Cash incentives to exporters to face scrutiny next week

Syful Islam | Published: December 05, 2015 00:00:00 | Updated: December 04, 2015 22:49:16

The government is set to make a close scrutiny of the cash incentives given to different export sectors to help trim up the packages as per needs and outcome in the present perspectives.
In this regard, Finance Minister AMA Muhith is going to sit with top government officials next week, officials said.
Benefits accrued from cash incentives, meant for promoting country's merchandising sector, will be reviewed at the meeting for necessary modifications of the same, they added.
Commerce Minister Tofail Ahmed will attend the meeting on special invitation.
Some days back, the ministry of commerce formed an 11-member body, headed by an additional secretary, to weigh the benefits accrued from cash incentives give to the export-oriented sectors.
Each year the government spends around Tk 35 billion as cash incentives and some Tk 20 billion of the same goes to the readymade garment sector alone.
"All the aspects of cash incentive arrangement -- the output, necessity, increase and decrease of rates, inclusion, and exclusion of sectors -- will be discussed in the meeting," a senior official at the ministry of finance (MoF) told the FE.
He said each year the government pays billions of taka from public exchequer to help promote and expand export basket.
But it was found out that despite getting handsome support as cash incentives, many sectors have yet to deliver results to the economy, said the official.
He mentioned that there are requests from several export-oriented sectors to include them as beneficiaries of the cash-incentive package to help them flourish and the meeting will also take the matter into consideration.
The official said some non-traditional export items having significant marketÂ potential may be included in the list of beneficiaries of incentive handouts.
Asked whether the new export items will get the benefit from next year or current fiscal year, he said once decided by the meeting to include new items in the list of recipients, a statutory regulatory order will be issued with the date of effect. Â
A senior official at the ministry of commerce said target is there to raise apparel export to US$50-billion mark by 2021 and total export volume to $60 billion by then. Expanding the incentive facility for more sectors is necessary to achieve the goal, he said.
He mentioned many countries, including neighbouring India, which offer cash incentives to help promote local products despite the goods being produced with own raw materials. This is given to help in diversification of products and local industrial base, the official said.Â Â
Presently, some 14 sectors get cash incentives against their export proceedings. Central bank data show that in fiscal year 2014-15 some Tk 34 billion was given as cash incentives to those sectors. The incentives vary from 2.0 to 20 per cent for different export sectors.
Bone-powder export gets 5.0 per cent cash incentives, leather goods get 12.5 per cent, finished jute products get 7.5 per cent, jute-yarn exporters get 5.0 per cent, and light-engineering goods get 15 per cent.
Besides, exporters of new apparel items to new markets, excluding the United States, Canada and the European Union, enjoy 3.0 per cent of the cash-incentive cake. Small and medium enterprises who export apparels get 4.0 per cent in their share.
Products made of elephant grass, paddy straw and sugarcane straw get 15-20 per cent, exports of vegetables, fruits, processed agricultural products, halal meat and potato enjoy 20 per cent, potato-flake exporters get 10 per cent, and ship exporters get 5.0 per cent of the cash incentives.
Diversified jute goods enjoy 10 per cent incentives, frozen shrimp from 7.0 to 10 per cent on various conditions, and other frozen-fish exports get 2.0 to 5.0 per cent this fiscal year.
Â syful-islam@outlook.com