EXPORT PROCEEDURE OF BANGLADESH

 Summary on Export from Bangladesh

Introduction

1.1 The word export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an “exporter” who is based in the country of export whereas the overseas based is referred to as an “importer” (foreign buyer). In international trade “exports” refers to selling goods and services produced in home country to other foreign markets.

1.2 Bangladesh exports about 168 different products and services to almost 186 countries. The main exportable are Readymade Garments, Knitwear, Home Textile, Frozen Food, Leather & Leather goods, Jute and goods which contribute near about 89% of our total export. On the other hand the main export destination of Bangladesh are USA, Canada, EU Countries including U.K, Germany, France, Italy, Sweeten etc contributing almost 93% of total export. The export statistics reveals that Bangladesh is proceeding with positive export growth since 1974-75 . Anexxure-17 presents the export trend from the year1974-75 to 2010-11 as well as the export performance in July-June, 2011.     

2. Procedure of Export

2.1 A company or individual businessmen with trade license is capable of doing export business. But before that he/the company has to obtain export registration certificate (ERC) from the office of Chief Controller of Import and Export (CCI&E), 111-113 Motijheel Commercial Area, Dhaka. Generally Trade License, Bank Balance Certificate, Membership from respective trade associations are required for obtaining ERC.

2.2 For starting a business in Bangladesh, it starts with registering the company name at the Office of the Registrar of Joint Stock Companies & Firms. The office is located at 24-25 Dilkusha, Commercial Area, Dhaka. This Office accords registration of Companies, Associations and Partnership Firms under the Companies Act, other related acts, rules, orders and ensures lawful administration of them.

2.3 The new entities should also obtain trade license from the city corporation where it is located. Depending on the type of the business it may also have to obtain license or certificate from BSTI, BRTA, etc.

2.3 For some products the exporters have obtain quality assurance certificate from BSTI/ Department of Fisheries (DOF)/ Respective Trade Associations etc.

2.4 The exporter can export with or without Letter of Credit (LC). The Contract/ Agreement with foreign buyer or CAD or Advance TT methods etc. are also allowed for export. The exporters then submit EXP form to bank and prepare bill of export. With all these documents exporters then approach at the customs authority of the port through which they want to ship his exportable. After examining all the papers the customs authority allows them to export and after boarding the products the authority gives them a bill of lading. After shipment the customs authority assures them stamping a seal in the back of bill of lading and provide Export General Manifest (EGM).  

 3. Export Law, Rules and Policies

The Export and Import Control Act 1950 (Annexure-1) provide the Government power to administer the import and export of Bangladesh under which a three yearly Export Policy is published. The Export Policy (Export Policy 2009-12, Annexure-2) generally guide the over all export of Bangladesh and help facilitate the exporters. The salient features of the Export Policy 2009-12 are as follows:

3.1 Products which cannot be exported and which can be freely exportable

3.1.1 Export Prohibited Products: Some Products cannot be exported. The list of such prohibited products can be found in Annex -1 of the Export Policy 2009-12.

3.1.2 Products under Conditional Export: Products which are exportable under some   conditions can be exported only after fulfilling those conditions. Such products have been listed in Annex-2 of Export Policy 2009-12.

3..1.3 Exportable Products: All other products except the products enlisted in Annex-1 and Annex-2 of the Export Policy 2009-12 i.e. export prohibited products and the products under conditional export shall be freely exportable.

3.1.4 Export of Samples which don't have commercial values: Samples of exportable can be exported freely but with some conditions outlined in para 2.2.1.2 of Export Policy 2009-2012.

3.2 Entre-pôt and Re-export Trade

Entre-pôt trade and re-export shall have to be conducted under the procedures stipulated in the Public Notice No. 42 (2003-2006)/import dated June 28, 2005 (14 Ashar 1412 Bangla) (Annexure-3) issued by the Office of the Chief Controller of Import and Export.

