Export Policy

7.2.8. Import of raw hides including wet blue and pickled leather, shall continue with the prevailing customs duty (2.5%) and import licence fee (2.5%) leviable on the importation of raw leather for three years.
7.2.9. Uniform policy on bank loan as regards criteria and rate of interest shall be followed for credit to leather sector.
7.2.10. The total credit excluded to the leather sector shall be brought under a single bank and export will also be effected through that designated bank.
7.2.11. After careful revision of the overall situation prevailing in the leather industries, the time-limit for export of crust leather has been extended upto the year 2000. Facilities for BMRE and other transformation process shall be made available to all tanning units to enable them to switcher by 2000, to processing crust/finished leather from wet blue leather.

8.1 Fiscal Incentives:
8.1.1. Restructuring of the Export Credit Guarantee Scheme (ECGS): At present, there are four schemes, namely, the Export Credit Guarantee (Pre-shipment), Export Credit Guarantee (Post-shipment), Export Payment Risk Policy (Comprehensive Guarantee) and Whole Turnover Pre-shipment Finance Guarantee, available under the Export Credit Guarantee Scheme ( ECGS ) covering risks on export credit as well as probable commercial and political risks occurring abroad. These schemes, however , are becoming effective to the desired extent due to existence of various complicacies in realizing their benefits. To strengthen the role of the Export Credit Guarantee the schemes shall be restructured.

8.1.2. Convertibility of Taka :
Taka has been made convertible in the current account in lieu with the policy of export-led growth in the liberalized world market. As a result, earning from the trading account shall be freely convertible into foreign exchange for import of goods (barring a few banned items). Under this arrangement, exporters shall be allowed to retain their foreign exchange earnings in their respective foreign exchange accounts gradually at higher proportion.

8.1.3. Utilization of Foreign Exchange by Exporters :
So long exporters were allowed to retain 20% of their FOB earnings in their respective foreign currency accounts in US dollar or Pound Sterling. From now on they will be entitled to retain either 40% of such earning or at a rate fixed by the government from time to time on proper review. However, in cases of export products where the import contents used in the manufacture of such items are relatively high ( such as, naptha,furnace oil, bitumen and other petroleum products, readymade garments and electronic goods ) and in the case of export of services ( legal advice, consultancy and similar professional services ), the exporters concerned will be entitled to retain only 7.5% of their FOB export earnings. Immediately on realization of export proceeds, the concerned banks will credit the exporters' foreign currency account in proportion to their respective entitlements. Exporters may utilize this foreign exchange for bonafide business purposes, namely, undertaking business trips abroad, participating in export fairs and seminars, importing raw materials, machineries and spares and even setting up overseas business offices. Foreign exchange may also be kept in the renewable fixed deposit account which will bear interest.

8.1.4. Export Promotion Fund ( EPF ) :
The following assistance and support would be provided out of  the Export Promotion Fund to producers/exporters of new and non-traditional items including those under the crash programme for product development and product and market diversification:
(a) Venture capital on easy terms and low interest rates ;
(b) Assistance in obtaining foreign technology and consultancy for product development and diversification;
(c) Assistance in fielding marketing missions abroad and participating in international fairs for market compatibility of products;
(d) Assistance in Establishing Sales and Display Centres abroad and extending warehousing facilities ; (e) Assistance for participation in overseas training programmes on product development and marketing help develop technical skill and marketing expertise ;
(f) Assistance in any other activity related to product and market development.

8.1.5. Extension of Time-limit for adjustment of Export Credit from 180 days to 270 days.
At present export credit is allowed at consessional rate of interest for a maximum period of 180 days. A section of exporters however cannot enjoy the benefit of such concessionary credit facility due to structural characteristics of certain commodities. Under such circumstances, the time-limit for repayment of export credit has been extended from 180 days to 270 days in case of export of frozen food, tea and leather by way of relaxing the condition of submission of firm contract/L.C. and considering working capital as export credit. The time limit for export credit under the Export Promotion Fund in certain cases shall be extended upto 270 days.

