Export Processing Zone
Export processing zone (EPZ) was established by an act namely, Bangladesh Export Processing Zone Authority Act, 1980. The broad guideline relating to the operational enterprise in the EPZs are contained in the Principles & Procedures governing in setting up of industries in EPZ, issued by Bangladesh Export Processing Zone authority (BEPZA).
Types of Industrial Unit
Following types of industrial units operate in the EPZs
|(a)||Type A:||100% foreign owned including those owned by Bangladesh nationals ordinarily resident abroad.|
|(b)||Type B:||Joint Venture projects between Foreign & Bangladesh entrepreneurs resident in Bangladesh|
|(c)||Type C:||100% Bangladesh entrepreneurs resident in Bangladesh.|
In establishing import L.Cs on account of type A, B & C units in the EPZ’s AD branch shall bear in mind the position that the import payments may be made only of the foreign exchange earnings of the concerned units or out of their borrowings abroad credited in their F.C accounts & no funds from the AD Bank’s own foreign exchange resources can be used for this purpose.
Before opening of import L.C against an export L.C received by an EPZ unit the AD branch shall satisfy itself completely about the clarity of the conditions in the Export L.C, the standing & credit of foreign buyer & the ability of exporting unit for timely execution of the export order.
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In opening of import L.C on account of type B & type C units, domestic value addition requirements prescribed for the respective items by Ministry of Commerce should also be abided by.
Import payment against the L.Cs should be scheduled in a manner that the payment obligations don’t fall due before receipt of export proceeds.
In all cases of opening of import L.Cs on account of EPZ units, AD branch should satisfy them selves 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 from external sources.
(a) Type A
- 100% of repatriated export proceeds industrial unit may be retain in F.C account in the name of the unit with an AD Branch.
- Balances of F.C account may freely be used to meet all foreign payment obligations including import payment obligation of the unit & payment obligations in foreign exchange to the BEPZA.
- Balances from the F.C account will also be freely encashable for local disbursements or for crediting Taka account maintained with the AD branch for meeting Taka payment obligations like – wages, rents, rates, taxes, vats etc.
- Taka account may also be credited from other inward remittances from abroad & sale of factory refuses / unusable portion of raw materials provided the permission from BEPZA.
- Balancing of Taka account cannot be converted to foreign exchange & may only be used for meeting local expenses.
(b) Type B & C
- Up 80% 0f repatriated export proceeds industrial unit other than those of General sector may retain in F.C account in the name of the unit with an AD Branch.
- 75% of repatriated export process industrial unit of Garments sector may be retain in F.C account in the name of the unit with an AD Branch.
- Balance of F.C account may freely be used to meet all foreign payment including import payment / repayment of foreign investment & payment obligations in foreign exchange to the BEPZA may be settled.
- Balance from the F.C account will also be freely encash-able for local disbursements.
- Rest of export precedes i.e. 20% to 25% should be encashed to taka at prevailing exchange rate.
Investment Facility to EPZ Units:
(a) Type A :
Type A may obtain short-term foreign currency loans from overseas banks & financial institutions subject to the following terms & conditions:
- The loan shall be received through an AD branch. The industrial unit may be the collateral of the loan. The loan proceeds will be credited to the F.C account in the name of the units. The loan is to be used for financing import of capital machinery & raw materials, payment of interest/ service charges, repayment of loan & for crediting in Taka account for local expenses.
- Repayment of principal & interest on the loan shall be remitted out of the balances available in the F.C account prior approval of Bangladesh Bank. No fund may be provided from the own source of AD branches for such repayment without prior approval of Bangladesh Bank.
- No Taka loan against repatriable short-term loan will be allowed.
(b) Type B :
Taka loan may be granted up to 100% of short-term foreign currency loan brought in & encashed to taka for procurement of capital machineries for setting up which not exceeded the local partners` share of ownership of the unit.
- Prior Bangladesh Bank approval should be obtained by the branch while providing foreign exchange for import of machineries out of Taka loan.
- Repayments of the taka loans along with interests should be received out of the foreign exchange earnings of the unit.
(c) Type C :
May extend credit facilities as admissible as per credit norms.
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