3.2.1 Entre-pôt trade means the export of an imported product at a price at least 5% higher than the import price. No change whatsoever in the quality, quantity, shape or any other aspect is necessary in this respect. Products under entre-pôt trade shall not come out of the port boundary. However, the products can be brought out of the port boundary under special authorization.

3.2.2 “Re-export” means the export of an imported product within a specific period of time with a value addition of at least 10% to the imported price by changing the quality or shape or both of the products by means of local reprocessing.

3.3 Export facilities and incentives

The government formulates the Export Policy principally with a view to facilitate the exporters so as to develop and promote export of Bangladesh. Chapter 3-7 of the Export Policy detail the techniques of export development and of providing facilities to the exporters. The policy details the lists of export facilities. Chapter-1 of the Export Policy 2009-12 introduces the title of the policy, its scope and strategy, Chapter-2 describes the general rules of export, Chapter-3 explain export diversification mechanism, Chapter-4 lists the general facilities of export, Chapter-5 describes about sector based facility, Chapter-6 presents about service export and Chapter-7 highlights some special facilities and incentives.

3.3.1 Cash incentives: As listed in Annexure-4, for 17 exportable, the government is providing 5-20% cash incentives against FOB price of exported items. The exporter can directly claim for cash incentive in his merchant bank.

3.3.2 Duty Drawback: Duties which are paid at customs authority is refundable in case of re-export business or imported materials which after making finished products will be exported.

3.3.3 Bonded Facilities: For bonded ware house with a view to 100% export materials can be imported without any duties.

3.3.4 Assistance in searching for foreign market: For exploring foreign market Export Promotion bureau (EPB) organize/help the exporters participate about 30-35 international trade fair every year. EPB generally bear the costs of stalls including other incidental costs. Normally the exporters will have to bear only traveling and their accommodation cost. Besides, EPB and Ministry of Commerce often organize Marketing Mission abroad for searching new export market. The Mission comprises representatives from business leaders and exporters. 

3.3.5 Export Loan at lower rate of interest: At only 7% rate of interest export loans are being provided. Besides, there is a fund named Export Promotion Fund (EPF) in Export Promotion Bureau (EPB) which provide export loan for ICT and handicrafts exportable at only 4.5% rate of interest without any co-lateral. There is an Export Development Fund (EDF) in Bangladesh Bank to provide export loans up to USD 400 million(Annexure-5).

3.3.6 Awarding CIP status and National Export Trophy: Every year CIP status (Annexure-6) and National Export Trophy (Annexure-7) are awarded to the best exporters of different sectors in recognition of producing new products, diversifying of products, enhancing exports, etc.

 

4. Export Preferences to (trade relations with) Foreign Countries

Bangladesh maintains excellent trade relations with foreign countries. Bangladesh became a member of World Trade Organization (WTO) from its inception. Bangladesh is also the member of South Asian Free Trade Area (SAFTA), Asia Pacific Trade Agreement (APTA), BIMSTEC and, Organization of Islamic Conference (OIC). Through those organizations and some times bilaterally Bangladesh enjoy preferential treatment on export trade. Of all those preferential treatments the most important one is Generalized System of Preference (GSP). In this system as an LDC, we get some preferential advantages including duty free or concession and quota free access. We are getting GSP in 37 Countries including 27 EU countries and 10 others like USA, Canada, Japan, Norway, Switzerland etc.

Frequently Asked Questions (FAQ)

1. I want to do business. How can I start a business?

Ans: To start a business at first you should have Tax Identification Number (TIN)/certificate and especially need a trade license? For Joint business or company you need register your company. in Office of the Registrar of Joint Stock Companies & Firms. The office is located at 24-25 Dilkusha Commercial Area, Dhaka. This Office accords registration of Companies, Associations and Partnership Firms under the Companies Act, other related acts, rules, orders and ensures lawful administration of them.

2. From where can I get a trade license?

Ans: For trade License you can apply to City Corporation, Pourashova or Union Parishad.

3. How can I register my company?

Ans: For registration of company name you need approach Office of the Registrar of Joint Stock Companies & Firms. The office is located at 24-25 Dilkusha Commercial Area, Dhaka. This Office accords registration of Companies, Associations and Partnership Firms under the Companies Act, other related acts, rules, orders and ensures lawful administration of them.

