1.1. Acceleration of production and expansion of trade result in growth of national wealth. Increased production in export sectors may become the prime mover in the development cycle in a densely populate of Bangladesh like our as this will generate employment opportunities which in turn will generate savings and investment on consequent flow of capital. The prime national objective of poverty alleviation will thus be materialised. As a first step towards reaching this goal we need to look at the country's production infrastructure.

1.2. Our export trade is featured by the dominance of a few commodities in a narrow market. Such dependence on at limited number of export items targeted a limited market is not desirable for economic development. We must, therefore, aim both at product and market diversification or else our export trade will become stagnant in the near future.

1.3. Our export trade must keep pace with the projected GDP growth @ 7% and make due contribution through increased export earning. In this exercise it is imperative to identify new thrust sectors, increased export of higher value added items, diversify product wise , ensure products quality, improve packaging, attain efficient productivity. We should aim at marketing quality products at competitive price at the correct time.

1.4.. The Export Policy 1997-2002 has been designed to operate in the imperatives and opportunities of the market economy with a view to maximizing export growth and narrowing down the gap between import payment and export earning.

2. Objctives:

The principal objectives of this policy are :

2.1. To achieve optimum national growth through increase of export in regional and international market;

2.2.. To narrow down the gap between the country's export earning and import payment through achievement of the export targets ;

2.3.. To undertake timely steps for production of exportable goods at a competitive price with a view to exporting and strengthening existing export markets and making dent in new markets;

2.4.. To take the highest advantage of entering into the post Uruguay liberalized and globalized international market;

2.5. To make our exportable items more attractive to the market through product diversification and quality improvement;

2.6.. To establish backward linkage industries and services with a view to using more indigenous raw materials, expand the product base and identify and export higher value added products ;

2.7. To simplify export procedures and to rationalize and solidify export incentives;

2.8. To develop and expand infrastructure ;

2.9. To develop trained human resources in the export sector;

2.10. To raise the quality and grading of export products to internationallyrecognized levels.

3. Strategies:

The following strategies shall be undertaken to attain the objectives of the export policy 1997 - 2001 :
3.1.. Simplifying export procedures, and helping the private sector achieve efficiency. The Govt.. desires more and more involvement of the private sector while the govt. will continue to play its facilitating role;

3.2.. Enhancing technological strength and productivity and facilitating reduce cost and attain internationally accepted standard of quality of exportable products and thereby consolidate their competitiveness ;

3.3.. Ensuring maximum use of local raw materials in the production of export goods and encouraging establishment of backward linkage industries;

3.4. Participation in the international trade fairs, specialized fairs, single country exhibitions abroad and also sending out trade missions, with a view to consolidating our position in the existing market and creating new markets;

3.5. Encouraging export of new category high value added readymade garments and also encouraging the concerned trade associations for establishment of a Fashion Institute ;

3.6. For promotion of high value added leather and leather goods export: providing various facilities including bonded warehouse facilities for import of materials such as raw hides, pickled, wet blue, crushed and finished leather, components and chemicals etc. to 100% export oriented leather industries;

3.7. For promotion of export of shrimp: Extension and modernization of traditional/semi-intensive method of shrimp cultivation and ensuring quality as per buyers requirements ;

3.8. For promotion of export of jute and jute goods: Undertaking extensive publicity of jute and jute goods as environment-friendly natural fibre and diversification of the uses of jute products;

3.9. For promotion of export of tea undertaking programmes for establishing brand name and developing linkage with established blending and distributing agents;

3.10. For promotion of export of agrobased products: undertaking programmes for raising quality standard and expansion of market;

3.11. For the promotion of export of electrical and electronic goods ( including computer software and data entry) : Building and ensuring conducive infrastructure;

3.12. For the promotion of export of engineering consultancy and other services and sub-contracting involving, in a bigger way, Bangladesh missions abroad obtaining contracts;

3.13. Organizing regularly international trade fairs and product-specific fairs with the country;

3.14. Making appropriate development and expansion of infrastructure conducive to export;

3.15. Making arrangements for necessary technical and practical training for development of skilled manpower in the export sector;

3.16. Ensuring maximum utilization of financial and other assistance extended by the World Trade Organization to the Least Developed Countries;

3.17. Ensuring maintenance of ecological balance and pollution-free environment in the production of exportable goods;

3.18. Extending technical and marketing assistance for development of new products and for finding appropriate marketing strategies;

3.19. Taking necessary steps to assist procurement of raw materials by the export oriented industries at world price ;

4. Scope and General Provisions :

4.1. This policy shall apply to the customs areas (excluding Export Processing Zones) of Bangladesh.

4.2. This policy shall take effect from 01.07.1998 and remain in force till 30.06.2002. However, the policy shall be considered valid until the next Export Policy is announced.

