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Facilities for Setting up Business in EPZ

Facilities for Setting up Business in EPZ

7.1 Incentives & Facilities

7.2 Fiscal Incentives:
1. 10 years tax holiday for the Industries to be established before 1 st January,
2012 and Duration and rate of tax exemption for Mongla, Ishwardi &
Uttara EPZ for the industries set up after January 01, 2012:
Duration of Tax Exemption Rate of Tax Exemption
First 03 years (1 st , 2 nd  and 3 rd  year) 100%
Next 03 years (4 th , 5 th and 6 th  year) 50%
Next 01 year (7 th year) 25%
Duration and rate of tax exemption for Chittagong, Dhaka, Comilla,
Adamjee,& Karnaphuli EPZ for the industries set up after January 01, 2012:
Duration of Tax Exemption Rate of Tax Exemption
First 02 years (1 st  and 2 nd year) 100%
Next 02 years (3 rd and 4 th year) 50%
Next 01 year (5 th year) 25%

2. Duty free import of construction materials
3. Duty free import of machineries, office equipment & spare parts etc.
4. Duty free import and export of raw materials and finished goods
5. Relief from double taxation
6. Exemption from dividend tax
7. GSP facility available
8. Accelerated depreciation on machinery or plant allowed
9. Remittance of royalty, technical and consultancy fees allowed
10. Duty & quota free access to EU, Canada, Norway, Australia etc.
7.3 Non ‚Äď Fiscal Incentives:
1.      100% foreign ownership permissible
2.      Enjoy MFN (most favored nation) status
3.      No ceiling on foreign and local investment
4.      Full repatriation of capital & dividend
5.      Foreign Currency loan from abroad under direct automatic route
6.      Non-resident Foreign Currency Deposit (NFCD) Account permitted
7.      Operation of FC account by 'B' and 'C' type Industries allowed.

7.4 Facilities:
1. No UD, IRC, ERC and renewal of Bond license
2. Work permits issued by BEPZA
3. Secured and protected bonded area

4. Off-Shore banking available
5. Import on Documentary Acceptance (DA) basic allowed
6. Back to Back L/C
7. Import and Export on CM basis allowed
8. Import from DTA (Domestic Tariff Area)
9. 10% sale to DTA (Domestic Tariff Area)
10. Customs clearance at factory site
11. Simplified sanction procedure
12. Sub-contracting with export-oriented Industries inside and outside EPZ
allowed
13. Relocation of foreign industries allowed
14. Accords Resident-ship and Citizenship
15. One Window same day service and simplified procedure.
7.5 Infrastructure:
1. Basic Infrastructure: Electricity, Water, &Gas
2. Fully serviced plots available
3. Factory building available on rental basis
4. Enclave for workers Dormitory & Day Care Centre
5. warehouse / Go down available
7.6 Support Services:
1. Business: Bank, Courier, Post office, C&F Agent, Shipping Agent, etc.
2. Administrative: Customs Office, Police Station, In-house Security, Fire
Station, Public Transport, Medical Centre etc.
3. Others: Restaurant, Health Club, Investors Club, Recreation Centre,
School and College, Sports Complex, Exclusive Telephone Exchange,
Electricity Sub Station, Business Centre, Anglers Club etc.
7.7 Investment Guarantee:
Foreign Private Investment (Promotion and Protection) Act, 1980 secures all
foreign investment in Bangladesh.
OPIC's (Overseas Investment Corporation, USA) insurance and finance
programmed operable. Security and safeguards available under Multilateral
Investment Guarantee Agency (MIGA) of which Bangladesh is a member.
Arbitration facility of the International Center for the Settlement of Investment
Dispute (ICSID) available.
7.8 Labour Issues
Monthly Wages Structure of the EPZ Workers
Ensure the congenial production climate.
Establish the franchise of the workers.

