Barriers of Export Import in Bangladesh By Khandakar Niaz Morshed(Business English)

Barriers of Export –Import in Bangladesh

Let’s see Export policy of Bangladesh: 1. Introduction:

1.1. Acceleration of production and expansion of trade result in growth of national wealth. Increased production in export sectors may become the prime mover in the development cycle c ycle in a densely populate of Bangladesh like our as this will generate employment opportunities which in turn will generate savings and investment on o n consequent flow of capital. The prime national objective of poverty alleviation will thus be materialised. As a first step towards reaching this goal we need to look at the country's production infrastructure. 1.2. Our export trade is featured by the dominance of a few commodities in a narrow market. Such dependence on at limited number of export items targeted a limited market is not desirable for economic development. We must, therefore, aim both at product and market diversification or else our export trade will become stagnant in the near future.

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1.3. Our export trade must keep pace with the projected GDP growth @ 7% and make due contribution through increased export earning. In this exercise it is imperative to identify new thrust sectors, increased export of higher value added add ed items, diversify product wise , ensure products quality, improve packaging, attain efficient productivity. We should aim at marketing quality products at competitive price at the correct time. 1.4.. The Export Policy 1997-2002 has been designed to operate in the imperatives and opportunities of the market economy with a view v iew to maximizing export growth and narrowing down the gap between import payment and export earning. 2. Objectives:

The principal objectives are: 2.1. To achieve optimum national growth through increase of export in regional and international market; 2.2. To narrow down the gap between the country's export earning and import payment through achievement of the export targets; 2.3.To undertake timely steps for production of exportable expo rtable goods at a competitive price with a view to exporting and strengthening existing export ex port markets and making dent in new markets; 2.4. To take the highest advantage of entering into the post Uruguay liberalized and globalized international market; 2.5. To make our exportable ex portable items more attractive to the market through p roduct diversification and quality improvement; 2.6. To establish backward linkage industries and services with a view to using more indigenous raw materials, expand the product base and identify and export higher value added products ; 2.7. To simplify export procedures and to rationalize and solidify export incentives; 2.8. To develop and expand infrastructure; 2.9. To develop trained human resources in the export sector; 2.10. To raise the quality and grading of export products to internationally recognized levels. 3. Strategies:









3.1 . Simplifying export procedures, and helping the private sector achieve efficiency. The Govt. Desires more and more involvement of the private sector while the govt. will continue to play its facilitating role; 3.2.. Enhancing technological strength and productivity and facilitating reduce cost and attain internationally accepted standard of quality of exportable products and thereby consolidate their competitiveness ; 3.3.. Ensuring maximum use of local raw materials in the production of export goods and encouraging establishment of backward linkage industries; 3.4. Participation in the international trade fairs, specialized fairs, single cou ntry exhibitions abroad and also sending out trade missions, with a view to consolidating our position in the existing market and creating new markets; 3.5. Encouraging export of new category high value added readymade garments and also encouraging the concerned trade associations for establishment of a Fashion Institute ; 3.6. For promotion of high value added leather and leather goods export: providing various facilities including bonded warehouse facilities for import of materials such as raw hides, pickled, wet blue, crushed and finished leather, components and chemicals etc. to 100% export oriented leather industries; 3.7. For promotion of export of o f shrimp: Extension and modernization of traditional/semiintensive method of shrimp cultivation and ensuring quality as per buyers requirements ; 3.8. For promotion of export of o f jute and jute goods: Undertaking extensive publicity of jute and jute goods as environment-friendly natural fibre and diversification of the uses of jute products; 3.9. For promotion of export of o f tea undertaking programmes for establishing brand name and developing linkage with established blending and distributing agents; 3.10. For promotion of export of agro based products: undertaking programmes for raising quality standard and expansion of market; 3.11. For the promotion of export of electrical and electronic goods ( including computer software and data entry) : Building and ensuring conducive infrastructure; 3.12. For the promotion of export of engineering consultancy and other services and subcontracting involving, in a bigger way, Bangladesh missions abroad obtaining contracts;









3.15. Making arrangements for necessary technical and practical training for development of skilled manpower in the export sector; 3.16. Ensuring maximum utilization of financial and other assistance extended by the World Trade Organization to the Least Developed Countries; 3.17. Ensuring maintenance of ecological balance and pollution-free environment in the production of exportable goods; 3.18. Extending technical and marketing assistance for development of new products and for finding appropriate marketing strategies; 3.19. Taking necessary steps to assist procurement of raw materials by the export oriented industries at world price ; Local representation Agents

It is generally accepted that to do business in Bangladesh a foreign company needs to appoint an influential local partner (usually an agent), who knows how business is done and can navigate a path around Bangladeshi bureacracy. The appointment of the right agent is considered to be fundamental to success. Usually, Dhaka-based agents should be in a position to cover the entire territory of Bangladesh. UK Trade and Investment, through the commercial section of the British High Commission in Dhaka, is well -positioned to identify suitable representatives for UK companies looking to enter the market, as well as offer an assessment of the potential demand for new products. Agency Legislation