4.3. If any provision of this policy is found inconsistent with any provisions of the Imports and Exports ( Control ) Act, 1950, or of the Import Policy Order, the Ministry of Commerce shall be entitled to amend, alter or modify such provision.
4.4. The Ministry of Commerce may, as and when necessary, amend, alter or modify any provision of the Export Policy including the export negative/restricted items.

4.5. Different aspects of the Export Policy shall be reviewed annually.

5. Target;

For the policy period Export targets have been set at US dollar 5020 million for the fiscal year (F.Y.) 1997-98, US dollar 5,630 million for the F.Y.1998-99, US dollar 6,340 million for the F.Y. 1999-2000, US dollar 7,175 million for the F.Y. 2000-2001 and US dollar 8,100 million for the F.Y. 2001-2002. Details of the export targets have been shown at annexure 'A'.

6. Export Promotion Councils/Committees;

6.1. A National committee on export has been formed. The highest level committee on export promotion, is headed by the Honourable Prime Minister and consists of the Honourable Ministers for Foreign Affairs, Finance, Commerce and Industries, Planning, Jute and Textile as well as senior government officials and representatives of important trade associations. The committee reviews the export situation, provides necessary directions and readily resolves problems.

6.2. For immediate attention and action on export related problem a task force has been formed under the chairmanship of the Honourable Minister forCommerce.

6.3. With a view to exchanging ideas with Chambers of Commerce and Industries, Exporters' Associations and private sector organizations in formulating export policy and strategies, and up lamenting policy decisions an export council has been formed.

6.4. A task force shall also be formed to recommend practical measures for export increase and monitoring the implementation of incentives and facilities of thrust sector and crash programme items.

6.5. Commodity Councils:
Commodity Councils shall be formed for jute, tea, shrimp, readymade garments and leather & leather products.

7. Thrust Sector:

7.1. Leather and leather goods industries, high and high value added readymade garments, computer software and agro-processing sectors have been identified as thrust' sectors in this export policy. Although the leather and leather goods sector has enormous export potential the sector has not been able, till date, to achieve desired results. On the other hand, the readymade garments sector is expected to stage a breakthrough in the export of high-priced, high value added garments of newer categories after having survived successfully the initial phase of exporting low-end garments. Like wise computer software and agro-processing sectors could not record the desired level of export through the sectors offer bright prospects for earning foreign exchange. These -four sectors have been declared, 'Thrust Sectors', in this policy to ensure priority with the following lines of actions :

7.2. Leather & Leather Goods :

7.2.1. Leather manufacturing units shall be modernized in order to enable them to produce increased quality of finished leather out of raw hides.

7.2.2. With a view to reducing cost of production, steps shall be taken to establish accessories industries for producing necessary chemicals and other inputs within the country.

7.2.3. The existing Leather Technology Institute shall be modernized for use as a 'Common Facilities Centre' for the suscountry leather units.

7.2.4. Necessary credit facilities shall be extended for setting up of leather goods industries and efforts for marketing the produces shall be strengthened.

7.2.5. Cluster industries comprising small units of leather goods factories shall be set up with a view to generating employment.

7.2.6. A 'Leather Council' shall be formed.

7.2.7. Industrial units having no bonded warehouse at the same time not interested to avail of duty draw back facilities shall be entitled to cash benefit in lieu of duty drawback.

7.2.8. Import of raw hides including wet blue and pickled leather, shall continue with the prevailing customs duty (2.5%) and import licence fee (2.5%) leviable on the importation of raw leather for three years.

7.2.9. Uniform policy on bank loan as regards criteria and rate of interest shall be followed for credit to leather sector.

7.2.10. The total credit excluded to the leather sector shall be brought under a single bank and export will also be effected through that designated bank.

7.2.11. After careful revision of the overall situation prevailing in the leather industries, the time-limit for export of crust leather has been extended upto the year 2000. Facilities for BMRE and other transformation process shall be made available to all tanning units to enable them to switcher by 2000, to processing crust/finished leather from wet blue leather.
7.3. Readymade Garments:

7.3.1. All out efforts would be made and steps taken for production and export of high priced readymade garments in the light of the prevailing market demand.