8.1.6. Export Financing:
(a) Introduction of Credit Card : In view of the risks involved in carrying of cash foreign exchange/travellers
cheque while undertaking business trip abroad, the practice of issuing credit cards to exporters against their respective foreign exchange entitlements will continue.
(b) Limit of Export Credit : Exporters may obtain export credit from commercial banks upto 90% of the value of their irrevocable letter of credit/confirmed contract.
(c) Credit to first time applicant : With a view to encouraging the new comers to enter into export trade the commercial banks will consider their credit proposals on a priority basis.
(d) Monitoring the Over-all flow of export credit :
Bangladesh Bank will take necessary steps to ensure that normal flow of export credit is maintained. The C.C. limit of the exporters will be determined only on the basis of their export performance in the preceding year. Tthis will not be subject to any general credit squeeze measure. Such credit facilities will also be available to new contracts.
(e) Overdue interest : No overdue interest will be charged by the commercial banks in cases of export against irrevocable letter of credit on sight payment basis. In such cases, however, exporters will be required to submit necessary export documents within the specified time.
(f) Export credit cell : As special export cell to supervise and monitor the export financing has been functioning in Bangladesh Bank. Besides, in every commercial bank a special unit has been created for processing exclusive export credit proposals.
(g) Export monitoring : A high-powered committee has been functioning to assess the export credit requirement and  to review and monitor the flow of export credit to ensure that adequate and timely credit are made available to the exporters.
(h) Inland back-to-back letter of credit : Authorised dealers may establish inland back-to-back letter of credit in favour of local suppliers of raw materials, against the corresponding master letter of credit.
8.1.7. Rebate on insurance premium:
Special rebates are allowed on premium covering fire and marine insurance to export-oriented industries (non-traditional items). Such rebates will be available also to the exporters of these items on shipment of goods.
8.1.8. Incentives for export of non-traditional industrial products :
Incentives will be provided for export of non-traditional/new industrial products, especially where value addition is 50% or more.
8.1.9. Similarly, export firms having exceeded the proportionate export target set for that product-sector will be considered for incentives facilities.

8.2. Fiscal Incentives:
8.2.1. Import facilities of raw materials for export-oriented leather industries:
To encourage increase in productional export at competitive price of finished leather customs duty and import licence fee leviable on import of wet blue and pickled leather by export-oriented leather industries will be exempted.

8.2.2. Income tax rebate on export earnings :
Previously, 50% rebate on taxable income generated from export earning was admissible under the Finance Act every year. From now on 50% of the income tax on any income on export will be exempted through incorporation of a new provision in the Income Tax Ordinance itself rather than as a temporary relief hitherto granted under the Finance Acts on a yearly basis.

8.2 .1. Lowering the rate of AIT at source :
Tax at source on all export earnings shall be deducted at the rate of 0.25%

8.2.4. Payment of duty drawback through commercial banks :
For quick disbursement of duty drawback with a view to giving a competitive edge to our export in the international market, payments will be made by the commercial banks immediately on receipt of foreign exchange against all exports except the deemed exports, determined on the basis of the principles laid down by the National Board of Revenue.

8.2.5. Bonding facilities for export-oriented industries :
Bonded warehouse facilities have generated special enthusiasm among the import-led export-oriented industries. To sustain such interest the procedures for providing bonded warehouse facilities to such industries will be further simplified, and will be extended to all industries recognised as 100% export-oriented industries.

8.2.6. Duty-free Import of capital machinery by export-oriented industries:
Presently, items produced in the Export Processing Zones (EPZ) are entirely exported. Likewise 100% export-oriented industries located elsewhere in the country are also required to export their produces entirely from this point of view as the objectives and functions of the industries of both locations are identical. Duty free import facility of capital machinery has also been extended to the 100% export oriented industies out side the EPZ.

8.2.7. Alternative facilities in lieu of customs bond or duty drawback for export-oriented domestic textile sector and garments industries:
During fiscal year 1995-96, the government, in an attempt to give incentive to the domestic textile and garments sector, allowed 25% compensatory assistance to the industries of this sector. In future also, these sectors will continue to receive reasonable facilities. Such compensatory assistance will also be admissible to a composite unit producing both fabric and garments or to the manufacturer only in case the exporter is not the producer of the local fabric provided no bonded warehouse or duty drawback facilities were availed of for such importation. If, however, the exporter is an intermediary buyer, the facility will go to the original producer of goods.

