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 in a densely populate of Bangladesh like our as this will generate employment opportunities which in turn will generate savings and investment on 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.

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 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 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 goods at a competitive price with a view to exporting and strengthening existing export 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 items more attractive to the market through product 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:

The following strategies shall be undertaken to attain the objectives of the export policy :

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 country 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 shrimp: Extension and modernization of traditional/semi-intensive method of shrimp cultivation and ensuring quality as per buyers requirements ;

3.8. For promotion of export of 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 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 sub-contracting involving, in a bigger way, Bangladesh missions abroad obtaining contracts;

3.13. Organizing regularly international trade fairs and product-specific fairs with the country;

3.14. Making appropriate development and expansion of infrastructure conducive to export;

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 or business. If an agent acts beyond 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.

How to Establish Representation Overseas

Labeling and packaging regulations

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 ‘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 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. They should be clearly labelled “Samples: for 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 the value of commercial samples delivered by courier to $16. In practice, the authorities allow this to be flouted; but if the value appears to be over $200, then customs may not clear the goods.

Special requirements are in place however for the importation of vegetable seed, animal and/or plant samples.

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 the product will be exported 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:

It provides information on trade barriers which may affect you in the individual countries;

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 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 country of origin),and correspond to the Letter of Credit.

Export Controls & Licensing

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

the collective security of the UK and its allies in NATO

national security and foreign policy requirements

international legal obligations and commitments

non-proliferation policy

concerns about terrorism

internal repression

other human rights violations

If items are subject to UK export controls, a licence is required before they can be 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 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. 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 January 1995 to implement TRIPS.

In spite of the presence of well-drafted legislation (according to international experts), enforcement of Bangladesh’s Intellectual Property Rights (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 of Department of Innovation, Universities and Skills (DIUS) within the Office for Science and Innovation (OSI) and responsible for the national framework of Intellectual Property rights, comprising patent, designs, trade marks and copyright.

Import and export

If you are thinking of importing or exporting then you should consider other peoples intellectual property (IP) rights. Infringing someone else's IP rights could prove costly.

IP rights are territorial, that is they only give protection in the countries where they are granted or registered. If you have only registered in the United Kingdom (UK) this may allow others to use your IP abroad without infringing your rights.

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 and 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 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 is now automatic. The cumbersome procedure for opening 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:

-few items, mostly inputs 0.0-15%

-basic raw materials 15-22.5%

-intermediate products 22.5-30%

-finished products 30-40%

A 2.5% infrastructure development surcharge is levied on imports. A supplementary duty is levied on luxury items like cars with engine capacity greater than 1,000 cc and "undesirable" items like cigarettes. Excise duties have been abolished on all items except on manually prepared cigarettes, bank accounts, and textiles. Certain products are exempt from the value-added tax. Ready-made garments manufacturers who are 100% export-oriented can import duty-free through bonded warehouses. Other export-oriented industries and indirect exporters can claim a duty-drawback at stated rates.

Customs Valuation

The customs valuation of imported goods for the purpose of assessment and realization of customs duty is based on the normal value concept. Ad valorem duties are generally assessed on the basis of the 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 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 10,200

a. customs duty @ 45% $ 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 $ 255

--license fee 2.5% on assessable value $ 255

--total duties and taxes $ 8,491.50

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

Import Licenses

Import licenses are not required for any imported items exceptthose on the restricted list. However, importers need to use

Letter of Credit Authorization (LCA) forms to import goods.

Export Controls

The following items are banned for export:

-all imported goods in their original or unprocessed form

-petroleum and petroleum products except naphtha, furnace oiland bitumen

--oil seeds and edible oils except kapok seeds

--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)

--bamboo and cane in whole form and wood log

--frogs of all species (live or dead) and frog legs

--human blood

--chemical weapons

In addition, the following items are restricted for export, requiring Ministry of Commerce permission on a case-by-case

basis: molasses, de-oiled rice bran, wheat bran and urea fertilizer.

Quality control licenses issued by the Bangladesh Standards and Testing Institute are required to export the following items:

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 is required for exports of raw jute. All plants and plant materials for export must be inspected and certified 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 can be kept on file with their banks. At present, there is no lack of foreign currency for import transactions. However, as a safety cushion against currency fluctuation, banks prefer to source foreign currency for L/Cs over $ 500,000 from the central bank. Typically, 1-2 days is required to obtain registration from the central bank. Unless otherwise specified, all imports must be made by opening an irrevocable letter of 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 procurement procedures for import of goods without an L/C;

--imports of "International Chemical References" through bank drafts by recognized pharmaceutical (allopathic) firms on the approval of the Director, Drug Administration, for the purpose of quality control of their products.