4. Having a trade license can I start export business?

Ans. No, for export business you need to get Export Registration Certificate (ERC) also.

5. How can I get ERC?

Ans: To get Export Registration Certificate (ERC) you have to apply to the Office of the Chief Controller of Import and Export (CCI&E) in prescribed form. Along with the application you have to submit the following documents:

• Copy of trade license
• Nationality certificate issued by Ward Commissioner or Union Parishad Chairman (for Bangladeshi nationals)
• Income tax payment certificate of the previous year (in applicable cases)
• Valid membership certificate from the Chamber of Commerce or Registered Trade Association
• Bank solvency certificate
• Partnership deed or  Incorporation certificate
• Photograph – 2 copy.

Prescribed form and other related information are provided in the official website of the CCI&E. The web address of CCI&E is www.ccie.gov.bd

(6) For export should I need any quality assurance certificate?

Ans. Yes, in most cases you need quality assurance certificate. These kinds of certificate are being issued by some authorized office/organizations/trade associations like, Export Promotion Bureau(EPB), Department of Fisheries(DOF), Bangladesh Standard and Testing Institute(BSTI) and some other Trade Organizations.

(7) What is compliance in export business?

Ans: In export business compliance means meeting the foreign buyer requirements. Sometimes the foreign buyers/buyer country/countries impose some special conditions on quality issues, working environment in the factory, etc. These requirements are known as compliance.

(8) For export should I need Government Permission?

Ans. Other than restricted items enlisted in Annex-1(export prohibited items) and Annex-2 (conditional export items) all the products are freely exportable and don’t require any export permission from Government. For conditional export items you need clearance from the appropriate authority as mentioned Annex-2 of the Export Policy 2009-2012.   

(9) I will buy some finished products and then again export it at higher rate. Is it possible?

Ans: Yes, you can but under some conditions i.e. in that case your export will be Entre-pôt and Re-export you need to follow the rules and procedure laid in respective policy or circulars which is attached here with as Annexure-3)

10. How can I get cash incentive for my exported items?

Ans: You can get cash incentives for the items and at the rate as shown in Annexure-4. You just follow the procedure as stated and claim with all necessary documents in your merchant bank.

11. What is GSP?

Ans: GSP- Generalized System of Preference. In this system we get some preferential advantage including duty free or concession and quota free access.

12. In which countries we are getting GSP

Ans: We are getting GSP in 37 Countries including 27 EU countries and 10 others like USA, Canada, Japan, Norway, Switzerland etc .

13. How an exporter export certain products. How can I help him?

Ans: At first and exporter needs an ERC (Export Registration Certificate) upon submission of bank balance, membership certificate of some association, trade license etc as explained in answer of question no-5. Then he can search for foreign buyers. He can collect some buyers list from Export Promotion Bureau (EPB) and Bangladesh Mission’s of the export destination country.

14. What is FTA and PTA and explain Bangladesh Position in these agreements?

Ans:

• FTA stands for Free Trade Agreement. E.g.  Bangladesh js a member of South Asian Free Trade Agreement (ASAFTA)

• PTA stands for Preferential Trade agreement. E.g. Bangladesh is a member of Asia Pacific Trade Agreement (APTA)

15. What is RTA and BTA and explain Bangladesh Position in these agreements?

Ans:

• RTA stands for Regional Trade Agreement E.g. Bangladesh js a member of in BIMSTEC (Bangladesh, India, Myanmar, Srilanka, Thiland)

• BTA Stands for Bilateral Trade Agreement. No bilateral agreement has been finalized but Preliminary Bilateral Trade Talks with India, Pakistan and Srilanka

16. What are comparative advantage, Competitive Advantage and Absolute advantage?

Ans:

Comparative Advantage: Identifying which activities a country/firm/individual is most efficient at doing (e.g. naturally available-cheap labour, cheap resource, better climate etc). Another example that Canada has the right climate/ skilled labour, resources etc. to produce wood-pulp efficiently. CA theory states that grow and sell the product which you have comparative advantage (CA) and buy the product in which you have less CA.

