Jamal (not his real name) is a Dhaka-based apparel maker. He had opened a letter of credit (LC) this June to import raw materials, to manufacture clothes for a reputed western buyer. His consignment of raw material arrived in the Chittagong Port at the end of July.
An exporter usually has to fit raw material imports, production of goods and exports within a 100-day schedule.
When checking Jamal’s raw material consignment at the port, customs officials took an additional 16 days to provide clearance, citing a weight mismatch between the voucher declaration and package as excuse.
Jamal, the managing director of his company, explained his hurdles, “It is nearly impossible to match flawlessly the weight mentioned in voucher declaration and package. Customs officials have been harassing us using this issue for years.
“They release the goods from the port after taking speed money. If there are issues with our shipments, then why don’t they fine us as per the law?”
Also a board of director at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Jamal said, “I have to pay around Tk 40 lakh annually as bribes to the customs officials to get my goods released.
“In addition to that, I am incurring crores of taka in losses indirectly due to customs harassment.”
It is not an isolated allegation, as many businesses – especially the export-oriented ones – claim of facing systemic harassment by a segment of customs officials at the Chattogram port. This in turn pushes up overall production costs and lead time of businesses.
A number of exporters further say that despite submitting complaints vocally and in writing to the customs authority and the National Board of Revenue (NBR), no visible attempts have been to resolve such issues.
Sharing his experience on condition of anonymity, another Chittagong-based exporter said, “I missed the vessel departure time last month after customs seized my goods for a couple of weeks for so-called inspection.
“They later allowed me to export the goods after I bribed them. But I had to export the goods by air, which was far more costly.”
He adds, “This is a regular issue at the Chattogram port, but no one speaks about this openly. We have to keep doing business, and these customs officials will increase their harassment of us further if we complain about it.”
Addressing the allegations of customs harassment, BGMEA President Faruque Hassan said, “Bangladesh is losing business opportunities worth billions of USD annually due to the customs harassment.
“Fashion business is fast, and we have to deliver the goods on schedule. But if the customs takes up to 45 days from our already tight lead time, how will we export the goods properly? The government is losing crores of taka annually as the customs officials are taking bribes instead of fining rule violators.”
Complaints submitted to no avail
In a bid to resolve the alleged harassment from customs officials, three top trade bodies BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) had submitted several letters to the National Board of Revenue (NBR) separately.
Representatives from these trade bodies also met with the customs and NBR authorities in bid to resolve these issues. But business leaders say the harassment continues unabated, despite the top NBR and customs officials giving assurances on multiple occasions.
In a recent letter sent to the NBR Chairman Abu Hena Md Rahmatul Muneem, BGMEA President Faruque Hassan requested the board to take necessary measures in this regard, and to direct all customs houses to curb harassment.
The letter mentions, “The ready-made garment is a seasonal and fashion-dependent export industry. We have an obligation to foreign buyers to import the raw materials and export the manufactured garment within the lead time.
“If the manufacturers fail to export goods within the specified timeframe, they face complications and financial losses, usually caused by paying discounts to buyers, facing order cancellations, and high air freight charges.”
Terming this issue as one of the key barriers to ease of doing business in Bangladesh, Policy Research Institute (PRI) Executive Director Ahsan H Mansur said, “Some customs officials conduct inspections with the motive to take bribes from businesses.
“Lead time is one of the major factors in export-oriented businesses. So, why are some customs officials taking 10-12 days or more to conduct inspections? The goods should be inspected within 5 to 6 hours of arrival at the port.
“The government should formulate a guideline for speedy inspection.”
BGMEA First Vice-President Syed Nazrul Islam, who is also in-charge of looking at customs harassment issues, said, “Some exporters missed vessel departure times recently because of customs harassment and delay in clearance.
“They have a habit of seizing goods from export-oriented businesses, because deadlines are a major factor for such industries. They have rights to check any items, but the question is how long this process should take? The authorities concerned should look into the matter.”
Due to the economic headwinds triggered by the Russia-Ukraine war, foreign buyers have become very cautious in placing purchase orders due to reduced demand for apparels globally, and they are taking a long time to clear payments after exports, BGMEA said in its recent letter.
The Business Post reached out to NBR Chairman Abu Hena Md Rahmatul Muneem on phone for comments on the matter, but he did not respond till the filing of this report.
The correspondent also tried to get comments from Member (Customs Policy) of NBR Masud Sadiq, but he too could not be reached on phone despite a number of attempts.
Exports lifeblood of Bangladesh
Bangladesh secured 6.67 per cent year-on-year (YoY) export growth in FY23. The country earned $55.56 billion during the period, compared to $52.08 billion posted last FY, show data from the Export Promotion Bureau (EPB).
The apparel sector, which provides the lion’s share of export earnings, contributed $46.99 billion – 84.58 per cent of the total earnings.
Bangladesh however has failed to meet its $58 billion export target for FY23, which was set by the commerce ministry. Total earnings are 4.21 per cent lower than this target.
“If in many cases, these issues – including cancellation of purchase orders – cause significant financial damage, and curb overall growth of the industry,” BGMEA president stressed in the letter.
BGMEA’s Faruque said, “As far as I know only Bangladesh’s exporters are facing such harassment. We are an export-oriented country, and we need foreign currency to survive. If the crisis does not stop, how will we keep earning and why would foreign investors be interested?
“The government should take immediate action to stop harassment from customs officials, and create a more business-friendly environment in Bangladesh.”