7.3.2. Immediate steps shall be taken to establish a Fashion Institute pending establishment of the Fashion Institute measures will be taken, under special arrangements, to extend expert services to match the actual demand.

7.3.3. Liberal credit may be considered for capacity building and hiring technology for producer of high quality garments.

7.4. Computer Software:

7.4.1. For the development of human resources in the software information of computer science, courses in all universities including B.I.T. and Polytechnic Institute and selected colleges shall be considered similarly for having a pool of skilled and trained instructors basic computer scheme at graduation level may be introduced.

7.4.2. An Information Technology Village making multifacet facilities shall be established as part of infrastructure development for promotion of export in this sector.

7.4.3. As a fillip to effective software marketing appropriate provisions on protection of intellectual imports shall be incorporated in the existing copyright Act.

7.5. Aero Processing:

7.5.1. For the development of the agro-processing industries 'Hortex Foundation' has already been established. Development activities of this sector under the Foundations programmes will go on.

8. Export Incentives :

In the light of the objectives and strategies of the Export Policy 1997-2002, several new incentives and facilities have been made available to the exporters. Besides, some existing incentives have been modified and improved to make them more workable. The rest of the existing facilities and incentives will remain unchanged. The incentives as offered are enumerated below :

8.1 Fiscal Incentives:

8.1.1. Restructuring of the Export Credit Guarantee Scheme (ECGS): At present, there are four schemes, namely, the Export Credit Guarantee (Pre-shipment), Export Credit Guarantee (Post-shipment), Export Payment Risk Policy (Comprehensive Guarantee) and Whole Turnover Pre-shipment Finance Guarantee, available under the Export Credit Guarantee Scheme ( ECGS ) covering risks on export credit as well as probable commercial and political risks occurring abroad. These schemes, however , are becoming effective to the desired extent due to existence of various complicacies in realizing their benefits. To strengthen the role of the Export Credit Guarantee the schemes shall be restructured.

8.1.2. Convertibility of Taka :

Taka has been made convertible in the current account in lieu with the policy of export-led growth in the liberalized world market. As a result, earning from the trading account shall be freely convertible into foreign exchange for import of goods (barring a few banned items). Under this arrangement, exporters shall be allowed to retain their foreign exchange earnings in their respective foreign exchange accounts gradually at higher proportion.

8.1.3. Utilization of Foreign Exchange by Exporters :

So long exporters were allowed to retain 20% of their FOB earnings in their respective foreign currency accounts in US dollar or Pound Sterling. From now on they will be entitled to retain either 40% of such earning or at a rate fixed by the government from time to time on proper review. However, in cases of export products where the import contents used in the manufacture of such items are relatively high ( such as, naptha,furnace oil, bitumen and other petroleum products, readymade garments and electronic goods ) and in the case of export of services ( legal advice, consultancy and similar professional services ), the exporters concerned will be entitled to retain only 7.5% of their FOB export earnings. Immediately on realization of export proceeds, the concerned banks will credit the exporters' foreign currency account in proportion to their respective entitlements. Exporters may utilize this foreign exchange for bonafide business purposes, namely, undertaking business trips abroad, participating in export fairs and seminars, importing raw materials, machineries and spares and even setting up overseas business offices. Foreign exchange may also be kept in the renewable fixed deposit account which will bear interest.

8.1.4. Export Promotion Fund ( EPF ) :

The following assistance and support would be provided out of the Export Promotion Fund to producers/exporters of new and non-traditional items including those under the crash programme for product development and product and market diversification:

(a) Venture capital on easy terms and low interest rates ;

(b) Assistance in obtaining foreign technology and consultancy for product development and diversification;

(c) Assistance in fielding marketing missions abroad and participating in international fairs for market compatibility of products;

(d) Assistance in Establishing Sales and Display Centres abroad and extending warehousing facilities ;
(e) Assistance for participation in overseas training programmes on product development and marketing help develop technical skill and marketing expertise ;

(f) Assistance in any other activity related to product and market development.

8.1.5. Extension of Time-limit for adjustment of Export Credit from 180 days to 270 days.

At present export credit is allowed at consessional rate of interest for a maximum period of 180 days. A section of exporters however cannot enjoy the benefit of such concessionary credit facility due to structural characteristics of certain commodities. Under such circumstances, the time-limit for repayment of export credit has been extended from 180 days to 270 days in case of export of frozen food, tea and leather by way of relaxing the condition of submission of firm contract/L.C. and considering working capital as export credit. The time limit for export credit under the Export Promotion Fund in certain cases shall be extended upto 270 days.