    

Competitive Advantage: Competitive advantage is at the heart of a form’s performance in competitive markets. Competition between firms or products. e.g. Lower cost, differentiated products .

Absolute Advantage: If a firms or products is superior at producing both the products, it holds absolute advantage.

17. What is NT, MFN, TBT, NTB ?

Ans:

NT: National Treatment(Treat domestic and imported product equally)

MFN: Most-Favored Nation Treatment (To treat all WTO countries equally)

TBT: Technical Barriers to Trade: Ensure regulations, standards, testing and certification (WTO regulation)

SPS: Sanitary and Phytosanitary Standards. Complement to TBT

NTB: Non Tariff Barrier

18. What are Dumping, Antidumping and Countervailing?

Ans:

Dumping: Occurs when a company when a company exports a product at a price lower than that normally charged in home market

Antidumping: Put an export tax on dumped product.

Countervailing: Meaning Anti-subsidies- Countervailing duties may be used to offset (remedy) unfairly subsidized trade.

RoO-Rules of Origin- used to determine where a product comes from

TRIPS-Trade Related Intellectual Property Rights-Copy Right Law, Patent Law, Trade Mark law

19. What are Primary goods, Manufactured goods, Traditional and Non -traditional goods?

Ans:

Primary goods: Almost Obtained naturally: Frozen food, Dry fish

Manufactured Goods: Manufactured in Industries: Chemicals, Medicine

Traditional Goods: Jute, Tea, Jute goods

Non-Traditional Goods: Others except Traditional Goods.

20. How can you separate the LDC’s from Developing countries?

Ans: The Criteria for the identification of the LDCs are as follows:

In its latest triennial review of the list of Least Developed Countries in 2003, the Economic and Social Council of the United Nations used the following three criteria for the identification of the LDCs, as proposed by the Committee for Development Policy (CDP):

• a low-income criterion, based on a three-year average estimate of the gross domestic product per capita (under $750 for inclusion, above $900 for graduation);

• a human resource weakness criterion, involving a composite Augmented Physical Quality of Life Index (APQLI) based on indicators of: (a) nutrition; (b) health; (c) education; and (d) adult literacy; and

• an economic vulnerability criterion, involving a composite Economic Vulnerability Index (EVI) based on indicators of: (a) the instability of agricultural production; (b) the  instability of exports of goods and services; (c) the economic importance of nontraditional activities (share of manufacturing and modern services in GDP); (d) merchandise export concentration; and (e) the handicap of economic smallness (as measured through the population in logarithm); and the percentage of population displaced by natural disasters. (E/2004/33)

To be added to the list, a country must satisfy all three criteria. To qualify for graduation, a country must meet the thresholds for two of the three criteria in two consecutive triennial reviews by the CDP. In addition, since the fundamental meaning of the LDC category, i.e. the recognition of structural handicaps, excludes large economies, the population must not exceed 75 million. In the 2000 review, Senegal was included in the list of LDCs. Timor-Leste was added to the list in 2003, bringing the total number of LDCs to 50. With regard to the 2003 triennial review of the list, the CDP concluded that Cape Verde and Maldives qualified for graduation and recommended that they be graduated from the LDC category. The CDP also concluded that Samoa was eligible for graduation in 2006. Based on the CDP report, the ECOSOC will make a recommendation to the General Assembly, which is responsible for the final decision on the list of LDCs.

21. What is MFA?

Ans: The Multi-fiber Arrangement (MFA), sometimes referred to as the Multi-fiber Agreement, is a trade agreement adopted in 1973 by the United States, Canada, and Europe that set quotas for the amount of textiles and apparel that other countries could export to these countries. The MFA, which came into force in 1974, was seen as a protectionist measure intended to prevent the loss of textile and garment industry jobs in the US, Canada, and the EU to countries, mainly developing countries, where such goods could be more cheaply produced. It was first seen as a temporary measure, but was extended five times (Hyvärinen, 2000). However, by the end of this year, following a 10-year phase-out program governed by another agreement, the Agreement on Textile and Clothing (ATC), that came into force along with the World Trade Organization (WTO) agreement in 1995, the MFA system will come to an end. This means that in 2005, all WTO members will have unrestricted access to the European, US, and Canadian markets.