BEPZA Instruction No. 1 & 2
Maternity Leave Circular (Revised)
The parliament passed the EPZ Workers Association and Industrial Relations
Act 2004(Ammended up to October 2010).
Re-Fixation of minimum wages for the workers of the enterprises of EPZs-
2013
Counsellor’s monthly compliance report.
Minimum wage structure-2018 are as follows:
Ôā∑ ¬† Apprentice-US$ 76.22
Ôā∑ ¬† Helper-US$ 100.00
Ôā∑ ¬† Jr. Operator-US$ 110.98
Ôā∑ ¬† Operator-US$ 116.46
Ôā∑ ¬† Sr. Operator-US$ 121.95
Ôā∑ ¬† High Skilled-US$ 182.32
Source: www.bepza.gov.bd/investor_details/labour-issues
The gross wage has been calculated as Basic wage + House rent 40% on Basic
+ Medical allowance Tk. 560 (Fixed)
In addition of the above gross wage, Food or Food allowance and Transport or
Transport allowance shall be provided by the enterprises.
Considering the production cost investor are being deemed to be satisfied with
the overall productivity of the labours.
7.9 Classification of Investors:
Type – A: 100% foreign owned including Bangladesh nationals ordinarily
resident abroad.
Type РB: Join venture between foreign and Bangladesh entrepreneur’s resident
in Bangladesh.
Type РC: 100% Bangladesh entrepreneurs’ resident in Bangladesh.

7.10 Off – Shore Banking Units
Ôā∑ Foreign investors do not have the opportunity of availing credit facilities
from the Different Financial Institutions (DFI) of Bangladesh.

Ôā∑ In order to cater the need of financial support off-shore Banking facilities is
being provided to the foreign owned/ Join Venture unit in the EPZ’s of
Bangladesh.
Ôā∑ Presently Foreign Banks in Bangladesh have licentiate for doing off-shore
banking like:
1.      Standard Chartered Bank Ltd.
2.      HSBC Ltd.
3.      Woori Bank Ltd.
4.      Citi N.A. Bank Ltd.
5.      Commercial Bank of Ceylon.
6.      Dutch-Bangla Bank Ltd.
7.      State Bank of India
Apart from that local bank of Bangladesh also provide off-shore banking like:
1.      Prime Bank Ltd.
2.      Dhaka Bank Ltd.
3.      South-East Bank Ltd.
4.      National Bank Ltd.
5.      Eastern Bank Ltd. (EBL).
6.      Bank Asia Ltd.
7.      Shahjalal Bank Ltd.
8.      The City Bank Ltd.
9.      The Premier Bank Ltd.
10.     IFIC Bank Limited
11.     BRAC Bank Ltd.
12.     AB Bank Limited
13.     Mutual Trust Bank Ltd.
14.     Jamuna Bank Ltd.
15.     One Bank Ltd.
16.     Pubali Bank Ltd.
17.     Standard Bank Ltd.
18.     National Credit and Commerce Bank Ltd.
19.     Islami Bank Bangladesh Ltd.
20.     Trust Bank Limited
21.     Mercantile Bank Ltd.
22.     United Commercial Bank Ltd.
Ôā∑ More local Bank in the pipe-line to have off-shore Banking license from
Bangladesh Bank (Central Bank).
Ôā∑ Schedule of standard¬†charges are being practiced among the off-shore
Banking units of DFI (Different Financial Institutions) of Bangladesh.

