SSAL/BGMEA/018A/2011

Wednesday, May 18, 2011 The President,

Bangladesh (BGMEA),

Garment

Manufacturers

and

Exporters

Association

BGMEA Complex, 23/1Pantha Path Link Road, Kawran Bazar, Dhaka 1215, Bangladesh.

Subject: New Market Exploration Assistance.

Reference: FE Circular No.21 Dated. 9th November, 2010 of Bangladesh Bank. Dear Sir, We the members of the Association are well conversant about the efforts and role of the leaders those who have suited to convince the Government the true position of RMG in the country and the threat of their existence in the volatile economic recession. FE Circular No.21, inspirers the RMG manufacturers in taking challenges to find new market exploration outside USA, Canada and EU. But!! It is very unfortunate for us, those who have established their industry in Export Processing Zone being a 100% Bangladeshi Company ( Category C) are being deprived from the privilege/benefit of the Government declaration due to misinterpretation of the circular and modus operandi of the respective circular.

The status of C Type (100% Bangladeshi Owned) Industries in EPZ :

a) 100% Bangladeshi Investment.

b) As per Bangladesh Bank FE Guidelines Chapter -25, Clause 20,

Quote-Credit facilities of C Type industries(100% locally owned) as admissible to such industries outside EPZ. Un-Quote therefore, the C type Industries are like the industries of outside the zone. industries are admissible to Off -Shore Banking facilities but the C type Industries are not admissible to Off -Shore Banking facility.

c) The Type A (100% Foreign owned) and Type B(Joint Venture Company)

d) The A type industries can retain 100% of their export proceeds in FC Account,
but type B and type C are nor admissible to retain 100% to the FC Account. ( FE Guidelines, Chapter -22, Clause 25(i) and (ii).

e) The Export L/cs and Export orders of Type C RMG industries are being received
directly from the overseas buyers and kept under lien with the AD ( Bank) instead

of receiving L/c or orders through overseas liaison office of Type A and Type B RMG industries.

f) Type C RMG industries importing their raw materials and accessories through
Back to Back L/cs instead of importing raw materials through contract via overseas liaison office of Type A and Type B RMG industries. The Bank, Insurance and other backward linkage industries are being benefited by the trade activities of C type RMG industries.
Continued Page-2

Page ...2 g) The C type industries shall have to comply the regulatory requirements and
requirements of the local Authority. The business retains income of C type industries retain in the country which built our national economy stronger.

h) The C type industries are facing competition and challenges in home and
abroad, except I/Tax exemption for 10 years( which is common for all A,B.& C Type industries in EPZs) there are no other special facilities for 100% Bangladeshi ownership companies.

i) The A type industries are exempted from payment of tax on dividend for the tax
exemption period (IRD SRO No.268-L/86, Dated.1 July, 1986).

j) Prior permission of the Bangladesh Bank is no longer required for remittance of

profit earned by A Type Industries (100% Foreign Owned Company). In contrary, the Bangladeshi companies (C Type industries) retain their earnings in the country.

k) The A and B type industries are permissible to import duty free motor vehicles
but the C type industries in EPZ vehicles for the company. are not permissible to import duty free motor

l) EPZ Industries are paying 10% service charges to BEPZA on all Utility bills
(Electricity, Gas, Water, Telephone) etc. These type of service charges are not prevalent in the out side industries

m) EPZ Industries are paying on and average12% to 40% higher labour wages in
comparison to outside industries depending on the grade. The object and main sprit of New Market Exploration Assistance: The Government declared New Market Exploration Assistance under FE Circular 21 on 2nd stimulation package for persevering Bangladeshi investors in RMG and Textile to find out a new avenue of their product market without depending on traditional market i.e USA, Canada and EU. The investor of the respective sector undertake the risk and challenges and have started their voyage to achieve their Goal and in the meantime remarkable success have been achieved by some of the Company and where we are in the proud list. We have applied for the assistance (New Market Exploration Assistance) for the year 2009-2010 in accordance to the guide line of the FE Circular 21 which has been kept pending by our Banker due to non receipt of clear clarification from Bangladesh Bank

(according to the bankers statement) and the fate of 2010-2011 and 2011-2012 application is fully based on this. We, therefore, submit our appeal to you and we are confident that your dynamic role shall eliminate the barriers and obstructions in this regard and the C type (100% Bangladeshi Companies) of EPZ shall be eligible in the light of FE Circular 21 like the Bangladeshi Companies outside EPZ. With Best Regards, For Section Seven Apparels Limited (Shahadat Musharraf Khan) Managing Director. BGMEA Reg.# 5045 CC: The 1st Vice President. BGMEA, Chittagong.