Policies ( Trade Policy )

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Trade Regulations and Standards

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

Association for Regional Cooperation (SAARC).