Home ›› 23 Jul 2022 ›› Editorial
The long awaited import policy order (IPO) was published on April 24, 2022 through an SRO no 92-ain/2022 as per provision of section 3(1) of Import and Export Control Act, 1950(Act No XXXIX of 1950). The Import Policy Order is meant for the period 2021-2014. The previous import policy issued for 2015-2018 was in operation for more than six years.
A new policy was inevitable. Several new changes have been introduced in the new IPO, which include separation of fees-related issues and increasing the role of CCI&E, references of concerned laws/acts/rules in several import activities, changes of HS Codes, increased number of mandatory standards, the introduction of bonded warehouse facilities for small exporters, etc.
As like in previous years, the IPO 2021-24 contains seven chapters, these are general provisions for import, special directives to import, Industrial Import, policies and directives for commercial import, import by the government and a chapter on Import Trade Control (ITC) Committee which looks after disputes between an importer and the Customs Authority on ITC classification or description of goods imported under First Schedule of Customs Act.
There are four Annexes which are an integral part of the policy. These are on a controlled list of products and prohibited list of imported products, import under joint basis, names of poisonous chemical products and a list of seventy-nine products for which mandatory standard of BSTI has to be followed.
In the earlier Import Policy (2015-2018), there were nine chapters. Two important chapters on Fees for Import (chapter three) and compulsory membership of recognized chambers and trade associations (chapter nine) have been dropped.
In case of import-related fees, primary registration for import, export and indenting license and its renewal and related fees will be announced by the government through gazette notification from time to time (chapter-2, clause (16). In the case of Chapter nine regarding mandatory membership from a recognized Chamber/Association, there are no specific directives, probably these could be addressed through the newly approved trade organization (TO) bill 2022 by the Parliament. In this bill, there is a mention of 955 trade organizations that have received licenses from the Ministry of Commerce. It is of course not clear, Chambers and Trade Associations who are members of the apex trade body following directives of the TO, are allowed to provide membership certificates for getting registration for import and export.
The present policy seems to be more business-friendly, synchronization of clauses with the introduction of some new directives which are indispensable at this stage of the changed global system. In the definition chapter, there are some provisions such as; the definition of internationally recognized surveyor companies, incoterms, sample, deemed export etc., which have brought more clarity to the policy.
In chapter two on general provision for import, there are changes in the amount allowed for import, in the past applicable amount of import without conditionalities was one lac taka, which increased to fifteen thousand US dollars. In the case of industrial importers for import of raw materials, capital machinery, and fire doors irrespective of price, commercial importers will be allowed to import up to five lac USD which was two lac USD in the earlier policy. On the other hand, importing under TT without opening LC has been simplified. In the case of rice import without LC allowed, the yearly amount has been increased to five lac USD which was two lac USD in the old policy. The time for the opening of LC was 180 days; it has been simplified and will depend on the contracts of buyers and sellers. For shipment of goods, instead of 17 months in the earlier policy, it has been increased to 24 months. It means import flexibilities have been increased in many places and will help support the manufacturing sector.
Commercial and industrial importers were classified into six categories and fixed fees were announced through IPO, there was mention of a surcharge for not renewing licenses and separate fees for indentors. In addition, there was mention of 15 per cent VAT on the license in the policy. As per the new policy order, the rates and fees should not be predetermined in the IPO, a separate gazette with changes in the amount of fees will come through CCI&E. In one sense this is good, however, businesses will feel uncertainty, in the case of fixed rates, whatever the amount or rates, businesses could get a decision regarding their business costs. Regulatory predictability is a concern for the private sector; they will now wait for the new circular, policies and the process apprehending chance of harassment and delay.
HS code fixation is one of the old problems. The new policy clearly mentions that the HS code will mean the first schedule of the Customs Act and the number would be eight or more digits. Often it is seen that HS codes suggested by the business are not accepted by the customs. In the policy there is mention of HS codes for certain products, some are four digits, some are six, which could create some problems in the future. On the other hand, a list of BSTI-approved BDS standards is attached as Annex-4 with different HS codes. In that respect, difficulties may arise in earmarking the exact products and cross-checking its standards.
