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Operation of EPZS in Bangladesh

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 the 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.

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