7.11 Operation of EPZS in Bangladesh:
1. (Bangladesh Bank FE Circular No. 37, dated 10 May, 1983)
By an act of Parliament, namely, the Bangladesh Export Processing Zones
Authority Act, 1980 (Act. No. XXXVI of 1980), Export Processing Zones shall
be established in Bangladesh under the auspices and supervision of the
Bangladesh Export Processing Zones Authority.
2. Regulation:
The board features relating to the operation of the industrial enterprises in the
zones are contained in the Principles and Procedures governing setting up of
industries in EPZs issued by the Export Processing Zones Authority.
3. Repatriation of Export Proceeds:
Exports made from the zones shall be declared to the customs on EXP forms in
6 copies as in the case of ordinary exports from Bangladesh. However, for the
purpose of indemnifications, these export forms should be rubber stamped or
over printed with the words 'Export from EPZ' in bold letters to distinguish
these exports from the ordinary ones.
4. Release of Foreign Exchange to the Enterprises against Exports:
The following procedure shall apply to release of foreign exchange by the
Bangladesh Bank against exports made from the zones:
i. Type-A industry (100% foreign owned investment) shall as usual bring into
Bangladesh the foreign exchange representing the export proceeds within 4
months from the date of export. They shall thereafter submit an application
to the area office of the Bangladesh Bank through their bankers for
permission to remit the export proceeds abroad or to retain the same in a
foreign currency account with an authorized dealer in Bangladesh (Bank).
The application should contain full particulars of the export consignment,
namely EXP form No. and date, description of the commodity exported and
its FOB value, freight charges, if any, the name and address of the
consignees, and the date of receipt of foreign exchange supported by a
proceeds realization certificate from the authorized dealers in the prescribed
form. The exporting unit shall also submit a declaration to the effect that no
part of the cost of production of the goods exported has been paid in local
currency other than through sale of foreign exchange to an authorized
dealer. Bangladesh Bank may, if necessary, ask for such other particulars or
documents as it may consider necessary to satisfy itself that no element of
such costs has been paid for in local currency other than no element of such
costs has been paid for in local currency other than through conversion of
foreign exchange. The Bangladesh Bank, on being satisfied with the

particulars furnished by the exporting unit, shall make a deduction of 5%
from the C&F / FOB value realized and will allow remittance or retention in
a foreign currency account of the balance amount. Remittance of the amount
representing 5% so deducted from the export proceeds will be allowed at the
end of each financial year after deduction of taxes, if any, and / or any cost
of production that may have been incurred in local currency otherwise than
by conversion of foreign exchange. As an alternative to the above
arrangement envisaging initial surrender of entire export proceeds, the
exporters could be allowed to retain 95% of the export proceeds in a foreign
currency account maintained with an authorized dealer in Bangladesh
subject to prior arrangement being made between the Bangladesh Bank and
the exporter concerned setting out the terms and conditions thereof. For the
purpose of retention of export proceeds, as allowed by the Bangladesh
Bank, and for crediting other inward foreign exchange remittances received
from the head office or other sources, an industrial unit shall be entitled to
maintain a foreign currency account with any authorized dealer in
Bangladesh. Withdrawals can be made freely from this account for local
disbursements as also for remittance abroad for importation of capital
machinery and raw material, payment of service charges and royalty,
repayment of loans etc. as per provision of the lease agreement / contract.
The unit may also maintain a Taka account for the purpose of payment of
wages, rent, rates, taxes etc. but this account must be fed by inward
remittance in foreign exchange or through conversion of funds from the
foreign currency account.
ii. Type-B Application for the purpose should be submitted to the Bangladesh
Bank indicating the cost of production in local currency and foreign
currency duly supported by Proceeds Realizations Certificate from an
authorized dealer in the prescribed form and other documents as may be
required by the Bangladesh Bank.
Pending the Bangladesh Bank's approval, the authorized dealer through
whom the export proceeds are realized shall retain the foreign exchange on
its own account outside the regular exchange position.
iii. Type-C industry (100% locally owned) shall also repatriate the export
proceeds through an authorized dealer within 4 months as per usual
Exchange Control Regulations. The industry shall submit an application to
Bangladesh Bank in the manner indicated in 4 (ii) above for allowing
transfer to a foreign currency account the FOB value of the cost of goods
exported that represents the cost of imported inputs used by it. The said
account may also be used for crediting the proceeds of loans etc. obtained in
foreign currency. The balance in this account can freely be used for
importation of raw materials, capital and other machinery, spares etc.
required by the industry as also for repayment of loans, if any, taken from
overseas sources.

