Indenting services need proper recognition: BIAA president

Dhaka,  Mon,  24 October 2016
Published : 14 Oct 2016, 22:18:39

Indenting services need proper recognition: BIAA president

FE Report

Indenting services, a growing foreign exchange earning sector, is not getting 'proper recognition' from the National Board of Revenue (NBR), said president of Bangladesh Indenting Agents Association (BIAA) MS Siddiqui.

In an exclusive interview with The FE recently, he said the government has recognised indenting services as an export sector in the Export Policy for 2015-18 but the revenue board is yet to acknowledge this.

"As a result the export sector is not getting the benefits, it deserves," Mr MS Siddiqui, also a legal economist said.

According to Mr Siddiqui, the commerce ministry wrote to the NBR in August this year to include indenting services in the list of export sectors.

 "The NBR cannot go against any state policy but they are going in practice... They are arguing that we are not exporters as we are not sending anything beyond borders and are simply serving the local importers," he said.

The BIAA president lamented that there is a misperception about indenting services in Bangladesh.

"Many people think indentors are brokers, but they are really not. They are the agents of foreign companies here... Exporters enjoy a good status here but the indentors don't enjoy such status because of the wrong perception," he said.

According to him, indentors do not receive any commission or service charges from local importers; whatever they receive is commission directly from their principals or exporters in foreign currency.

Bangladesh Bank data suggest indentors' commission had been steadily increasing for the last several years.

According to the central bank, the sector received 39.96 million US dollars in commission in 2011-12 fiscal year. The figure rose to $40.54 million in FY 2012-13, $42.37 million in FY 2013-14 and $51.31 million in FY 2014-15. It was $40.97 million in the first 10 months of FY 2015-16.

The figures, however, are not included in the country's export proceeds that the Bangladesh Bank compiled.

To a question on whether the price of a product that an importer sources through indentors is higher than that imported directly from the principal, Mr Siddiqui answered in the negative.

"The prices of products sourced through us are even lower as we reduce the principals' marketing cost. Because of us, the principals don't need to open overseas offices and engage any salaried marketer. If they don't give us commission, it doesn't mean that the prices will be lower," he said.

"On the other hand, we can find out the best sources for the importers what is difficult on their own due to the lack of properly manned purchase departments... It means we are serving local industries but are being paid by foreign companies", he continued.

The BIAA chief complained that the NBR has imposed 8.0 per cent advance income tax (AIT) and 15 per cent value added tax (VAT) on earnings of indentors though the VAT Act does not endorse imposition of such charges on any export proceeds.

He fears 'a drastic fall' in the export proceeds fetched by indentors because of the imposition of the AIT and VAT.

Mr Siddiqui sought supports from the government for indenting agents so that they can grow and go for the establishment of industries with the knowledge they acquire as indentors.

He claimed that many of the leading corporate entities in Bangladesh had started their business as indentors and then thrived to many other areas. "Entrepreneurship started from here."

The BIAA president called indentors 'ambassadors of the country' and said they facilitate foreign investments by introducing the country's business and industrial sectors to large global players.

"If anybody publishes advertisements in international media stating that Bangladesh is a very good market (for investment), nobody will come. But if we tell our overseas partners that you know our market well so please come here for investments. That will be much more effective," he said.
Editor : A.H.M Moazzem Hossain
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