8.1.6. Export Financing:

(a) Introduction of Credit Card : In view of the risks involved in carrying of cash foreign exchange/travellers
cheque while undertaking business trip abroad, the practice of issuing credit cards to exporters against their respective foreign exchange entitlements will continue.

(b) Limit of Export Credit : Exporters may obtain export credit from commercial banks upto 90% of the value of their irrevocable letter of credit/confirmed contract.

(c) Credit to first time applicant : With a view to encouraging the new comers to enter into export trade the commercial banks will consider their credit proposals on a priority basis.

(d) Monitoring the Over-all flow of export credit :

Bangladesh Bank will take necessary steps to ensure that normal flow of export credit is maintained. The C.C. limit of the exporters will be determined only on the basis of their export performance in the preceding year. Tthis will not be subject to any general credit squeeze measure. Such credit facilities will also be available to new contracts.

(e) Overdue interest : No overdue interest will be charged by the commercial banks in cases of export against irrevocable letter of credit on sight payment basis. In such cases, however, exporters will be required to submit necessary export documents within the specified time.

(f) Export credit cell : As special export cell to supervise and monitor the export financing has been functioning in Bangladesh Bank. Besides, in every commercial bank a special unit has been created for processing exclusive export credit proposals.

(g) Export monitoring : A high-powered committee has been functioning to assess the export credit requirement and to review and monitor the flow of export credit to ensure that adequate and timely
credit are made available to the exporters.

(h) Inland back-to-back letter of credit : Authorised dealers may establish inland back-to-back letter of credit in favour of local suppliers of raw materials, against the corresponding master letter of credit.

8.1.7. Rebate on insurance premium:

Special rebates are allowed on premium covering fire and marine insurance to export-oriented industries (non-traditional items). Such rebates will be available also to the exporters of these items on shipment of goods.

8.1.8. Incentives for export of non-traditional industrial products :
Incentives will be provided for export of non-traditional/new industrial products, especially where value addition is 50% or more.

8.1.9. Similarly, export firms having exceeded the proportionate export target set for that product-sector will be considered for incentives facilities.

8.2. Fiscal Incentives:

8.2.1. Import facilities of raw materials for export-oriented leather industries:
To encourage increase in productional export at competitive price of finished leather customs duty and import licence fee leviable on import of wet blue and pickled leather by export-oriented leather industries will be exempted.

8.2.2. Income tax rebate on export earnings :

Previously, 50% rebate on taxable income generated from export earning was admissible under the Finance Act every year. From now on 50% of the income tax on any income on export will be exempted through incorporation of a new provision in the Income Tax Ordinance itself rather than as a temporary relief hitherto granted under the Finance Acts on a yearly basis.

8.2 .1. Lowering the rate of AIT at source :

Tax at source on all export earnings shall be deducted at the rate of 0.25%

8.2.4. Payment of duty drawback through commercial banks :

For quick disbursement of duty drawback with a view to giving a competitive edge to our export in the international market, payments will be made by the commercial banks immediately on receipt of foreign exchange against all exports except the deemed exports, determined on the basis of the principles laid down by the National Board of Revenue.

8.2.5. Bonding facilities for export-oriented industries :

Bonded warehouse facilities have generated special enthusiasm among the import-led export-oriented industries. To sustain such interest the procedures for providing bonded warehouse facilities to such industries will be further simplified, and will be extended to all industries recognised as 100% export-oriented industries.

8.2.6. Duty-free Import of capital machinery by export-oriented industries:

Presently, items produced in the Export Processing Zones (EPZ) are entirely exported. Likewise 100% export-oriented industries located elsewhere in the country are also required to export their produces entirely from this point of view as the objectives and functions of the industries of both locations are identical. Duty free import facility of capital machinery has also been extended to the 100% export oriented industies out side the EPZ.

8.2.7. Alternative facilities in lieu of customs bond or duty drawback for export-oriented domestic textile sector and garments industries:

During fiscal year 1995-96, the government, in an attempt to give incentive to the domestic textile and garments sector, allowed 25% compensatory assistance to the industries of this sector. In future also, these sectors will continue to receive reasonable facilities. Such compensatory assistance will also be admissible to a composite unit producing both fabric and garments or to the manufacturer only in case the exporter is not the producer of the local fabric provided no bonded warehouse or duty drawback facilities were availed of for such importation. If, however, the exporter is an intermediary buyer, the facility will go to the original producer of goods.

