BB relaxes forex rules for EPZs, EZs

All A-type industries in Export Processing Zones (EPZs) and Economic Zones (EZs) can now borrow short-term foreign-currency loans from parent companies abroad and their other subsidiaries operating in these hubs in Bangladesh.
Such a latest stimulus for the foreign investors-meant for a fillip to economic activities in these special zones-came through relaxation of the foreign-exchange regulations of the country.
Under the relaxations, all A-category industries in EPZs and EZs are allowed to access short-term foreign-currency loans from parent companies/shareholders abroad and other type-A subsidiaries/associates operating in the country's special zones, according to a notification issued by the Bangladesh Bank (BB) Sunday.
"In the context of such short- term loans within subsidiaries/associates operating in EPZs/EZs, authorised dealers (ADs) shall, before transferring the fund, satisfy themselves that the fund is unencumbered," says the notification.
A senior BB official told FE that the relaxed regulations would facilitate business activities of all 'A'-category industrial units in EPZs/EZs  as the measure will allow them to take short-term foreign-currency loans from parent companies/shareholders abroad and other subsidiaries/associates operating in the zones.
He noted that "all 'A'-category industrial/ units in EPZs/EZs are not eligible for borrowing from local sources".
Under the existing regulations, type-A industries in EPZs are allowed to obtain short-term loans from overseas banks and financial institutions subject to observance of the stipulated instructions.
The central bank of Bangladesh had earlier relaxed the foreign- exchange regulations allowing all industrial enterprises in the EPZs to borrow offshore medium-and long-term loans.
There are three categories of industrial units now operating in all of the EPZs across the country. A total of 259 are 'A'-category (fully owned by foreigners) units while 72 are 'B'-category (joint venture) and 132 'C' (100 per cent locally owned) units.
Talking to the FE, General Manager of the Bangladesh Export Processing Zones Authority (BEPZA) Nazma Binte Alamgir said such soft-tuning of rules "would benefit all 'A'-category industries located at the EPZs across the country". She said a total of 463 industrial units are now operating in the EPZs while 56 are under implementation.
BEPZA is the official organ of government to promote, attract and facilitate foreign investment in the EPZs of the country.
The primary objective of an EPZ is to provide special areas where potential investors would find a congenial investment climate, free from toils of cumbersome procedures.
There are eight EPZs in Bangladesh-Chittagong, Dhaka, Mongla, Iswardi, Comilla, Uttara, Adamjee, and Karnaphuli.
In another circular, the central bank allowed exporters to make import payments from their subsidiaries’ exporter's retention quota (ERQ) accounts.
In  order  to  keep  minimum  involvement  of  AD's  own  fund  for  settlement  of  import,  it  has  been  decided  that any AD will be able to transfer  fund from an exporter’s one ERQ account to another for settlement of import payment.
"Such relaxations will help increase export competitiveness by way of minimising exchange losses," another BB official explained.
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