Bangladesh Bank has sought Tk2.5bn additionally in the outgoing fiscal’s budget as cash incentive for the jute sector, which saw a surge in exports recently.
The government offers a 10% cash incentive on total exports. With the increase in export volumes, the amount needed in cash incentive has gone up proportionately.
The central bank asked for an additional Tk4.7bn to cover incentives for other sectors as well, which exceeded the TK24bn allocated for the previous fiscal year. Bangladesh Bank had to disburse all of the Tk24bn four months before the fiscal year ended. In the last fiscal, the sectors received Tk18bn incentive.
A senior finance division official said the country’s jute industry export had already crossed its target for the current fiscal. The jute sector’s export target was set at Tk740m for the year 2012-13.
“Bangladesh Bank’s proposal will be placed before the finance minister for approval,” the official said.
Bangladesh Jute Spinners Association (BJSA) official data showed that incentive dues of the government to the jute sector would stand at Tk5.55bn at the end of the current fiscal.
The entrepreneurs including spinners, raw jute exporters, and jute goods exporters are yet to get the cash incentives of four fiscal years.
According to the BJSA, in FY2009-10, the government allocated Tk3bn as cash subsidy for the jute spinners where they were supposed get Tk3.93bn.
In FY2010-11, Bangladesh exported jute goods worth nearly Tk53bn. Considering the 10% incentive, the sector was entitled to get Tk5.3bn, but the government gave Tk3bn.
The trend continued in the following fiscal years and the exporters were to get above Tk810m and Tk1.5bn in FY12 and FY13 respectively.
Jute spinning constitutes around 63% of total jute sector’s export. On April 3, the jute spinners association sent a letter to Finance Minister AMA Muhith urging to pay Tk10.55bn as cash incentive dues.
In the last 29 years, the incentive has been reduced to 10% of export from 25%.
“If the jute sector exporters need to be given additional money, the government should give that,” said Abdus Salam Murshedy, president of Bangladesh Exporters Association.
Murshedy said due to long bureaucratic process and costs including bribe, the exporters hardly get the incentive for their real benefit.
According to him, a little amount of incentive is left with the exporters after paying 37.5% tax and others.