22. What assistance do we provide to our exporter?

Ans: The importance assistances we provide to our exporters are as follows:

-project loan at lower rate of interest

-Income tax exemption

-cash incentive

-export loans with soft terms and lower rate of interest

-reduced air fare

-tax return/bond facilities

-assistance in production of marketing

-help them to participate in international fair, marketing missions abroad

-duty draw back, ECG, EPF fund facilities

-International trade related training and workshop

-export loan with a lower rate of interest and under easy terms and condition etc.

23. What is the basic feature of our export policy?

Ans:The basic features are:

-Our Export Policy 2009-2012 provides guide lines to promote our export. Its objective is to facilitate our exporter rather than control the export

-The policy allows freely export of all the products except a few export prohibited products and conditional export items.

-Only 16 categories of products have been prohibited. Most of them are in line with international conventions. For example arms, chemical weapons, some wild animals, archeological relics etc. 2 are under conditional export (fertilizer-audio-video etc)

-For export diversification 8 sectors identified as Highest Priority sectors where as 12 promising sectors have been identified as Special Development Sectors have been identified.

-Provisions of General facilities and incentives have been described in chapter-4

-Sector based facilities have been incorporated in chapter-5

-Chapter 6 describe about the service export while

-Chapter seven describes some misc export promotional issues like export trophy and   and CIP for women entrepreneurs.

24. How an exporter is being honored?

Ans: To honor the exporter Commercially Important Person (CIP) are declared by Government related facilities are being provided. Besides Export Trophy are also distributed to the distinguished exporters.

25. How many kinds of CIP are being declared and what is the criteria for CIP exporters?

Ans: There are different types of CIP i.e. CIP-Export, CIP-Industry and CIP-NRB in Bangladesh. We deal with CIP-Export and the criteria used to determine Commercially Important Person (CIP) for Export are as follows:

• Minimum export earning for 9 specific product is US$0.10 million and for other sector US$ 1.00 million.
• Not a loan or Tax (all tax) defaulter.
• No trade dispute with the foreign buyer.
• Not convicted by the court.
• No false information provider.

Ministry of Commerce or Export Promotion Bureau publishes advertisement regarding invitation of application for CIP in August of the year.  For further information a copy of the “CIP (Export) Plicy-2006 can be seen at Annexure-6)

26.What is WTO Mode1, Mode2, Mode3, Mode4 ?

Ans:

Mode1- Invisible communication with another countries e.g. Telecommunication, Rail Communication etc.

 Mode11- Services taken from other countries like healthcare, nursing, etc

Mode 111-  Foreign Direct Investment(FDI)

Mode IV- Movement of Natural Person to another countries. 

 27. What is TRIMs?

Ans: TRIMs: (WTO) Trade Related Investment Measures Agreements

28. What facilities for export-oriented industries are being offered by Board of Investment (BOI)?

Ans:

• Use of a portion of the foreign currency earned by the exporter under the retention quota of Bangladesh Bank for foreign trip, participation in international fairs and seminars, import of raw materials, spares and equipment, establishment of office abroad, etc.;
• Export development Fund(EDF) offers joint venture capital at low interest rates, assistance for obtaining foreign technical assistance, service and technology, assist in sending marketing missions abroad, assist in the establishment of sales & display centers and warehousing facilities abroad, assist in participation in product development & marketing training programs for export promotion, etc.;
• Tax holidays (5 years for Dhaka, Chittagong & Khulna and 7 years for other areas);
• Agro-processed industries, ICT, to be relieved from income tax;
• Restructure the Export Credit Guarantee Scheme;
• Up to 90% bank loan against irrevocable LC or confirmed contracts.