Contract Act 1872 prescribes the rights and liabilities of an agent and also of the principal. The agent has the authority to act or carry on a business, and therefore should do every lawful thing necessary to execute such an act a ct or business. If an agent acts beyond be yond the terms of the agency agreement, the principal will not be liable for these acts. Most agency agreements have a clause, which permits both parties to give due notice if it is intended that the agreement is to be terminated. As Bangladesh has not ratified the Arbitration (Protocol and Convention) Act 1937, it is wise to include a clause which agrees to allow an independent arbitrator to settle any disputes between parties.









Imported goods and their containers must not incorporate any words, pictures or inscriptions of a religious or obscene connotation. Advertising material disclosing the nature of the contents that could entice theft should be avoided. Import controls

Inspection rules change frequently so exporters should check the requirements either with their customer or with the relevant pre-shipment company. Bangladesh’s import policy orders prohibit the importation of horror-based and subversive or offensive literature, including printed material, posters, audio and video based productions. Items causing offence to Muslims will not be allowed to enter the territory. In addition, temporary bans may be enforced like the recently-implemented prohibition against the importation of birds from Romania and Croatia (to reduce the chances of avian av ian ‘flu spreading to Bangladesh). Import Duties (Tariffs)

Bangladesh’s regime of import or tariff duties is not considered to be unduly protectionist, in global terms. Rates of duty on more commonly imported items range from 25% (for textiles and clothing products competing in Bangladesh’s key economic eco nomic sector); for high energy-consuming home electrical and electronic items; and for motor cars) down to zero (for key inputs into the textiles and clothing industries; for fertilizers; and for many foodstuffs). As a Least Developed Country (LDC), Bangladesh will not be required to reduce tariff barriers as part of the (now-stalled) Doha Round Import Duties (Quotas)

There are currently no quota-based import controls. Bona fide samples of items permissible under Import Policy Orders may be imported free of charge without prior permission. permission. They should be clearly labelled labelled “Samples: for promotional promotional purpose but not for sale”. Business visitors should be able to hand-carry a reasonable quantity of samples but their sale in Bangladesh is prohibited. A law is in place restricting restricting the value of commercial commercial samples delivered by courier courier to $16. In practice, the authorities allow this to be flouted; but if the value appears to be over $200, then









Agents and representatives of foreign manufactures are allowed to temporarily import equipment /machinery for the purpose of exhibiting or demonstration, subject to the goods being exported within a year of their arrival; and the importer acquiring a bank guarantee (or similar legal instrument) confirming that that the product will be exported within within the 12 months. Import duties would be waived in these circumstances. Given the political unrest it is recommended that companies wishing to do business in Bangladesh seek legal representation and advice before entering into any contract. Find Out More About ATA Carnets Read SITPRO's guide on Temporary exportations from the UK Read about ATA Carnets on HMRC's website Apply for an ATA Carnet at the London Chamber of Commerce Anti Dumping and Countervailing

As a member of the World Trade Organisation (WTO) Bangladesh can apply anti-dumping or countervailing duties to products which are sold in Bangladesh for less than they sell in the country of origin in order to gain market share or undermine an existing or emerging industry in Bangladesh. These additional duties are imposed on a temporary basis to counteract the effects of an unfairly low price or an unfair subsidy to the producer. An example of an unfair subsidy would be government grants, capital loans, favourable loan guarantees, export rebates, and tax incentives. These duties can only be imposed if the imported goods have caused, or are likely to cause, material harm to the Bangladeshi domestic market. Read Businesslink's guide on anti dumping and countervailing duties Drawback and Bounty

Export-oriented industries and indirect exporters may be eligible to claim a duty-drawback at stated rates. Customs duties

How HM Revenue & Customs Can Help You HM Revenue & Customs provide information and guides to assist you with the export process. The European Commission's Market Access Database is a free tool designed to assist exporters:











The Applied Tariff Database section allows users to enter a HS code or product description to obtain a tariff rate and details of taxes applicable ap plicable to a, enabling you to calculate a landed cost; the Exporters Guide to Import Formalities database (searchable by HS code or by product), gives an overview of import procedures and documents, as well as any general and specific requirements for a product; The SPS Database facilitates the identification of Sanitary and Phytosanitary export problems with any non-EU country The Market Access Database can only be accessed with an ISP that is based in the EU. Additional taxes

The United Kingdom has a Double Taxation Agreement and an Investment Promotion and Protection Agreement (IPPA) with Bangladesh. Read Businesslink's guide on understanding your tax liabilities when exporting Additional information Documentation

