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DOING BUSINESS WITH BANGLADESH RESOURCES
Your complete guide on how to start and do business with Bangladsh. Information such as import/export regulations, customs information, tax , currency, copyrights, etc.

8. 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 0.0-37.5%%. 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 essential items
0.0-15.0%
- Basic raw materials
15.0-22.5%
- Intermediate products
22.5-30.0%
- Finished products
30.0-37.5%

A 3.0% Development Surcharge is levied on imports along-with 2.5% Licence fee and 2.5% Advance Income tax (AIT). 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
With the introduction of the PSI (pre-shipment inspection) system Bangladesh has abandoned the traditional tariff value method to determine the price of import items on the basis of which customs duties were levied. From February 15, 2000 onwards items imported through Letter of Credits will be taxed on the basis of certificate of clean report of findings (CRF) issued by three designated PSI Agents. For a list of countries showing their respective CRF Issuing Companies, please see annexure.
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.

IMPORT POLICY
Import of goods into Bangladesh is regulated under three broad categories:
Banned List: Unless otherwise specified, items included in the list cannot be imported
Restricted List: Any item included in this list shall be importable only on fulfillment of the
conditions specified therein against the item

Free List: Unless otherwise specified, any item which doesn’t appear either on the
banned or restricted list shall be freely importable

Import licenses are not required for any imported items except those on the restricted list. However, importers need to use Letter of Credit Authorization (LCA) forms to import goods.

IMPORT 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 through opening of 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 1997-2002 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 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 recognize and accept 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.

EXPORT POLICY
Objectives:
- To narrow down gap between export earning and import payment through achievement of export target set by the government
- Develop marketability through product diversification and quality improvement
- Establish backward linkages for utilization of local materials
- Encourage and use appropriate technology and formulate suitable strategy for development in the context of free market economy
- Increasingly involve the private sector in the expansion of export trade

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 oil and 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 de-veined 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.

BANKING
The Bangladesh banking sector is made up of:
Nationalized commercial banks
Domestic private commercial banks
Foreign banks
Specialized banks & development financial institutions
The Bangladesh Bank (the central bank) regulates all banking institutions.

Collectively, these banks make up the “scheduled “ banking system. The central
Bank is controlled by the Ministry of Finance. The Bangladesh Bank is headed by a governor, who reports to the Secretary, Banking Division of the Ministry of Finance.
The Bank of Nova Scotia has been granted a license to operate in Bangladesh and has a full-fledged branch in Dhaka.

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.

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).

 

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