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Nod to central bonded warehouses for RMG

Tk 3,000cr fund proposed to face post-MFA regime; plan now awaits PM's approval

Star Report
The National Co-ordination Council (NCC) on textile and readymade garment industries yesterday recommended setting up central bonded warehouses in export processing zones and a Tk 3,000 crore fund to withstand the challenges of post-MFA (multi-fibre arrangement) regime beginning from January2005.
The high-powered committee also suggested that a textile zone be established with ready infrastructure similar to Ute EPZs. The suggestions will be sent to the Prime
Minister's Office within seven days for final approval.
Earlier, in his budget speech, Finance Minister M Saifur Rahman had said the government would set its post-MFA strategy based on die NCC's recommendations. The policymaking body, after a thorough review of die situation and a scries of meetings finally made the recom-mcndationsyesterday.
As per die recommendations, die centra! bonded warehouses (CBWs) will be established in the EPZs by the private sector and monitored by the National Board of Revenue (NBR). The council believes the ware-
houses will help RMG exporters sign! fi candy reduce thelead-time in shipmentoftheirproducts.
The council also suggested allowing importoffabrics, greyyarn, dyestuff, and garment machinery and accessories through back to back letters of credit (L/Cs) and reexport of unsold items from die CBWs.
Bangladesh Garment Manufacturers' and Exporters' Association (BGMEA) has long been demanding for putting in place the CBWs to face competition in the quota-free trade regime.Butlocal textilefabric
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manufacturers who fear their industry would be hard-hit by the measure have been opposing the demand.
The CBWs will facilitate the RMG industry to procure imported raw materials and other accessories quickly to meet overseas orders, reducing the lead-time by at least 45 days. The warehouses would thus help the exporters in competing with other RMG exporting countries.
The Tk 3,000-crore fund that the NCC proposed will be created by the central bank for a two-year period and provided to the commercial banks to finance their respective clients at a 7 percent interest rate.
"The garments manufacturers who will go for setting up backward linkage industries will be eligible to apply for loan under the fund," a meeting member told The Daily Star.
He said recommendation has also been made to open up the garment sector to foreign direct investment. Presently FDI in the sector is allowed only in the EPZs.
The NCC, however, decided to maintain the status quo on the rules of origin, suggesting the government to conduct a study on how to avail of the GSP facility.
The government had formed the council in the wake of demands from the business community to derive a strategy to fight the post-MFA regime.
Dr Kamaluddin Siddiqui had been made its convenor, with finance secretary, commerce secretary, shipping secretary, textile secretary, NBR chairman and executive chairman of Board of Investment as members.
The BGMEA hailed the recommendations noting the central warehouse facility appears to be free from stringent conditions.
Talking to The Daily Star BGMEA President Annisul Huq said the government should immediately apply for the derogative GSP facility, adding, "We'll miss the bus if we don't apply for the facility this month."
Huq said the government can go for the six-month study but it will be of no use if the deadline for conveying the decision is missed. "Based on outcome of the study, the government can switch its decision. But if we don't apply for the facility now then we will not be able to avail the facility later."
On the Tk 3,000 crore fund, he said the BGMEA had demanded the fund for both the backward as well as the forward linkage industries. "We hope the government will incorporate the forward linkage RMG industries as eligible for the facilities under the fund.