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Nepal garment sector wants end to 'advance penalty'
May '12
The Nepal Government should end the 'advance penalty' system applicable for raw material imports by garment manufacturers in the 2012-13 budget, Garment Association Nepal (GAN) has suggested.

The association claimed that they want the Government to realize and remove the difficulties that the garment entrepreneurs in the country face due to the advance penalty system. GAN has also forwarded a copy of the same suggestion to the Ministry of Finance with an urge to resolve the problems faced during import of raw materials by the country's garment sector.

While importing raw materials, garment entrepreneurs need to pay an additional 25 percent charge, other than the 13 percent Value Added Tax (VAT) and 15 percent customs duty. The additional charge is aimed at covering losses during imports.

Garment entrepreneurs have been paying such advance penalty ever since implementation of the bank guarantee system.

Though the sum so paid is refundable, it raises the cost of production by almost 50 percent, following which Nepali garments are priced comparatively higher in global market.

GAN believes that the Nepali Government can help revival of the country's garment export industry by ending the advance penalty system.

Garment entrepreneurs in Nepal each year import millions of Nepali rupees worth of raw inputs, and the extra penalty raises their cost of production. GAN thus expects of the Government to seriously consider its suggestion and act positively for revival of the industry.

The association stated that there are several issues concerning the industry that have been overlooked for over a decade, but this time they only want the Government to incorporate their only suggestion in the forthcoming budget.

Fibre2fashion News Desk - India

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