5. Sale of Bangladeshi Goods to EPZs:
Sale of Bangladeshi goods or raw materials to the enterprises in the EPZs
against payment in foreign currency as explained in the annexed regulations
shall be treated as exports from Bangladesh and normal exchange control
regulations concerning declaration of the exports on EXP forms and
repatriation of proceeds within 4 months shall be applicable to these exports.
6. Remittance of Dividends:
For joint venture enterprises (Type-B industries) the Bangladesh Bank shall
allow remittance of dividends to the foreign partners / collaborators on
submission of the Audited Balance Sheet and Profit & Loss Account etc. as per
existing Exchange Control Regulations.

7.12 Extension of Credit Facilities to Industries In EPZS:
(Bangladesh Bank FE Circular No. 9, dated 23 January 1984)
1. It has since been decided that Type-A industries of the Bangladesh Export
Processing Zones would be allowed to obtain short term repatriable foreign
currency loans from overseas banks and financial institutions against mortgage
/ hypothecation of fixed and other assets subject to prior clearance from the
Bangladesh Bank.
(i)  The Type-A industry of the EPZs will submit their application through any
authorized dealer detailing the terms and conditions of the repatriable foreign
currency loans for prior approval of the Bangladesh Bank.
(ii)   The assets against which charge will be created have to be fully owned by
the Type-A industry in Bangladesh.
(iii)    After obtaining prior approval from the Bangladesh Bank, the authorized
dealer may credit the amount of the short-term foreign currency loans in the FC
accounts of Type-A industries maintained by them in terms of para 4 of FE
Circular No. 37 of 1983. The above FC account may also be freely debited for-
(a) Making remittances abroad for importation of capital machinery and raw
materials, payment of interest, service charges and repayment of loan etc.
and
(b) For crediting Taka account maintained by the Type-A industries for
meeting their local expenses.
(iv) The above loans will not get any forward cover facility against fluctuation
in exchange rates of Taka.
(v)    In case, the short term repatriable foreign currency loan is called up by the

creditor, the fixed and other assets fully owned by the Type-A industry and
charged to the foreign financing bank will be allowed to be sold and proceeds
thereof repatriated subject to the conditions that-
(a)  The assets are sold in foreign exchange
(b) All liabilities in Bangladesh are paid off and
(c)  Prior approval of the Bangladesh Bank is obtained. No remittance from the
country's foreign Exchange or under Wage Earner's Scheme will be allowed for
this purpose.
(vi) 1. Type-B industries of the Export Processing Zones would also be allowed
to obtain short term repatriable foreign currency loans from overseas banks and
financial institutions subject to prior clearance from the Bangladesh Bank. All
procedures as applicable in this regard in case of Type-A industries have also to
be observed for Type-B industries. But the Type-B industries will not be
permitted to mortgage / hypothecate their fixed assets or raw materials to
anyone outside Bangladesh. The authorized dealers may, however, issue
guarantee to overseas banks and financial institutions for the short term
repatriable foreign currency loans brought in to Bangladesh by the Type-B
industries subject to prior approval of the Bangladesh Bank.
2.    The authorized dealers may also grant Taka loans to Type-B industries up
to 100% of any short-term foreign currency loan brought into Bangladesh
subject to prior clearance of the Bangladesh Bank. Taka loans on matching
basis can be allowed only if the foreign currency proceeds of the loan are
converted into Taka and not credited to any FC account. The Type-B industries
of the EPZs will submit their applications for this purpose through any
authorized dealer detailing the terms and conditions in this regard for prior
clearance from the Bangladesh Bank.
(i)  Type-B industries will not be permitted to mortgage / hypothecate
their fixed assets / raw materials to anyone outside Bangladesh for Taka
loans also.
(ii) Type-B industries will not be allowed to take forward cover facility
for the Taka loans for a maximum period of six months against
fluctuation in exchange rate of Taka as admissible under FE Circular No.
26 of 1983.
(iii)   The above Taka loans against repatriable short term foreign
currency loans will not be allowed to type-A industries.
3.  The authorized dealers may extend credit facilities to Type-C industries as
admissible to such industries outside EPZs.
4.  Bringing in and repatriation of all foreign currency loans including payment
of interest will require the prior approval of the Bangladesh Bank. No prior
approval would, however, be necessary for such repatriation if the remittances

