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Thursday, September 29, 2011

Bangladeshi Fish exporters afraid of incurring Tk 1b loss

Local fish exporters expressed apprehension of incurring loss of more than one billion taka due to the government's decision to cut cash incentive for the country's third largest foreign currency earning sector, officials said.

They said if the government discontinues the enhanced rate on ceiling, the fish exporters will incur a loss of around Tk 1.0 billion in the current fiscal (2011-12), as their production cost would increase.

The government has withdrawn the enhanced 25 per cent cash incentive on ceiling price and decided to continue the support to the fisheries export sector at the earlier rate, they added.

"The sector will face a setback for losing competitiveness in the global market," President of Bangladesh Frozen Food Exporters Association (BFFEA) Kazi Shahnewaz told the FE Wednesday.

Export growth of the sector will retard in the current fiscal, as the cash support directly helped the fish growers, he added.

On April, the Prime Minister's Office formed a committee, headed by the PM's Economic Adviser Dr Mashiur Rahman, to help the frozen food exporters iron out the problems they are facing following the global recession.

The committee recommended a number of suggestions for boosting the sector's growth, including providing cash support on invoice value from July 2011. It also suggested that fixed price could be raised from 25 to 35 per cent for providing incentive as an interim adjustment for the export of April to June of 2010-11 fiscal.

As part of the recommendations, the government raised the cash incentive on ceiling to $4.74 per pound for shrimp from $3.79 and $1.38 per pound for white and other fishes from $1.10 for an interim period of April to June.

"We bought fish considering our cost on the basis of 25 per cent enhanced rate of price," managing director of Ark Seafood Ltd Mohammad Aminullah said.

Our cost of production has gone up following high interest rate of banks, he said, adding that the decision of cutting the support will hinder the export growth.

An exporter used to get $3.79 for per pound of shrimp and $1.10 for per pound of white and other fishes. According to the recommendations, the exporters are expected to get the cash support on the actual rate of invoice value from this July, he also said.

Instead of launching the actual rate of invoice value the government suddenly cut the increased support, he added.

The government started providing cash incentive at the rate of 10 per cent from 2002-03 fiscal and raised it to 12.5 per cent in 2009-10 fiscal to overcome the aftermath of global financial crisis, an exporter said.

"It helped the sector overcome the crisis and pushed up the export growth," he said, adding that it also encouraged the farmers, as the cash support go directly to them.

The country fetched $445.18 million in 2009-10 fiscal, marking a negative growth of 2.0 per cent, and $625.04 million in 2010-11 fiscal, making a robust growth of over 40 per cent, he added.

"It happens due to the government's assistance, but in the previous fiscal, the government cut 2.5 per cent cash incentive and raised the ceiling rate for the last three months."

"If the government discontinues the support, we are going to incur a loss of around Tk 1.0 billion in the current fiscal," he added.
Financial Express

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