In chapter three, required fees have been converted into USD and the allowed amount has been changed. Sample import for herbal and pharmaceuticals by the importers and indentors has been raised to ten thousand USD from the previous BDT three lac. Foreign manufacturers operating in Bangladesh will also be allowed to import samples worth up to USD five thousand, which was BDT one lac fifty thousand in the past. Sample import for RMG has been increased accordingly while it has remained the same for shoe exporters, tannery exporters and for misc products exporters providing NOC from EPB is taken. It seems that sample import for exporters other than RMG remains the same.
There were several proposals for easing the sample importing policy, albeit, a definition has been included, but hassles for sample import are long-standing problem. For the import of samples there should not be a requirement of L/C, samples can be justified through its definition. De Minimis limit is only BDT 2000 in the country, if increased it can give some relief to the non-RMG and non-traditional new exporters. In the case of importing alcoholic beverages by the hotels, restaurants and bars some policy simplification has been made. It seems that government is willing to encourage tourism.
Import of raw materials and packaging products have been simplified, as like BGMEA, BKMEA will be allowed to issue Utilization Declaration (UD) as per entitlement, even products of controlled items can be imported if required for export. It will help increase RMG and Knit garments export.
For RMG export, Value Addition Rate remains the same at 20 per cent, while per dozen Free On Board (FOB) price has been set at USD 60 which was earlier USD 40, and for Oven and Knit RMG, FOB price of which is more than USD 60( earlier USD 40), value addition requirement will be 10 per cent. Value addition remains the same for children's apparel. An increase of Value Addition Tax needs to be considered. Partial export-oriented factories, as per the new policy will import through utilization declaration(UD) and utilization permission(UP) by the customs provided a bank guarantee is given. In that case value addition for exported products made by the imported raw materials would be fixed by the Bangladesh Trade and Tariff Commission and EPB will announce the entitlementd ehich is good news for small exporters. However, bank guarantee issue, entitlement and value addition fixation by the organization as mentioned in the policy are needed for spearheading the process.
There are some changes in the amount of sectoral import, e.g., export-oriented specialized textile. Those who have technical capacities will be allowed to import through a supervised bonded warehouse without back-to-back LC. They are allowed to import raw material for six months which was four months earlier and the increased amount is 50 per cent of the production capacity which earlier 33 per cent. Specialized textile export can get a boost.
The new IPO has allowed the import of new or old aircraft and its parts as per the concerned HS code following pre-approval of civil aviation and navigation orders and circulars.
Another policy shift is to reduce the allowable limit of old cloths, import of gold and silver, specific HS code for import of Pyrex and glassware import, etc. There are sectoral policies in the IPO for handling sectoral issues, which can be a good directive for the sectoral players.
Sequencing of clauses seems to be much better in the new policy, however, in several places there is mention of getting permission/NOC/approval from a concerned government organization; in some cases, their names are mentioned, however, in most cases these are not mentioned, especially foreign investors may face problems in this respect. A list of authorities concerned could give more clarity to the policy.
A good number of goods have been included in the prohibited list, which was in the controlled list earlier, some of these products are: shrimps( of specific HS Code), Poppy Seeds( of specific HS Code), grass, bhang, opium, wine lees and argol, liquefied propane and butanes(which is part of LPG), petroleum gas and other gaseous hydrocarbons, petroleum coke, sodium cyclamate, artificial mustard oil, polypropylene bag, and polyethylene bag, three-wheeler, three-wheeler with two-stroke engine, gas syringe, old motorcycle. It seems that government is sincere in protecting the environment and addressing the climate change issues. There are some supportive directives in the policy, However, proper implementation will justify its benefits.
The writer is CEO, BUILD-a Public Private Dialogue Platform works for private sector development.
She can be contacted
