Thrust on supportive export policy

(continued from yesterday’s issue)

According to Ferdaus Ara Begum, CEO of the Business Initiative Leading Development (BUILD), 'Deemed Export' is essentially one of the critical building blocks, laying the foundation for export diversification and growth.

"Yet, there is no clear definition of what comprises Deemed Export and no emphasis on what needs to be done to foster growth in this segment," she said.

The apparel accessories and packaging manufacturers rank among the highest contributors of deemed exports in Bangladesh. Statistics show that while direct export constitutes only 15 per cent of the country's total exports, they account for almost 85 per cent of deemed or indirect exports. While deemed export is dominant in the readymade garment (RMG) and textiles sector, its presence can be felt in sectors including frozen food, pharmaceuticals, leather and leather goods etc.

 Deemed export performances in the knitwear and woven garments are respectively 75 per cent and 30 per cent, with a significant number of SMEs (small and medium-sized enterprises) directly involved in supporting these giant backward linkage industries.

BUILD suggests that in order to ensure the legal entity of the deemed exporters, there should be a separate policy for deemed exports which can also include the guidelines for deemed exporters.

According to a Policy Research Institute (PRI) study, the average earning of tobacco farmers is around 30 per cent higher than non-tobacco farmers, the report claimed on the basis of field-level survey.

Tobacco has turned into a prime cash crop in a number of areas such as Kurigram, Lalmonirhat and Nilphamari, specially helping the poor during the 'monga' period, the report noted.

Nielsen Bangladesh collected and compiled the field level primary data from the tobacco cultivating regions of Rangpur, Kushtia and Chittagong Hill Tracts (CHT). Survey covered farmers who are cultivating tobacco and also farmers growing crops other than tobacco.

The PRI report said export quality tobacco cultivation has generated employment for thousands of farmers/ farm labourers in the tobacco growing areas. Furthermore, another 100,000 jobs may have been created in tobacco export-related activities, it said.

The positive gains from tobacco cultivation have been also reflected in the growth of raw tobacco exports from Bangladesh. In the fiscal 2009-10, the tobacco export proceeds amounted to more than $50 million and the amount increased to more than $80 million in the next fiscal (2010-11).

However, imposition of 10 per cent duty on the export of tobacco in the FY11 budget has impacted negatively the country's tobacco export. The global blue chip tobacco companies are in the process of removing Bangladesh from their list of supply chain due to frequent policy changes. Thus, the PRI report said, tobacco, the second most important agricultural export after jute, may even disappear from the Bangladesh's export basket.

Tobacco leaf export volume has decreased in recent years. The downtrend began in 2010 mainly due to imposition of 10 per cent duty on the export of tobacco.

However, foreign exchange earnings from leaf export remained significant. This was a major challenge given that Bangladesh leaf had to compete strongly against neighbouring countries, despite the 10% export duty imposed on exported leaf from Bangladesh which is not present in any other country.

In another development ,the Bangladesh Bank is going to create its own refinance fund to the tune of Tk 2.0 billion for the jute sector following refusal of the government to provide a payment guarantee against the scheme, officials  said.

A complete proposal will be presented before the board of directors of the Bangladesh Bank (BB) seeking approval of the scheme with the revolving fund having the tenure of five years.

The businesspeople in the jute sector including exporters and jute mills will get bank loans with a lower rate of interest under the scheme, BB sources say.

State-owned jute mills, private jute mills and raw jute traders will get 40 per cent, 40 per cent and 20 per cent loans respectively from the proposed fund, according to the BB.

"If any amount under the 40 per cent quota for state-owned jute mills remains unused, that will be disbursed among the private jute mills," a central bank source said.

    (concluded)