Govt to withdraw condition of inscription of bond facility
Wednesday, 2 December 2009
Doulot Akter Mala
The government is set to withdraw the condition of 100 per cent bank guarantee equivalent to customs duty or mandatory inscription of bond facility on import packets of plastic raw materials to help the backward linkage industry.
The National Board of Revenue (NBR) has taken the move to ease hassle and reduce additional cost on import of plastic raw materials, a backward linkage industry for readymade garments export.
"It is a long-drawn demand of the plastic raw materials importers who have been bearing the additional cost due to imposition of the measure," said a senior customs official.
The NBR in principle agreed to withdraw the condition for the benefit of plastic raw materials importers who are enjoying bond facility, he said.
The caretaker government has imposed the condition of providing 100 per cent bank guarantee on import of plastic raw materials under the bond facility if the exporters failed to inscribe the statement 'Imported under bond, not for sale' in indelible ink.
"It is not possible for exporters to inscribe the statement as the machine is not available in the exporting countries. So, plastic raw materials importers have provided bank guarantee," he said.
It escalates cost of production of the backward linkage industry that is affecting RMG export, he added.
"We have to help the exporters to stay competitive in the international market rather than imposing tough conditions on them," he said.
Talking to the FE, Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) president Ferdous Wahid said: "The imposed condition is benefiting neither the government nor the exporters, only banks are getting advantage of the measure."
Plastic raw materials importers have been paying millions of taka as bank interest because of this condition that escalates cost of production, he added.
"We are also facing liquidity crisis as a big chunk of money is blocked for such bank guarantees," he said.
The government should withdraw the irrational measure immediately to make the country's RMG competitive in the international market, he said.
The government has imposed the condition to thwart abuse of bond facility and market distortion.
"Customs can apply other ways to check abuse of bond facility rather than imposing irrational conditions on exporters," the BPGMEA president said.
The government has imposed the measure in 2007 which saw several changes in the last two years.
In the budget for fiscal 2007-08, the government made it mandatory to mark the bags containing plastic raw materials as 'Imported under bond, not for sale' in red, using the punching method.
But the importers had been facing a problem in import as marking the bags with seals containing the statement by using the punching method is not possible in case of petro-chemical products.
Later, the government changed the rules incorporating the provision of indelible ink instead of punching method. It has also given an option of providing 100 per cent bank guarantee in case of failure in inscription of the statement.
The government is set to withdraw the condition of 100 per cent bank guarantee equivalent to customs duty or mandatory inscription of bond facility on import packets of plastic raw materials to help the backward linkage industry.
The National Board of Revenue (NBR) has taken the move to ease hassle and reduce additional cost on import of plastic raw materials, a backward linkage industry for readymade garments export.
"It is a long-drawn demand of the plastic raw materials importers who have been bearing the additional cost due to imposition of the measure," said a senior customs official.
The NBR in principle agreed to withdraw the condition for the benefit of plastic raw materials importers who are enjoying bond facility, he said.
The caretaker government has imposed the condition of providing 100 per cent bank guarantee on import of plastic raw materials under the bond facility if the exporters failed to inscribe the statement 'Imported under bond, not for sale' in indelible ink.
"It is not possible for exporters to inscribe the statement as the machine is not available in the exporting countries. So, plastic raw materials importers have provided bank guarantee," he said.
It escalates cost of production of the backward linkage industry that is affecting RMG export, he added.
"We have to help the exporters to stay competitive in the international market rather than imposing tough conditions on them," he said.
Talking to the FE, Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) president Ferdous Wahid said: "The imposed condition is benefiting neither the government nor the exporters, only banks are getting advantage of the measure."
Plastic raw materials importers have been paying millions of taka as bank interest because of this condition that escalates cost of production, he added.
"We are also facing liquidity crisis as a big chunk of money is blocked for such bank guarantees," he said.
The government should withdraw the irrational measure immediately to make the country's RMG competitive in the international market, he said.
The government has imposed the condition to thwart abuse of bond facility and market distortion.
"Customs can apply other ways to check abuse of bond facility rather than imposing irrational conditions on exporters," the BPGMEA president said.
The government has imposed the measure in 2007 which saw several changes in the last two years.
In the budget for fiscal 2007-08, the government made it mandatory to mark the bags containing plastic raw materials as 'Imported under bond, not for sale' in red, using the punching method.
But the importers had been facing a problem in import as marking the bags with seals containing the statement by using the punching method is not possible in case of petro-chemical products.
Later, the government changed the rules incorporating the provision of indelible ink instead of punching method. It has also given an option of providing 100 per cent bank guarantee in case of failure in inscription of the statement.