UK Exporters to Bangladesh should be diligent and precise in preparing export documentation: any deviations can lead to delays and additional costs. Invoices should clearly state the goods being supplied (including specification, packing and a nd country of origin),and correspond to the Letter of Credit. Export Controls & Licensing

The UK Government maintains export controls to control c ontrol the export of goods, including software and technology, for a variety of reasons including:









If items are subject to UK export controls, a licence is required before they can be b e exported by any means. Department for Business, Enterprise & Regulatory Reform (BERR) is the licensing authority. BERR Export Control Organisation is the first point of contact for information on export controls. The Enquiry Desk provides advice on many issues, including how to establish whether or not specific goods need an a n export licence, the different types of export licences, how to complete export licence application forms and how long they take to process. The Defence Export Services Organisation (DESO) can provide information concerning the export of defence related equipment. Intellectual Property

Bangladesh is a member of the World Intellectual Property Organisation (WIPO), and adheres to the Paris Convention on Intellectual Property in 1991. 1991 . The Government is currently examining drafts of Patent and Designs and Trade marks Acts which are supposed to bring them into conformity with the World Trade Organisation's Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Bangladesh has 10 years from Janua ry 1995 to implement TRIPS. In spite of the presence of well-drafted legislation (according to international experts), enforcement of Bangladesh’s Intellectual Intellectual Property Rights (IPR) (IPR) is notoriously weak. The proliferation of pirated software and DVDs, some copied locally and neighbouring Asian countries, is an obvious example. Bangladesh has until January 2015 to implement the WTO’s Trade-Related aspects of Intellectual Property rights agreement (TRIPS). Intellectual Property and International Trade The UK Intellectual Property Office (UK-IPO) is an Executive Agency o f Department of









State Trading Organisations / Privitisation Role and Contacts / Trade Promotion Organisations

Imports for government departments and nationalised industries account for almost one third of total imports to Bangladesh. The Trading Corporation of Bangladesh (TCB) imports items on behalf of public and private sector importers and certain industrial consumers. TCB has a monopoly for commodities such as sugar, salt, cement an d ammunition required by the public sector organistions. Exchange controls

Bangladesh imposes no foreign exchange controls and no other restrictions on the repatriation of profits or capital by foreign investors. Trade Barriers

Bangladesh has made significant progress in liberalizing its trade regime. Customs duty rates rates have been compressed to a range of 0.0-40.0%. The 2.5% import permit fee is the only other protective instrument for most imports (a trade neutral 15% value-added tax is also applied). The import permit system system is now automatic. The cumbersome procedure for opening letters letters of credit has been simplified. Customs duties are levied on all imports except raw cotton, textile machinery, certain machinery used in irrigation and agriculture, animal feeds used by the poultry and dairy industries, and certain drugs and medical equipment. Duty rates are determined along the following lines: lines: -few items, mostly inputs -basic raw materials

0.0-15% 15-22.5%









The customs valuation of imported goods for the purpose of assessment and realization of customs duty is based based on the normal value concept. Ad valorem duties are generally generally assessed on the basis of the CIF CIF (cost, insurance, freight and other charges) cost of goods. Duties are collected in Bangladesh currency by Customs authorities under the Bangladesh Customs and Excise Departments of the Ministry Ministry of Finance's National Board of Revenue. Follows is an example of how duties are charged on an imported item [duty rate used in this example may not be actual rate]: 1300 cc car, C&F value

$ 10,000

Insurance (1% or actual)

100

Landing Charge (1%)

100

Assessable value a. customs duty @ 45%

10,200 $ 4,590

b. supplementary duty @ 10% $ 1,020 c. duty paid value

$ 15,810

--VAT at 15% of duty paid value

$ 2,371.50

--advance income tax 2.5% of assessable value --license fee 2.5% on assessable value --total duties and taxes

$ 255

$ 255 $ 8,491.50

Our $ 10,000 vehicle's landed cost is therefore $ 18,691.50. Import Licenses









--jute seeds and sunn-hemp seeds -wheat --gur and khandseri sugar --animals, animal skins and wildlife covered by the Bangladesh Wildlife Preservation Order, 1973 -arms and ammunition, explosives, and ingredients thereof --fissionable materials -raw and wet blue leather -rare items of archaeological interest --human skeletons --pulses --eggs and poultry --prawns and shrimp, except frozen and processed --feature films not certified by the Bangladesh Film Censorship Board as fit for export --onions --rice bran (except de-oiled rice bran) --shrimp of count 71/90 and sizes below for sea water and 61/70 and sizes below for fresh water, excluding two varieties (Harina and Chaka)











cane molasses, shrimp and prawns (except frozen deveined or cooked), oil cake, wet batteries and dry battery cells, electric fans and other select electric appliances, biscuits, and PVC electric cables. An inspection certificate certificate is required required for exports of raw jute. jute. All plants and plant materials for export must be inspected and certified ce rtified that they are free of insects or disease. Import/Export Documentation