8.2.8. Tax holiday:
To encourage a rapid growth  and attract entrepreneurs to export oriented industries tax holiday incentive will continue till the year 2000 in consonance with the Industrial Policy. The industrial enterprises enjoying the benefit of tax holiday shall be exempted from deduction of tax at source. After 2000, decision on tax holiday will be taken in the light of the  government policy of that period.

8.2.9. Duty drawback scheme :
(a) Exporters of manufactured products are entitled to draw back after the export is effected. The amount of duties and taxes paid on importation of raw materials under any of the three systems, namely, actual drawback, notional drawback and flat rate drawback. However, as a simpler mechanism of getting drawback, the flat rate method shall continue to receive greater weightage.
(b) The rate of duty drawback payable on export of all traditional and non-traditional items will be renewed at
regular intervals and more and more, new products will be brought under the duty drawback system.

8.2.10. Value Added Tax (VAT) on packaging materials:
Should jute clothes and bags be used in the packing of export goods VAT paid on such products will be refunded.

8.2.11. Simplification of the procedure for refund of VAT paid on export support services:
To maintain competitiveness of export prices, VAT paid on export support services, namely, C & F service, telephone, telex,fax, electricity, insurance premium, shipping agent's commission/bill will be refunded under a simplified procedure.

8.2.12. Permission for sale of goods rejected for exportation:
20% of the rejected goods of the 100% export-oriented industries including leather goods and readymade garments will be admissible for sale in the local market subject to payment of usual duties and taxes.

8.3. General incentives:
8.3.1. Declaring 80% export oriented leather industries as 100% export-oriented industries:
Most of the leather industries are able to export at least 80% of their products; rarely they are in a position to export 100 of their product. In order to bringing about dynamism in the leather sector 80% export oriented leather producing units have been declared 100% export-oriented industries.

8.3.2. Other 80% export-oriented industries to get identical incentives available to 100% export-oriented industries :
Other 80% export oriented industries (other than leather industries) will be given following incentives with a view to encouraging their export operations:
(a) Financial incentives including bank loan as available to 100% export-oriented industries. However, the benefits allowed to the 100% export-oriented industries by the National Board of Revenue in respect of duties and taxes will not be applicable to them.
(b) Sale permission upto 20% of their production in the local market on payment of usual duties and taxes.

8.4. Reduced airfreight for export of all crash programme items including fruits and vegetable:
(a) Airfreight at lower rate will be changed for export of all crash programme items including fruits and vegetables.
(b) Withdrawal of royalty from foreign airlines extending cargo services :
In order to ensure export of goods by cargo services of foreign airlines and sell export goods at competitive price, the royalty being presently imposed by Biman Bangladesh Airlines may, if necessary, be further reduced or may be withdrawn altogether.

8.5. Settlement of trade disputes :
With the expansion of exports trade disputes are also increasing. In many cases Bangladesh's image as an exporting country is being tarnished because of such disputes. On the other hand, Bangladeshi exporters are also incurring financial losses. To remove such difficulties, the Export Promotion Bureau will initiate steps for settlement of trade disputes through conciliation. For this, necessary amendment will be made in the Charter of Export Promotion Bureau to enable them to perform this responsibility effectively.

8.6. Recognizing small and medium size agricultural farms as Industry:
To encourage production of fruits, vegetables, fresh flowers, orchid etc. for export, agricultural farms of a minimum size of 5 acres have been recognized as 'Industry' and become eligible for all facilities of export-oriented industries.

8.7. Research and development:
Marketing of products in the international market is becoming increasingly competitive due to globalization and liberalization of trade.To sustain in the face of such stiff competition, continuous quality improvement and market adaptability have become necessary. For this purpose, industrial enterprises should be equipped with their own Research and Development ( R & D ) facilities . For this duties and taxes on machinery and equipment imported by export units will be gradually lowered. Research institutions on the recommendation by the Export Promotion Bureau will also be entitled to such benefit.

8.8. Export on the basis of sub-contracting :
The sub-contracting service sector has immense potential for export. All out efforts will be made to exploit the opportunities in this sector especially in the automobile industry in Japan and the printing industries in the western countries.

