Al Amin :
The entrepreneurs of the export-oriented sectors, who use domestic raw materials in producing finished goods, are allegedly barring from opening back-to-back letter of credits (LC) for not having bonded licence.
They said that bonded licence rule is also a big barrier for development of the country’s backward linkage industry, which is a major part of the apparel industry to reduce lead time and offer competitive price in the international market.
For the sake of the national interest, this rule should be changed immediately, they added. They further said at least 65-70 per cent of the Knitwear factories have no bonded licence and they are using domestic raw materials in producing their finished goods for export.
Purchasing the domestic raw materials, exporters normally open back-to-back LCs against the loans as the commercial and scheduled banks were reluctant over the rule, despite having restrictions on opening the LCs.
But, in the wake of a recent letter issued by the National Board of Revenue (NBR), the banks are strongly maintaining the rule in this regard, leaving the entrepreneurs in trouble.
They are now being unable to open back-to-back LCs as they are not being allowed to do it due to having no bonded licence.
As per the Bangladesh Bank rule, manufacturers must have bonded licence to open back-to-back LCs.
Dr Muhammad Abdul Mazid, former chairman of the NBR, said that the time has come to reach a logical solution in this issue.
“NBR may consider the application of the apparel sector, if it does not conflict the other issue,” he added.
“Restriction on opening back-to-back LCs against loans for purchasing domestic raw materials is absolutely anti-state rule as the rule is not business friendly and a big barrier for developing domestic backward linkage industry. It should be changed immediate,” said Mohammad Hatem, Senior-Vice President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
NBR issues bonded warehouse licence, commonly known as bond licence, mainly to 100 per cent export-oriented industries offering duty-free raw materials import benefits with some conditions.
The conditions include that manufacturers must export the finished goods produced using the raw materials and in no way they should sell the raw materials in the local market.
There are allegations that many companies sell raw materials imported under duty-free facility in local market instead of producing goods and export.
This practice deprives the revenue board of its due revenue while creates imbalance in local market as commercial importers cannot compete with duty-free raw materials, mainly fabrics for RMG industry.
The exporters said that the entrepreneurs will lose interest in developing backward linkage industry in the country if they do not get policy support for the use of local raw materials for making export products.
