The 6th Trade & Investment Working Committee Meeting was organized by Business Initiative Leading Development (BUILD) and the Ministry of Commerce (MOC) recently at the conference room of MOC Bangladesh Secretariat.
The meeting was chaired by Mr. Shubhasish Bose, Senior Secretary, MOC.
The meeting discussed the need for export diversification and regulatory barriers to be addressed by the policy makers.
BUILD presented three specific policy papers-based on evidence-based research findings.
Ms. Ferdaus Ara Begum, CEO, BUILD presented three papers namely, Tannery Industry in Bangladesh and its Export Competitiveness”, “Export Competitiveness of Light Engineering Sector-A Case Study of Bicycle Industry in Bangladesh” and “Situation Analysis of Constraints & Policy Support Needs for Export Subsidy/ Cash Incentives for the Exporters”.
The CEO, BUILD, in her presentation placed a recommendation for forming a high powered committee of relevant stakeholders for understanding and addressing the constraints of the Tannery Industrial Estate of Dhaka (TIED) operating in Savar.
The paper highlighted procedural gaps, understanding gaps and policy related gaps which need to be bridge to increase finished and crust leather export which declined 24% and 92% respectively in FY2017-18.
An independent third party audit for monitoring current operation of CETP is a must viewed by the stakeholders of leather sector. Adopting measures for solid wastes management, making Common Chrome Recovery Unit (CCRU) operational, measures for reducing water and chemical used by tanneries and standardizing the water and chemical use parameters in the environmental regulations are some other recommendations by BUILD. In regard to Bi-products from wastages, a Joint Secretary of Ministry of Industries informed that they are working for identifying some projects in this respect. They have also prepared the first draft of Leather and Leather Goods Policy which will be posted in the MOI website soon.
In the context of re-examining the water parameters, BSCIC representative mentioned that it would not be possible to do anything in case of Total Dissolved Solids (TDS) and Total Suspended Solids (TSS), a new project has to be taken for these issues. President Bangladesh Tanners Association (BTA) informed that low quality chemicals are using in tannery which requires the high amount. He endorsed BUILD recommendations of identified 21 Chemicals using only for tannery sector which duties should be reduced. President, LFMEAB also echoed the voice of the other stakeholders and requested for individual ETPs to qualify for LWG certification. Custom Bond Commissioner in regard to query of entitlement under bond facilities as like as RMG, replied that advocacy through the association is important for regulatory changes.
The second presentation was on the Light Engineering sector which specifically analyzed the case of Bicycle exports from Bangladesh. There are two manufacturer exporters are operating in Bangladesh exporting 7-8 lac pieces of bicycles mostly to EU. It was highlighted in the paper that there are different value chain actors operating independently, they are parts & component manufacturers, assembler, importers of finished goods and parts and bicycle manufacturers. Thus backward and forward linkage has not happened. Exporters by themselves producing 50-60% of OEM while remaining are imported. The policy paper suggested for substantial value addition for quality production, process simplification for importing Argon Gas, Technology Support Centre etc. for improving quality products. The paper also recommended for reintroduction of Cash Incentives which was in place in 2002-2012, besides there are tax related discrimination against exporters in the field of painted and non-pained import of bicycle spares, HS code related issues for aluminum and steel bicycle parts etc. In the meeting HS code related issues were endorsed for immediate implementation, private sector stakeholders urged for cash incentives irrespective of bond and non-bond operators. The committee also emphasized for backward linkage and in that respect early establishment of Technology Support Centre and in that respect support from IFC is appreciated.
Another presentation emphasized on the need for a specific guidelines with value addition criterion for new and established manufacturing industries, expansion possibility of the sector and use of technology. The meeting also highlighted for better provision so that misuse of the benefits can be reduced. The policy paper informed that there is an established guideline by Bangladesh Bank which is specifically meant for Textile, it was also shown that EPB follows a criterion for providing the incentives but it does not have any reflection in the policy. The polices are scattered, there is a need for coordination among these organizations. Bangladesh is going to be graduated to a developing country by 2024, then as per WTO rules providing Cash Incentives will be a question, so that country needs to formulate a credible policy in this respect soon.
In the meeting these issues were endorsed and proposed for export competitiveness by digging out root of the problem. As per customs Act 1969, all the E/O manufacturing industries were entitled to have the bond facilities but in 1992 Bangladesh Customs decided not to give bonded facilities to all but only 100% E/O manufacturers exporters as they feel it is difficult for them to control all the bonds. For this reason those who are partial exporters are deprived for getting the benefits. Presently they are facing problems of paying duties for all the raw materials they use for exports, but the tax being paid for these imported raw material are much higher that the Cash Incentives they are getting. Thus they prefer to get duty draw back but the capacities of the office is not enough to pay drawback to all those industries.
EPB source in the meeting informed that Bangladesh Bank and NBR began a process named True Single Source to ensure the authenticity of B/L and PRC and other related export documents to have the cash incentive. Associations linked with this process, their members are eligible to have the certificate from EPB with in 2/3 hours, but those who are not linked cannot get these benefits which some confusion and sometimes arises opportunities of mis-declaration.
BPC Coordinator emphasized on the need for a time-bound plan for coming out from the situation created in the TIED otherwise it would be difficult to maintain export growth of the sector. CFO Apex footwear emphasized on the need for meeting the demand of the brands as has been mentioned in the paper, he emphasized on the issues such as traceability, lead time, and technological up-gradation as some of the important issues to be addressed.
Sr. Secretary, MOC in conclusion appreciated the role of BUILD for coming up with a number of effective reform proposals is appreciated and opined that LLG has got tremendous opportunity to expand as the raw materials are produced within the country. In a queue to the point of full operation of CETP in Tannery Industry Estate of Dhaka (TIED), he mentioned that a High Powered Committee formation with a specific TOR is an immediate need to find out alternative solution for reversing the export growth of the sector. In this regard, he emphasized on the need for export diversification and he agreed that both Leather and Leather Goods, Light Engineering have tremendous potential to grow but policies need to be supportive.
Executive Member BIDA and representatives from Bangladesh Bank, Department of Environment, BFTI, SME Foundation, Department of Explosive, Ministry of Fisheries and Livestock, Dhaka Customs House were also present. President LFMEAB and BTA, BAPA, BKMEA, BFLLFEA, BIAA, MCCI, RFL, Rahim Afrooz, SMART Leather, Picard Bangladesh also spoke in the occasion. Representative of IFC, Sr. officials of Ministry of Commerce, among others, were also present.
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