8.2.8. Tax holiday:

To encourage a rapid growth and attract entrepreneurs to export oriented industries tax holiday incentive will continue till the year 2000 in consonance with the Industrial Policy. The industrial enterprises enjoying the benefit of tax holiday shall be exempted from deduction of tax at source. After 2000, decision on tax holiday will be taken in the light of the government policy of that period.

8.2.9. Duty drawback scheme :

(a) Exporters of manufactured products are entitled to draw back after the export is effected. The amount of duties and taxes paid on importation of raw materials under any of the three systems, namely, actual drawback, notional drawback and flat rate drawback. However, as a simpler mechanism of getting drawback, the flat rate method shall continue to receive greater weightage.

(b) The rate of duty drawback payable on export of all traditional and non-traditional items will be renewed at regular intervals and more and more, new products will be brought under the duty drawback system.

8.2.10. Value Added Tax (VAT) on packaging materials:

Should jute clothes and bags be used in the packing of export goods VAT paid on such products will be refunded.

8.2.11. Simplification of the procedure for refund of VAT paid on export support services:

To maintain competitiveness of export prices, VAT paid on export support services, namely, C & F service, telephone, telex,fax, electricity, insurance premium, shipping agent's commission/bill will be refunded under a simplified procedure.

8.2.12. Permission for sale of goods rejected for exportation:

20% of the rejected goods of the 100% export-oriented industries including leather goods and readymade garments will be admissible for sale in the local market subject to payment of usual duties and taxes.

8.3. General incentives:

8.3.1. Declaring 80% export oriented leather industries as 100% export-oriented industries:
Most of the leather industries are able to export at least 80% of their products; rarely they are in a position to export 100 of their product. In order to bringing about dynamism in the leather sector 80% export oriented leather producing units have been declared 100% export-oriented industries.

8.3.2. Other 80% export-oriented industries to get identical incentives available to 100% export-oriented industries :

Other 80% export oriented industries (other than leather industries) will be given following incentives with a view to encouraging their export operations:

(a) Financial incentives including bank loan as available to 100% export-oriented industries. However, the benefits allowed to the 100% export-oriented industries by the National Board of Revenue in respect of duties and taxes will not be applicable to them.

(b) Sale permission upto 20% of their production in the local market on payment of usual duties and taxes.

8.4. Reduced airfreight for export of all crash programme items including fruits and vegetable:

(a) Airfreight at lower rate will be changed for export of all crash programme items including fruits and vegetables.

(b) Withdrawal of royalty from foreign airlines extending cargo services :
In order to ensure export of goods by cargo services of foreign airlines and sell export goods at competitive price, the royalty being presently imposed by Biman Bangladesh Airlines may, if necessary, be further reduced or may be withdrawn altogether.

8.5. Settlement of trade disputes :

With the expansion of exports trade disputes are also increasing. In many cases Bangladesh's image as an exporting country is being tarnished because of such disputes. On the other hand, Bangladeshi exporters are also incurring financial losses. To remove such difficulties, the Export Promotion Bureau will initiate steps for settlement of trade disputes through conciliation. For this, necessary amendment will be made in the Charter of Export Promotion Bureau to enable them to perform this responsibility effectively.

8.6. Recognizing small and medium size agricultural farms as Industry:

To encourage production of fruits, vegetables, fresh flowers, orchid etc. for export, agricultural farms of a minimum size of 5 acres have been recognized as 'Industry' and become eligible for all facilities of export-oriented industries.

8.7. Research and development:

Marketing of products in the international market is becoming increasingly competitive due to globalization and liberalization of trade.To sustain in the face of such stiff competition, continuous quality improvement and market adaptability have become necessary. For this purpose, industrial enterprises should be equipped with their own Research and Development ( R & D ) facilities . For this duties and taxes on machinery and equipments imported by export units will be gradually lowered. Research institutions on the recommendation by the Export Promotion Bureau will also be entitled to such benefit.

8.8. Export on the basis of sub-contracting :

The sub-contracting service sector has immense potential for export. All out efforts will be made to exploit the opportunities in this sector especially in the automobile industry in Japan and the printing industries in the western countries.

8.9. Assistance to contract services abroad like Engineering Consulting Services Contract and Civil
Construction Contract etc. :

Contract Services like engineering, consulting and civil construction contract abroad have been identified as potential export sector. The following facilities are being extended to assist this sector :