70% bond facility on import of raw materials of export products

The government is formulating a new national tariff policy emphasising various issues including expansion of the country’s trade, increasing the competitive capacity of the domestic industries, maintaining balance in import and export and creating employment opportunities.

Sources from the Ministry of Commerce said instead of value addition conditions, the draft of the new policy includes a provision of providing bond facility to import of raw materials for export-oriented products.

The bond facility will be up to a maximum of 70 per cent of the value of export product. If the price of raw materials is more than 70 per cent of the value of export product, the exporters will get duty drawback facility as per the existing policy.

The decision of providing bond facility was made at a recent meeting organised by the Ministry of Commerce to discuss the draft of the policy. Presided over by Senior Secretary to the commerce ministry Tapan Kanti Ghosh, the meeting also decided that the gross rate of total tariff at the import level will be reduced gradually, according to sources concerned.

Bangladesh Trade and Tariff Commission is formulating the new tariff policy. This commission recommends the government to determine the duty on import of various products and advises the National Board of Revenue (NBR) in fixing various rates of duty.

Sources concerned said 17 general guidelines have been included in this policy for tariff determination. The draft policy has been formulated consulting all the stakeholders.

“This policy is being formulated with the aim of increasing the competitive capacity of the domestic industries through trade liberalisation and tariff structure rationalisation. At the same time, the policy also aims to facilitate the expansion and diversification of export and encourage investment to create employment opportunities,” said Dr Mustafa Abid Khan, advisor to the committee formed to formulate the tariff policy and a former member of Tariff Commission, while addressing the recent meeting of the commerce ministry.

At the meeting, Chairman of Bangladesh Trade and Tariff Commission Md Faizul Islam said, “This policy will mainly act as a guideline to determine various tariffs. If the government makes a policy under the power of the Rules of Business, it will play an effective role.”

Informing that the policy is being formulated according to the Rules of Business, Tapan Kanti Ghosh said, “Once formulated, the new tariff policy will play an effective role in rationalisation of tariff.”

At the meeting, representative of the NBR said, “It is appropriate to provide the proposed bond facility for a certain period to the industries that produce products for sale in the international and local markets.”

He proposed that instead of value addition, bond facility up to 70 per cent of the export product value can be provided for import of raw materials. He also proposed to provide the existing duty drawback facility if it is more than 70 per cent.

He further said that since duty collection is under the purview of the NBR, there is no need for a separate implementation committee to implement the draft policy.

Hafizur Rahman, former additional secretary of the World Trade Organisation cell of the commerce ministry, told the meeting that if anti-dumping, counter-veiling and safe guard duties are collectively cited as trade remedial measures in the policy, it might create confusion.

Representative of Bangladesh Textile Mills Association suggested the inclusion of backward linkage industries that are manufacturing new products, in addition to new product manufacturing, setting up industries and new industrial sectors.

The representative of Dhaka Chamber of Commerce and Industry (DCCI) proposed to include the DCCI president in the monitoring and review committee to represent small and medium enterprises.

The representative of Bangladesh Ceramic Manufacturers and Exporters Association said it is necessary to be careful whether the provision of trade neutral tariff would create an obstacle to the protection of the domestic industries.

Tariff protection benefits provided to the country’s local industries over the years by imposing high customs duty on imported goods will soon come to an end. However, certain products will enjoy this protection for a limited period of time to make local industries more competitive after the LDC graduation, according to the draft policy.

The average tariff in Bangladesh is 14 per cent, while the average tariff in developed countries is 8.5 per cent. Countries have committed to the World Trade Organisation to reduce tariffs to facilitate integration in world trade.