Importers must submit to their nominated banks the following documents along with the LCA:

--L/C application form duly signed by the importer;

--indents for goods issued by indentor or a proforma invoice obtained from the foreign supplier;

--insurance cover note.

Foreign firms are allowed to import permissible commercial items against prior permission from the Chief Controller of Import and Export and need to provide following documents:

--photocopy of the valid Import Registration Certificate;

--photocopies of invoices, bill of lading, and import permit duly certified by the bank;

--original or copy General Index Register (GIR) certificate from Income Tax Authority;

--certified copy of the last income tax assessment order; and

--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 and industry or any trade association, established on an all-Bangladesh basis, representing any special trade or business;

--proof of payment of renewal fees for the Import Registration Certificate (IRC) for the concerned fiscal year;

--copy of a "TIN Certificate" issued by the tax authority. The TIN (Tax Identification No.) Certificate is a new requirement aimed at ensuring collection of income tax, VAT and other revenues from importers.

--a declaration, in triplicate, that the importer has paid income tax or submitted an income tax return for the preceding year and

--any such documents as may be required by import policy order or public notice, or instruction issued by the Chief Controller of Imports and Exports.

In the following case, neither an LCA nor the opening of an L/C will be necessary, but an import permit (IP) or clearance permit (CP) will have to be obtained by the importer:

--import of books, magazines, journals, periodicals and scientific and laboratory equipment against surrender of UNESCO

coupons;

--imports under pay-as-you-earn scheme for a limited number of cars, fishing vessels, cargo or passenger vessels, and new machinery on the basis of clearance from the Bangladesh Bank;

--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 obtains an import/export permit.

Labeling, Marking Requirements

Imported goods (including their containers) must not bear any words or inscriptions of a religious connotation, the use or disposal of which may injure the religious feelings and beliefs of any class of the citizens of Bangladesh. In addition, imported goods should not bear any obscene pictures, writing, inscription, or visible representation.

Milk food can be imported in cans and in bulk. The container must indicate the ingredients in Bangla as well as the manufacturing and expiration dates (in Bangla or English). A measuring spoon must be supplied in all containers of baby food.

Non-fat dried milk is importable only in airtight containers, with the date of manufacture and expiration noted in Bangla or English. Pesticide containers must be able to withstand "handling by sea," indicate the chemical contents, and meet other specifications.

Prohibited Imports

Bangladesh's Import Policy Order 1995-97 places controls on some imports. Items banned from import include:

--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 citizens.

Other items completely banned are: live pigs, pig and 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.

In addition, the import of goods from Israel and the import of goods of Israeli origin are prohibited, as is the shipment of goods on Israeli flag vessels. All types of imports are also banned from Serbia and Montenegro.

Standards

Quality standards are set and monitored by the Bangladesh Standards and Testing Institute. Bangladesh also recognizes and accepts goods bearing certification from standard institutions of other countries. Standards for pharmaceuticals are controlled by the Department of Drugs Administration under the Ministry of Health and Family Welfare. The Bangladesh Atomic Energy Commission tests all imported food items to ensure that the prescribed standard for radioactivity is maintained.

Free Trade Zones/Warehouses

Bangladesh has two Export Processing Zones (EPZ's), one in Chittagong and one in Savar (near Dhaka). The EPZ's offer tax breaks, a relatively secure power source, the duty-free import of capital machinery, warehouse facilities, and other benefits to 100% export-oriented industries. Chittagong port has 116,375 square meters of covered warehouse space, with a capacity to hold 50,000 metric tons. The port also has a warehouse for hazardous cargoes (102 metric tons) and for cold storage (500 tons).

Mongla port near Khulna (southwest Bangladesh) also has warehouse 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 for many years as a means to promote exports while conserving foreign exchange. Barter trade in commodities used to carried out 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

Bibliography:

www.britishhighcommission.gov.uk or www.ukinbangladesh.org

www.sitpro.org.uk/trade/index.html

www.sitpro.org.uk

http://www.ipo.gov.uk/abroad.htm