are made out of the foreign currency accounts maintained by Type-A and Type-
B industries of the EPZs where such / foreign currency accounts are maintained
in terms of para 4 of FE Circular No. 37 of 1983. Repayment of principal or
payment of interest will be allowed out of the industries own resources only.
No resources borrowed or acquired in Bangladesh would be allowed to be
utilized for this purpose.
5.    To meet the credit needs of the garments industries of the Bangladesh
Export Processing Zones, it has been decided to extend the back-to-back L / C
facility to the garments industries of the EPZs also. All instructions as
contained in circular letter No. ECP Com. 241/ A-3050, dated 5.12.1982 will
apply in case of garments industries of the EPZs also. In addition, the
authorized dealers should satisfy themselves that necessary arrangements have
been made by the opener so that in case of any shortfall or delay, necessary
foreign exchange would be made available
(i)    The Type-A industry of the EPZs will submit their application
through any authorized dealer detailing the terms and conditions of the
repatriable foreign currency loans for prior approval of the Bangladesh
Bank.
(ii)    The assets against which charge will be created have to be fully
owned by the Type-A industry in Bangladesh.
(iii)    After obtaining prior approval from the Bangladesh Bank, the
authorized dealer may credit the amount of the short-term foreign
currency loans in the FC accounts of Type-A industries maintained by
them in terms of para 4 of FE Circular No. 37 of 1983. The above FC
account may also be freely debited for-
A) Making remittances abroad for importation of capital machinery
and raw materials, payment of interest, service charges and
repayment of loan etc. and
B) For crediting Taka account maintained by the Type-A industries for
meeting their local expenses.
(iv) The above loans will not get any forward cover facility against
fluctuation in exchange rates of Taka.
(v)    In case, the short term repatriable foreign currency loan is called up
by the creditor, the fixed and other assets fully owned by the Type-A
industry and charged to the foreign financing bank will be allowed to be
sold and proceeds thereof repatriated subject to the conditions that-
(a) The assets are sold in foreign exchange
(b) All liabilities in Bangladesh are paid off and

(c) Prior approval of the Bangladesh Bank is obtained. No
remittance from the country's foreign exchange or under Wage
Earner's Scheme will be allowed for this purpose.
(vi)   Type-B industries of the Export Processing Zones would also be
allowed to obtain short term repatriable foreign currency loans from
overseas banks and financial institutions subject to prior clearance from
the Bangladesh Bank. All procedures as applicable in this regard in case
of Type-A industries have also to be observed for Type-B industries. But
the Type-B industries will not be permitted to mortgage / hypothecate
their fixed assets or raw materials to anyone outside Bangladesh. The
authorized dealers may, however, issue guarantee to overseas banks and
financial institutions for the short term repatriable foreign currency loans
brought in to Bangladesh by the Type-B industries subject to prior
approval of the Bangladesh Bank.
7.13 Credit Facilities to Industries in Export Processing Zones
(BANGLADESH BANK GUIDELINES FOR FOREIGN EXCHANGE
TRANSACTIONS, Volume-1 Instructions as of 31 May, 2009 issued to
Authorized Dealers and Money Changers in Foreign Exchange)
(A) 100% foreign owned enterprises in the EPZs known as Type A industries
may obtain short term foreign currency loan from overseas banks and financial
institutions subject to the following conditions:
(i) The loan shall be received through an AD in Bangladesh; and the loan
proceeds will be credited to the FC account maintained by the AD in the name
of the Type-A unit, to be used for financing import of capital machinery and
raw materials, payment of interest / service charges, repayment of loans and for
crediting Taka account for meeting local expenses;
(ii)  Only assets fully owned by the Type-A industry may be lodged as
collaterals for such loans;
(iii) Repayment of principal and interest on the loan shall be remitted out of the
balances available in the FC account without prior Bangladesh Bank approval.
No fund may be provided from the AD’s own resources for such repayment
except with prior approval of Bangladesh Bank;
(iv) In case the loan is called up by the creditor, the assets charged to foreign
lender will be allowed to be sold only in foreign exchange and proceeds, after
paying off all local liabilities in Bangladesh, may be remitted abroad with
Bangladesh Bank’s approval;
(v) No Taka loan against repatriable short term foreign currency loan will be
allowed to a Type-A industry.

