Exchange rate incentive for exporters on the cards

The government is likely to introduce exchange rate incentive under
which local exporters will get financial support in the form of
exchange rate of green buck, official sources said. 'We are
examining the central bank's proposal of giving the local exporters
the exchange rate incentive to help them facing the impact of global
recession', said an official of the finance ministry. The official
also said if the government would approve the proposal, it would be
applicable only for the local exporters, not for the importers, and
the incentives would be depending on the volume of exports. A
technical committee of the finance ministry, formed to deal with
shocks from the global economic meltdown, in its first meeting for
the current fiscal year on Wednesday, analysed the central bank
proposal to provide exchange rate incentive to the local exporters.
The technical committee of the coordination council on monetary and
exchange rate policy recommended formation of a high-powered
executive task force to tackle the global economic recession. The
central bank incentive proposal will be recommended to the task force
to tackle the global economic recession, sources said. According
to the proposal, the government can set up dual exchange rates—one for
the exporters and other for the importers. But, the change is high
to provide the incentive to the exporters in the cash form depending
on their value addition to the export items, sources said. In the
past year, Bangladesh neighbouring country Pakistan devalued it
currency by 30 per cent while India devalued its currency by 25 per
cent. The exchange rate of dollar against taka was Tk 69.30 on
Thursday. The US dollar remained almost unchanged against taka for a
long time due mainly to low demand of the greenback in the
inter-bank foreign exchange market. The banks quoted the dollar
signal rate at Tk 69.06 last week. The central has continued its
intervention in the foreign exchange market through buying US dollar
from the commercial banks directly aiming to keep the market stable.
Earlier, the leader of the Bangladesh Textile Mills Association
demanded devaluation of local currency against US dollar so they
could get an competitive edge at the global markets. But, the
garment exporters urged the government not to depreciate taka against
the US dollar as the knitwear sector mainly depends on imported raw
materials. They also said local exporters were against
depreciation of taka because devaluation would help the exporters but
in the end, it would affect the people. Former president of
Bangladesh Garment Exporters Association Anwar-ul Alam Chowdhury
Parvez told New Age that the exporters would get maximum financial
benefit if the government introduce the foreign exchange incentive.