The Bangladesh Knitwear Manufacturers and Exporters Association has requested that the National Board of Revenue (NBR) continue to allow the issuance of Utilisation Declaration (UD) certificates in favour of export-oriented factories with no bond licences.
A letter issued by the commerce ministry in 1998 allowed the BKMEA to issue UD, a document required to procure raw materials, for non-bonded apparel exporters. Besides, offering the back-to-back LC facility and cash incentive on duty-free sourcing of raw materials to them are not against the central bank's circular, the BKMEA said in an explanation letter to the NBR on Sunday.
There was no mention in the Bangladesh Bank's circular that the factories without bond licences cannot enjoy the cash incentive, the letter also said.
The association also claimed that they have repeatedly demanded an amendment to the central bank's existing foreign exchange guidelines for allowing non-bonded factories to open back-to-back LC, but no effective measures have been taken yet.
According to a report of Customs Valuation and Internal Audit Commissionerate, the BKMEA cannot issue UD certificates in favour of its non-bonded member factories as per the Bangladesh Bank guidelines. The factories are also not allowed to enjoy the back-to-back LC facility for procuring raw materials on credit either.
Moreover, exporters who source duty-free raw materials domestically are not entitled to receiving a 4% cash incentive on the use of local raw materials – 40% for woven garments and 80% for knitwear items.
The commissionerate in the report said exporters who have availed the duty drawback facility or have purchased duty-free raw materials under back-to-back LC facility are not eligible for the incentive as per a central bank circular concerning the issue.
Earlier, the revenue board in a letter on 31 August requested the Bangladesh Bank not to allow non-bonded apparel factories such a facility as it contradicts the central bank's guidelines.