Exporters may use retention quota

Exporters may use foreign exchanges from their 'export retention quota' (ERQ) to pay monthly remuneration of foreign employees working with export-earning firms in Bangladesh.

The central bank has made the move to help diversify the use of funds maintained with commercial banks by exporters.

This will minimise risk for exporters as the forex market often remains volatile while they procure foreign exchanges to pay the employees.

Bangladesh has a large number of foreign nationals, mostly from India, Sri Lanka and China, working in different export-earning sectors.

According to a Bangladesh Bank circular issued on Tuesday, exporters may transfer remunerations to foreign currency (FC) accounts in the names of foreigners employed in exporting companies here.

The circular, signed by BB general manager (current charge) Md Shahidul Islam, said it is meant to bring further relaxation in payment by exporter-employers.

They may transfer from ERQ accounts up to 75 per cent of net monthly income of expatriate employees in equivalent foreign currency to their FC accounts operated in Bangladesh.

This means exporters will be able to pay up to 75 per cent of net payment of the employees, for example, after deduction of taxes and other mandatory payments.

A guideline for foreign exchange transaction-2009 permits exporters to retain a specified part of their earnings in foreign exchange for utilisation without the regulator's permission for bonafide business expenses abroad.

The expenditure includes maintenance of offices abroad, import of raw materials, machine and spare parts.

Bangladeshi exporters can keep up to 15 per cent from export proceeds as the ERQ through bank accounts maintained by commercial banks.

[email protected]