(B)    Type-B industries (joint venture projects) may also obtain such loans
subject to conditions applicable to Type-A industries as indicated above, except
that Type-B industries will not be permitted to mortgage / hypothecate their
fixed assets, raw materials in favor of any non-resident. The ADs may,
however, issue guarantee to overseas banks / financial institutions for short
term foreign currency loans brought into Bangladesh by Type-B industries,
subject to prior approval of the Bangladesh Bank.
Taka loan may be granted to a joint venture (Type-B) industrial unit in EPZ up
to 100% of short-term foreign currency loan brought in and encased to taka.
Loan in Taka for procurement of capital machineries for setting up a Type-B
industry, not exceeding the local partners’ share of ownership of the unit, may
be extended on normal banker-customer relationship. Prior Bangladesh Bank
approval should be obtained by the AD while providing foreign exchange for
import of the machineries out of the Taka loan. Repayments of the Taka loans
along with interests should be received out of the foreign exchange earnings of
the unit.
ADs may extend credit facilities to Type-C industries (100% locally owned) as
admissible to such industries outside EPZ.
In establishing import LCs on account of Type-A, B and C units in the EPZs
ADs shall bear in mind the position that the import payments may be made
only out of the foreign exchange earnings of the concerned units or out of their
borrowings abroad credited in their FC accounts, and that no funds from the
ADs own foreign exchange resources can be used for this purpose. Before
opening inputs import LC against an export LC or export order received by an
EPZ unit the AD should satisfy itself completely about the clarity of the
conditions in the export order / LC, the standing and credit of the foreign buyer
and the ability of the exporting unit for timely execution of the export order. In
opening inputs import LCs on account of Type-B and Type-C units, domestic
value addition requirements prescribed for the respective items by the Ministry
of Commerce should also be abided by.
Import payments against the LCs should be scheduled in a manner that
payment obligations do not fall due before receipt of export proceeds. In all
cases of opening inputs import LCs on accounts of units in the EPZ, ADs
should satisfy themselves that necessary arrangements have been made by the
opener that in case of shortfall or delay in export receipts, foreign exchange
would be made available form external sources.
In the case of joint venture (Type-B) projects in the EPZs, the foreign partners
will have to arrange their contributions in foreign exchange from own or
borrowed sources outside Bangladesh and the local partners shall contribute
their shares in local currency. In the event, however, the contributions as per
joint venture project agreements made by the foreign partners are not sufficient