Unless otherwise specified, all imports transacted through a bank require a Letter of Credit Authorization (LCA) Form. Obtaining an LCA is not onerous, and many of the documents required for submission by importers importers can be kept on file with their banks. At present, there is no lack of foreign currency for for import transactions. transactions. However, as a safety cushion cushion against currency fluctuation, banks prefer to source foreign currency for L/Cs ov er $ 500,000 from the central ce ntral bank. Typically, 1-2 days is required to obtain registration from the central bank. Unless otherwise specified, all imports imports must be made by opening an irrevocable letter of credit. credit. Import against an LCA may be made without opening an L/C in the following areas: -import of books, journals, magazines, and periodicals on sight draft of issuance bill basis; --import of any permissible item for an amount not exceeding $ 5,000 only during each local fiscal year against remittances made from Bangladesh; --imports under commodity aid, grant or such other loan for which there are specified









--name and description of each item to be imported with quantity and approximate C&F value. Public sector importers also need to provide the following documentation:

-attested photocopy of allocation letter issued by the allocating authority in favor of the concerned public sector agency specifying the source, amount, purpose, validity, and the terms and conditions; --attested photocopy of sub-allocation letter, if any, issued in favor of the importing agency or unit; --attested photocopy of sanction letter from the administrative ministry or authority where applicable; and --a declaration by the authorized officer of the importing agency indicating the amount of utilized/unutilized government funds and that imported raw materials will not be sold. Private sector importers need to furnish the following additional documents :

--valid membership certificate from the registered local chamber of commerce an d industry or any trade association, established on an all-Bangladesh b asis, representing any special trade or business;









--import of items by passengers coming from abroad in excess of the permissible limits as per permitted allowance; and -import of free samples, advertising materials, and gift items above prescribed ceilings. Temporary Entry

Agents and representatives of foreign manufacturers are allowed to import machinery and equipment from their principals for purposes of demonstration or exhibition, subject to the following conditions: -the goods brought into Bangladesh will be re-exported within a period of one year; --the importer shall execute a bond and furnish a bank guarantee or understanding or a legal instrument to the satisfaction of Customs at the time of clearance indicating that the goods will be re-exported in a timely manner; and --if the goods include any banned or restricted items, prior permission is required from the Chief Controller of Imports and Exports.

Equipment or machinery imported on a temporary basis is exempt from duty if the importer









--maps, charts and geographical globes which indicate the territory of Bangladesh but do not do so in accordance with the maps published by the Bangladesh Government's Department of Survey; --horror comics, obscene and subversive literature; -printed material, posters, video tapes, etc. containing matters likely to outrage the religious feelings and beliefs of any class of the citizens of Bangladesh; --unless otherwise specified, old, second-hand and reconditioned goods; --unless otherwise specified, all kinds of waste; and --goods bearing pictures or writing which is obscene or of a religious connotation which may injure the religious feelings of any class of Bangladesh c itizens. Other items completely banned are: are: live pigs, pig and poultry poultry fat, poppy seeds and dried posto dana, grass, opium, tendu leaves, lard, lard and tallow oil, solid or semi-solid palm oil, raw sugar, un-denatured ethyl alcohol (80% or higher) and other spirits denatured of any strength, wine, artificial mustard oil, selected petroleum products, woven fabrics of silk or silk waste, pig hair, some kinds of cloth, selected insecticides, nylon and polyethylene ropes, fishing nets (gillnets), used or new rags, vessels more than 15 years old, motorbikes more than three years old, and single phase electricity meters.









Mongla port near Khulna (southwest Bangladesh) also has warehouse facilities. facilities. For industries outside the EPZ's, the National Board of Revenue provides bonded warehouse facilities to 100% export oriented industries or to industries whose raw materials/components are mainly imported. Production within bonded areas is free of import duties, with a minimum of customs formalities. Privately-owned and operated EPZ's are now legal though none is in operation; Korean investors have been planning one in Chittagong for the last two years but have faced implementation and other hurdles. Special Import Provisions

Bangladesh has encouraged counter-trade c ounter-trade for many years as a means to promote exports ex ports while conserving foreign exchange. Barter trade in commodities commodities used to carried out with with countries in Central and Eastern Europe, Central Asia, China, and North Korea, but during FY96 barter trade was discontinued with Bulgaria, China, the Czech Republic, Hungary and North Korea. Bangladesh also allows special trading arrangements through the Trading Corporation of Bangladesh. Membership in Free Trade Arrangements Bangladesh is a member of the South Asia Preferential Trade Agreement (SAPTA) under the umbrella of the South Asia



















Barriers of Export Import in Bangladesh By Khandakar Niaz Morshed(Business English)

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