8.9. Assistance to contract services abroad like Engineering Consulting Services Contract and Civil Construction Contract etc. :
Contract Services like engineering, consulting and civil construction contract abroad have been identified as potential export sector. The following facilities are being extended to assist this sector :
(a) Issuance of bid bond and performance bond, at 1% margin by commercial banks for submission of tender and on receipt of work order respectively;
(b) Allocation of fifty thousand dollars annually to each organization to meet the expenditure like maintaining communication, sending representatives, making overseas trips, purchasing tender documents etc. before receipt of actual work order ;
(c) Permission for setting up overseas office and appointment of staff;
(d) Permission for Sadharan Bima's Individual professional guarantee/insurance in favour of project specialists ;
(e) Involving Bangladesh missions abroad to provide information and assistance.

8.10. Annual ceiling for dispatch of export samples :
At present, the annual ceiling for dispatch of samples to international trade fairs is fixed at US $ 2000 (two thousand). The ceiling for sending samples for purposes other than international fairs was however considered inadequate. It has been raised in phases from Tk.1000 per annum to US $ 1500 (approximately Taka 65,000) per annum. The maximum limit for sending out samples by parcel post will be raised from its present limit of Taka 2,000.00 to Taka 5,000.00

8.11. Commodities under the Crash Program :
(a) At present toys, luggage and fashion items, electronics, leather goods, diamond cutting and polishing, jewellery, silk fabric, stationery goods, cut and artificial flowers and orchid, gift items, vegetables and engineering consultancy and services have been included under the crash program. In order to boost production and export, promote goods/services under the crash program, soft term credit will be provided for product development, market adaptation, and marketing. Import of raw materials, facilities will be provided for export on consignment basis and into duty drawback/bonded warehouse facilities. In addition assistance will be provided for market exploration obtaining joint venture. Fresh flower, fruits and bamboo, cane and wooden furniture shall be included in list of crash programming items apart form the items listed above.
(b) In order to increase the export of agro-based products, necessary assistance will be provided to the high value added agricultural products.

8.12. Increased import facilities of samples for product development:
For product development and market promotion any exporter except of RMG sector is entitled to import duty free:
Samples upto a maximum of US $ 1000 (One thousand) annually on obtaining clearance from the Export Promotion Bureau. For import of samples exceeding US $ 1000 (One thousand), clearance shall have to be obtained from the Chief Controller of Imports & Exports which will approve the import on the recommendation of the Export Promotion Bureau issued on the basis of export earnings.
8.13. Multiple entry visa to importers and foreign Investors :
Multiple entry visas are being issued to foreign investors and importers to make their entry into and stay in Bangladesh easy and trouble free.

8.15. Participation in International Trade Fairs, Organizing Single Country Exhibitions and undertaking market development programs abroad :
As part of export promotion Bangladesh regularly takes part in international trade fairs, organizes single country exhibitions and undertakes market development programs in different countries of the world Private enterprises and organizations are encouraged to take part in such export-oriented events and are accorded various incentives. Besides, programs to organize single country exhibitions in different countries through combined public and private initiates will continue.

8.16. Strengthening training on export-related matters :
Knowledge about the facilities and incentives available in the export trade leads to intensified export activities in the country. To apprise the country's exporters of the various facilities/incentives available, training sessions, seminars and workshops in different parts of the country under the National Export Training Program of the
Export Promotion Bureau will continue to be organized.

8.17. Establishment of World Trade Centre :
The government has decided to establish a World Trade Centre in Dhaka in a bid to strengthen infrastructural facilities for the development and expansion of export. An area of 6.12 acres near Hotel Sonargaon has been earmarked for this purpose.

8.18. International Trade Centre :
Simultaneously with the establishment of a World Trade Centre in Dhaka, it has been decided to set up, in Chittagong, an International Trade Centre at private initiative. Necessary land for this purpose has already been allotted.

8.19. C.I.P. (Export):
Every year commercially important persons (CIPS ) are selected from the highest export performers item- wise in recognition of their contribution to export.

8.20. National Export Trophy :
As mark of national accolade, 45 National Trophies are awarded every year to the most outstanding exporters in 15 product sectors. The trophy winning exporters are given C.I. P. facilities at the airport.

8.21. Deemed Export Facilities :
Local raw materials used as direct import for export production for products supplied to local projects procurement in foreign exchange against international tender are regarded as 'deemed export' and qualify for all export incentives and benefits including duty drawback that extended to direct exporters.