to cover the cost of machinery and equipment, the shortfall may be made up,
with prior Bangladesh Bank approval, by conversion of Taka into foreign
currency up to an amount not exceeding the local partners’ shares /
contributions referred to above.
Bangladesh in NFCD accounts may be utilized for discounting ussance bills
drawn by Type-A and B units of EPZs for supplying raw materials under back
to back (B2B) arrangement and accepted by ADs operating outside EPZs.
However, utilization of NFCD fund for the above purpose including payment
for B2B sight LCs (as mentioned in Chapter 7) will not exceed 50% of total
NFCD balance of the concerned bank.
For working capital, in addition to pre-shipment non-funded facility through
B2B LC and post shipment finance through bill discounting as mentioned in
para 22 of this chapter, an AD may grant working capital loan from its own
source on banker customer relationship considering repayment capacity of the
B and C Type units up to the extent of value of inputs required for four months
production. However, loans so advanced should be adjusted form export
receivables within shortest possible time. The amount of importable is to be
determined on the basis of export performance of the concerned unit during the
previous year while for the new concern the AD should refer to the production
capacity as determined by BEPZA.
N. B.: To be read in conjunction with other instructions, subsequent
amendments and modifications from time to time.
7.14 Extension of Credit / Remittance Facilities to Type-B Industries in
the EPZ
(Bangladesh Bank F.E. Circular No. 79, dated 21 December, 1993)
Foreign partners of joint venture companies known as Type-B industries are
now required to supply machinery and equipment to set up industries in the
Export Processing Zones (EPZs).
It has been decided that in case of joint venture project in the EPZs, the foreign
partners will have to arrange their contributions in foreign exchange from own
or borrowed sources outside Bangladesh and local partners may similarly
contribute their shares in local currency. In the event, however, the
contributions as per joint venture project agreements made by the foreign
partners are not sufficient to cover the cost of machinery and equipment, the
shortfall may be made up, with the Bangladesh Bank's approval, by conversion
of taka into foreign currency up to an amount not exceeding the local partners'
shares / contributions referred to above.
Authorized dealers may also extend local currency loans on the basis of banker

customer relationship without prior approval of the Bangladesh Bank within the
limit of the contribution of the local shareholders of Type-B industries as per
project agreement. Foreign exchange released for import of machinery along
with interest of any loan granted to them for this purpose will require be
adjusting / repaying out of the foreign exchange earnings of the concerned
industries.
Other instructions regarding extension of credit / remittance facilities to the
different types of industries in the Export Processing Zones will remain
unchanged.
7.15 Deposit of Export Earnings in Fc Account of Type-A & Type-B
Industries in EPZS
(Bangladesh Bank FE Circular No. 25, dated 16 July, 1989)
In partial modification of the instructions contained in para 4(I) and (ii) of FE
Circular No. 37 of 1983, it has been decided that:
(a)    The existing provision for deduction of 5% of the C&F / FOB value of
each export consignment in respect of Type-A industries in the Export
Processing Zones in withdrawn. Henceforth, Type-A industries of EPZs shall
be allowed to deposit 100% of their export proceeds in a foreign currency
account maintained with an authorized dealer in Bangladesh.
(b)    Type-B industries of EPZs (joint venture enterprises) other than garments
industries shall, henceforth, be allowed to deposit 70% (seventy percent) of
their export value in their foreign currency accounts without prior permission
of the Bangladesh Bank and the remaining 30% (thirty percent) will continue to
be deposited in local currency accounts at official rate of exchange.
7.16 Deposit of Export Earnings in Fc Account of Type-B Industries In
EPZS
1. (Bangladesh Bank FE Circular No. 33, Dated 4 September, 1989)
Attention of the authorized dealers is invited to FE Circular No. 25 dated
16.07.89.
02. The following instructions are issued in cancellation of the instructions
contained at item (b) of the 1st paragraph of the Circular referred to above:
Type-B industries (joint venture) of EPZs other than garments industries shall
be allowed to deposit 70% of each of their exports earnings in their foreign
currency account without prior permission of the Bangladesh Bank and the
remaining 30% will be encased at SEM rate and deposited in their local
currency accounts. The foreign currency so purchased by the authorized dealers

