Japan has demanded equality between local and foreign apparel companies on providing incentive packages, media reported.
Bangladesh currently provides incentives only to domestic apparel manufacturers which have created discrimination between the local clothing units and the foreign-owned units operating in the export processing zones (EPZs).
In a recent letter to the Ministry of Finance, the Japanese Ambassador in Dhaka urged to ensure equal treatment of both the EPZ factories and the local producing units.
Currently, the local apparel exporters enjoy a 4% cash incentive against their exports to non-traditional or new market destinations.
Only Type C companies, 100% Bangladesh-owned and resident in Bangladesh in the EPZs, are entitled to get the incentive.
According to the letter, Type A companies (100% foreign-owned – including Bangladeshi nationals ordinarily residing abroad) and Type B companies (a joint venture between foreign and Bangladeshi entrepreneurs residing in Bangladesh) in the EPZs are not eligible to get the facility.
The Bangladesh-Japan Public Private Joint Economic Dialogue (PPED) stocktaking meeting on August 4 discussed the issue along with a number of investment challenges faced by the Japanese companies in Bangladesh.
The letter added that the cash incentive on garment exports to the new markets is one of the issues, which is yet to be solved.