8.22. Organizing Local Fairs of International Standard :
Organizing trade fairs of international standard plays a very important role in the promotion of exports. Trade fairs, help product familiarization on the one hand and establishment of closer contacts between foreign buyers and local sellers on the other hand. Considering this aspect general as well as specialized trade fairs of international standard will be organized within the country apart from participating in general and specialized International Trade Fairs abroad.
8.23. Import of samples by Export Promotion Bureau and TCB :
The Export Promotion Bureau and the Trading Corporation of  Bangladesh will be entitled to import duty free samples upto a maximum annual limit of taka 30,000.00 (Taka Thirty thousand ).

8.24. Import of banned items :
Export-oriented industries may be entitled to import raw materials put under the banned/restricted list of import against specific export orders subject to permission from the Ministry of Commerce.

8.25. Widening the Scope of deemed export:
The coverage of "deemed export" has been widened to include supply of goods to the Export Processing Zones and export of turn-key projects like engineering services contract, consulting services contract and various other construction contracts. The net foreign exchange earnings generated by such project exports will be considered as actual export and become eligible for all export incentives and facilities.

8.26. Waiver on Shipment of goods :
To avoid unnecessary delay in shipment of export cargo the Ministry of Shipping will grant waiver for shipment of export goods except those which are covered within 24 ( twenty four ) hours of receipt of  application in the transportation of export goods. Besides, should  an exporter decide to charter an aircraft for quick transportation of his export consignment, the government will consider for according necessary permission in this regard.

8.27. Re-export ( Entre-Pot) :
The existing system of taking permission from the Ministry of Commerce on case-to-case basis for re-export of imported cargo (entre-pot ) trade will not be necessary henceforth. The rate of value addition required for entre-pot trade has been lowered to 5% from the previous rate of 10%. However, each package under the re-export consignment must bear the mark 'entre-pot' or 'temporary importation' and must not claim Bangladeh as country of origin.

8.28. Export without L/C.:
With a view to further simplifying export procedures, from now on, export may be effected without L.C. on the basis of purchase contract, agreement, purchase order or advance payment. In such cases, the exporter will be required to submit only the EXP Form and the Shipping Bill. In addition, export of all commodities including vegetables and electronic goods shall be allowed without L.C. and on the basis of advance encashment or on consignment basis. In order that such exports can be effected smoothly, genuine exporters will be allowed, for a minimum period of one year, to export their goods on the basis of contract, purchase order or advance payment, besides export L.C.

8.29. Import without L.C.:
Import without L/C is permissible in cases of import of capital machinery essential raw materials for export-oriented industries, and perishable goods for eventual re-exportation, irrespective of value ceiling.

8.30. Relaxation of provisions for import of raw materials for export- oriented industries:
For import of raw materials through back-to-back L.C. by 100% export-oriented industries, restrictions of the import policy order or the requirement of this rules of origin shall be relaxed.

8.31. Provision for Direct Air Booking :
Direct air booking facility from Rajshahi and Syedpur airports up to the destinations shall continue for export of fresh vegetables and other perishable items produced in the northern regions of the country to ensure quick transport and preservation of quality.

8.32. Inter-Agency, Inter-Sector Project for product diversification :
An Inter-Agency, inter-sector project shall be taken up with the aim of product diversification. The existing bonding system, duty drawback, cash incentive etc. shall be reviewed under the proposed project, with a view to keeping the export prices competitive. The project will encompass issues like product development, market expansion, trade cooperation, identification and removal of infrastructural impediments of the export trade. Appropriate project, aided by the World Bank or other sources, shall also be taken up for technology transfer in order to bringing about quick transformation of the export trade.

8.33. Encouraging increased use of local raw materials :
Composite knit/hosiery and garments manufacturing units operating under the bonded warehouse system have been increasingly using local raw materials. These units are presently enjoying bonded warehouse facilities for 50% - 70% of their imports. This rate of bonded warehouse facilities shall be gradually lowered in an attempt to ensure increased use of local raw materials.

8.34. Establishment of M.I.S. at the Ministry of Commerce :
With the financial assistance of the UNDP, an M.I.S. shall be established at the Ministry of Commerce under the Uruguay Round Study Project. Internet connection shall be available to the proposed M.I.S. allowing easy access to all information concerning world trade including imports and exports.

Source: Export Promotion Bureau