will be sold to be the SEM fund of the Bangladesh Bank as per instructions
contained in para (3) of FE Circular No.15, dated 17 March, 1988.
In case, expenses representing the cost of imported raw materials, spares and
other foreign exchange overheads applicable to each export consignment
exceed 70% of the export proceeds of the related consignment, applications
may be submitted to the Bangladesh Bank with relevant documents for
purchasing funds at SEM rate out of the remaining 30% of export proceeds
encased at SEM rate. In case of Type-B garments industries in the EPZs, 75%
of the export proceeds will continue to be credited to their foreign currency
accounts as per provisions of FE Circular No. 66, dated 23.8.84 and the
remaining 25% will be credited to their local currency accounts. For
encashment of 25% of the export proceeds in these cases, the instructions
contained in FE Circular No. 15, dated 17.3.88 will apply.
7.17 Deposit of Export Earning in Fc Account of Type-C Industries in
EPZS
(Bangladesh Bank FE Circular No. 18, dated 15 May, 1994) Attention of the
authorized dealers is invited to article 4 (3) of the FE Circular No. 37, dated 10
May, 1983.
It has been decided that all the Type-C enterprises of the Export Processing
Zones will be able to deposit their export value in foreign currency (FOB
value) of their FC account directly after deducting the amount of value
addition.
They will not require prior permission of the Bangladesh Bank for this
purpose.
7.18 Operation of Fc Account by Type-B and Type-C Garments
Industries in EPZS
(Bangladesh Bank FE Circular No. 66, dated 23 August, 1984)
In partial modification of the instructions contained in para 4(ii) and 4(iii) of
the Bangladesh Bank's FE Circular No. 37, dated 10 May, 1983, it has since
been decided that the authorized dealers may credit to the FC account to Type-
B or Type-C garments manufacturing units in the EPZs an amount not
exceeding 75% of the C&F / FOB value, as the case may be, of each export
consignment realized without prior permission from the Bangladesh Bank. The
remaining 25% shall be credited to a local currency account at the official
exchange rate.
Withdrawals may be made freely by the Type-B and Type-C garments of the
EPZs from the foreign currency account maintained by them for local

disbursement as also for remittance abroad for importation of capital machinery
and raw materials, payment of service charges and royalty, repayment of loans
etc.
7.19 Operation of Fc Account by Type-B and Type-C Industries in EPZS
(Bangladesh Bank FE Circular No. 21, dated 2 August, 1995)
Attention of the authorized dealers is invited to para (b) of F.E. Circular No. 25
of 1989 and F.E. Circular No. 18 of 1994.
In partial modification of the instructions contained in the above F.E. Circulars,
it has since been decided that the Type 'B' and Type 'C' industries, other than
the garment units of the EPZs, who shall use only imported raw materials, shall
henceforth be allowed to deposit in their respective foreign currency accounts
up to 80% of the C&F / FOB value of each export consignment released
without prior permission from the Bangladesh Bank. The remaining 20% shall
be credited to the local currency accounts at the official exchange rate.
7.19.1 Encashment of Foreign Exchange by the Industrial Units in EPZs:
Application of Seem Rate:
(Bangladesh Bank FE Circular No. 15, dated 17 March, 1988)
1. Attention of the authorized dealers is invited to our F.E Circular No. 37 of
1983 and 66 of 1984 regarding the foreign exchange transactions of the
industrial units in the Export Processing Zones (EPZs).
2. It has been decided that henceforth the SEM rate will be applied instead of
official exchange rate, for all encashment for export receipts of the industrial
units in the EPZs. The SEM rate will also be applied for encashment of
funds brought in from abroad by the units in EPZs for meeting their local
expenses.
3. Foreign exchange funds representing (both compulsory and optional
encashment) should be sold by the authorized dealers in the SEM fund in
the Bangladesh Bank, through their Head Offices / Principal Offices at
Dhaka (Funds should be tendered to the Bangladesh Bank in amounts
rounded to the nearest US$ 5000 or £3000. Amounts smaller than US$ 5000
or £3000 need not be tendered). It will not, however, be compulsory for the
authorized dealers to sell to the SEM fund the foreign exchange representing
encashment of other receipts of the EPZ units (such as encashment of funds
brought in from abroad for meeting local expenses, foreign exchange loans
brought in by them with the prior approval of the Bangladesh Bank etc.);
The authorized dealers may retain such funds with them subject to general
instructions regarding holding of foreign exchange outside exchange
position.
4. If any portion of the Taka funds enchased at SEM rate by a Type -A EPZ
unit is found remittable at the year and (excess rate amount after all local

expenses have been met in foreign exchange / in local Taka obtained from
encashment), reconversion of the same to foreign exchange will be
admissible only at the SEM rate.
5. It may be mentioned here that no XPB is admissible to EPZ units for their

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