encourage the country's export trade. This facility will be applicable for goods shipped during the 2018-2019 fiscal year. The guidelines 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 chemical products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) produced in their own factory, 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 Areas (EPZs, EZs).

3. Extent of Local Value Addition: In the case of export of chemical products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide), the rate of local value addition must be at least 30%. The export subsidy and Duty Draw-back/Duty Bond facilities will not be applicable simultaneously in the aforementioned sector.

4. Deadline for Submission of Export Subsidy Application:
   (a) The aforementioned subsidy will be provided in accordance with the DSR rules against the expenses incurred for handling, quality inspection, processing, domestic and international transportation, and freight charges of the exported goods.
   (b) Exporters may submit an application for export subsidy in Form-K at the Approved Dealer Bank branch against the repatriation of export proceeds following the export under the Export Letter of Credit/Contract documents or through Documentary Collection. For exports against advance payment repatriation under Export Letters of Credit/Contracts linked with TT (Telegraphic Transfer), the Approved Dealer Bank branch must ensure the authenticity/reliability of the foreign buyer, accuracy of the price, and actual export from Bangladesh based on the TT remitter's comment and other documents. The advance payment under 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 concerned Approved Dealer Bank branch within 180 days from the date of valuation of the export price (repatriation of export proceeds) at the concerned bank abroad. However, regarding the submission of subsidy applications against exports through different shipments for the same export, the instructions of FEPD Circular No. 12, dated December 20, 2012, shall be followed. (c) Required documents 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 authorities and endorsed by the carrier for export), etc., must be submitted.

5. Receipt, Examination, and Payment Decision of Application by Approved Dealer Bank Branch:
   (a) The Approved Dealer Bank must ensure in the preliminary 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 of local value addition (Form-B) must be submitted along with the subsidy application in accordance with the attached table. The concerned bank branch must also ensure the authenticity of the documents processed by the bank branch and the accuracy of the information stated therein. The Approved Dealer Bank branch must inform the applicant institution in writing within 03 (three) working days of receipt of the application regarding any defect/incompleteness observed in the preliminary examination. (b) To ensure consistency between the production capacity of the applicant institution and the export stated in the application, additional explanations/documents may be required from the applicant. The Approved Dealer Bank will determine the payable amount after the application is received in complete and full form, supplemented with information/certificates collected from the bank branch's own records and other bank branches where applicable. This process will be completed by following the instructions of the designated section of the application form for use by the Approved Dealer. (c) Each application must be examined by the appointed External Auditor Firm to ensure 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 regarding the subsidy released 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, the concerned export proceeds repatriation certificate (according to Appendix-5/36 of Guidelines for Foreign Exchange Transactions-2018, Volume-1), Bill of Lading/Air Waybill as proof of shipment, Commercial Invoice, Packing List, and Bill of Exporter endorsed by Customs authorities must be stamped with the amount of subsidy paid at an easily visible location and signed by the authorized officer to prevent misuse of these documents. The Approved Dealer Bank branch must take special care to ensure that a PRC (Payment Release Certificate) is not issued multiple times for the same facility for the same export. Additionally, before processing the application, the Approved Dealer Bank must ensure from the Bangladesh Bank's Online Exporter Monitoring System that the export proceeds of the concerned exporter have not been unrepatriated, in accordance with the instructions of FEPD
   Circular No. 30, dated August 16, 2017. (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/State Commercial Audit Department of Bangladesh Bank. (f) If any ambiguity arises regarding export matters or if information is needed, the concerned bank shall seek advice from the Audit Firm, Export Promotion Bureau, TSCB Building, 1 Karwan Bazar, Dhaka.

6. Punitive Measures for Payment of Subsidy Outside the Rules:
   (a) If subsidy is paid outside the rules, the paid amount must be recovered by closing the account of the paying bank kept with Bangladesh Bank.
   (b) Appropriate punitive measures will be taken against the bank officers/employees involved in the committed irregularity.
   (c) If any officer 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/officer.

7. Process of Payment of Amount for Subsidy: The amount in favor of the concerned bank will be provided from the funds released against the Government Budget Allocation against the submitted application for subsidy.

All concerned parties are requested to be informed about the matter.

Yours faithfully,

Enclosure: As per description.

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

(Form-K)
(Application for Export Subsidy against Export of Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide))

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

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

(c) Local source, quantity, and value of goods used in the production of exported goods:
Name and Address of Supplier | Quantity | Value | Payment Method 1 | 2 | 3 | 4 (A certificate of local value addition must be submitted regarding the description, value, and source of the export goods. Documents required for the payment method must be submitted.)

(d) Imported 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 declaration by the exporter stating that duty bond facility or duty drawback facility has not been availed for the materials used in the production process and will not be applied for in the future must be submitted.)

(e) Details of Export Shipment:
Description of Goods | Quantity | Name of Importer's Country | Invoice Value (Foreign Currency) | Date of Shipment | EXPI Number | Repatriated Export Value and Date of Repatriation (Foreign Currency) 1 | 2 | 3 | 4 | 5 | 6 | 7 (Legible certified copies of Commercial Invoice, Packing List, Bill of Lading/Air Waybill issued and endorsed by the carrier as proof of shipment, Bill of Exporter (issued and examined by Customs authorities and endorsed by the carrier for export), etc., and the certificate of repatriation of export proceeds must be submitted.)

(f) Amount of Subsidy Applied:
Amount of Ship Hire (if applicable for repatriated export value) | Commission, Insurance, etc. payable in Foreign Currency (if any) | Net FOB Export Value 1-(2+3) | 1 | 2 | 3 | 4 (A legible certified copy of the Freight Surcharge containing the mention of ship hire must be submitted 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 Imported | 5 | 6 | 7 | 8

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

I hereby declare that an application for export subsidy is made against the export of chemical products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) produced in our own factory. All information/declarations provided in this application are complete and accurate. If any error/false information/fraud/forgery is discovered later, the entire amount of subsidy received or part thereof will be recovered from us/our bank account.

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

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

Value of Goods Used in Production of Export Goods | Rate of Local Value Addition [(4-6)/4] x 100 | Payable Subsidy Amount (in Taka) | 4 x 10% x | Domestic Imported | 5 | 6 | 7 | 8

(7) 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 Title of Authorized Bank Officer for Subsidy Approval (At the date of repatriation of export proceeds, the relevant Foreign Exchange ODI Spot Purchase Rate)

(Form-B)
(Certificate of Local Value Addition)
(Certificate of Receipt of Export Subsidy against Export of Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide))

1. Name, ERC Number, and Address of Applicant:
2. Export Letter of Credit/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 and Value of Goods Stated in Invoice:
6. Source of Local Materials for Production of Exported Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) (Name and Address of Supplier):
   Quantity: Value:
7. Source of Imported Materials Used in Production of Exported Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) (Name and Address of Supplier):
   Quantity: Value:
8. Details of Exported Goods: Quantity: Value:
9. Date of Shipment: Destination Port:
10. EXPI Number: Value: Date:
11. Total Repatriated Export Value (Foreign Currency): Net FOB Export Value (Foreign Currency):
12. Certificate Number of Repatriated Export Value: Date:

Signature and Date of Exporter

I hereby certify that the information stated in the aforementioned paragraphs is correct and truthful, and that the materials were sourced from the sources mentioned in serial numbers 6 and 7 above for the production of chemical products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) produced in our own factory for export. The authenticity/reliability of the purchase order of the foreign buyer/importer has also been ensured.

Signature and Date of Exporter

It is verified that the declared export value mentioned in serial number 8 is consistent with the actual and prevailing domestic market price, and the authenticity/reliability of the foreign buyer has been ensured. It is recommended to pay the export subsidy on the repatriated export value (Net FOB Value).

Signature, Date, and Seal of Two Suitable Officers of the Certificate of Local Value Addition

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

(Form-G)
(Claim Proposal for Amount Payable as Export Subsidy in the Export Sector of Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) according to FEPD Circular No. 36/2018)

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

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

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

(Form-D)
(Statement of Paid Amount for Export Subsidy in the Export Sector of Chemical Products (Chlorine, Hydrochloric Acid, Caustic Soda, and Hydrogen Peroxide) for the Month of......... of the Year......... according to FEPD Circular No. 36/2018)

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

Name and Address of Subsidy Applicant Institution | Export Related Information | Paid Subsidy (Taka) | Date of Payment | Pending Applications at Branch | Details of Goods | 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 Authorized Officer