Ctg port's auction woes: Why customs' goods fail to find buyers

In a concerning trend at Chattogram port, numerous imported goods have been failing to be sold despite multiple auctions by the customs authorities, resulting in an accumulation of products and significant financial losses. 

Various factors, including "inflated" comparative prices and adherence to customs regulations, have contributed to the inability to sell these goods, causing valuable storage space to be occupied for years, according to people who are informed of the matter.

One such case involves a rice mill machine imported through Chattogram port in 2016. Currently, the machine, valued at approximately Tk38,000, remains stagnant in the N shed of the port. The machine was auctioned at least 20 times between 2018 and 2022, yet it still remains unsold.

Similarly, 36 retail elevator spare parts, imported from China in 2018 and valued at Tk5,86,000, have also failed to find buyers. These spare parts have been subject to four auction attempts since 2021, resulting in no successful sales.

In another instance, six units of air conditioners (ACs), imported in 2019 at a value of Tk6,07,000, are presently stored at the CCT yard of the port. Despite the fact that these ACs are in demand in the market, they have gone unsold even after being auctioned twice since last year.

According to data from Chattogram port, out of a total of 37,800 TEUs (twenty-foot equivalent units) of containers stored at Chattogram port on 19 May 2023, 7,239 TEUs were lying at the auction unit.

Stakeholders concerned have identified several reasons for the inability to sell these goods. 

One of the key factors is the challenge of setting a comparative price that aligns with the quality of the products. Additionally, selling the goods at prices determined by customs rules has proved difficult.

Consequently, valuable space within the main seaport has been occupied for years, leading to the deterioration of the products over time. The financial burden resulting from the repeated auctions is also depleting government resources.

Officials of Chattogram Custom House have clarified that these goods typically fall under their control due to various reasons, including duty evasion, false declaration during importation, failure to pay duty within the stipulated time, and delayed release. Following their taking of control, the goods are subsequently sold through auctions. 

The customs authorities set the reserved value based on the import value of each product, with the sale required to reach at least 60% of the reserved value in accordance with customs rules, the officials added. 

The Chattogram customs house recently conducted auction tenders from 16 April to 7 May, offering 76 lots of various products for sale. 

Despite receiving 275 tenders, including luxury cars, food products, heavy machinery, motor parts, iron, steel straps, textiles, fabrics, glassware, paper, and plastic products, many items remained unsold.

The challenge lies in the provision that prohibits selling goods below 60% of the reserved price in the auction.

Customs officials have mentioned that prices can be reduced based on product quality during the auction committee meeting. However, allegations have been made that bidder syndicates offer low prices without actually purchasing the products, hindering successful sales. 

Traders participating in the auction have expressed concerns about the rules.

According to current regulations, if a product does not receive a bid of at least 60% of the reserved price in the first tender, it cannot be sold. The opportunity to proceed with the sale arises if the second auction fetches a higher price than the first tender. Subsequent tenders also allow for price reductions. 

But these rules are not consistently followed, the traders have alleged.

The auction committee has the authority to set prices but often chooses not to reduce them, resulting in repeated auctions without finding buyers, they said. 

Yakub Chowdhury, general secretary of Chattogram Customs Auction Traders Welfare Association, pointed out that the reserve prices set by customs authorities are often too high compared to the product quality. 

"Buyers are not interested in purchasing goods at a loss since they acquire them for resale, not personal consumption."

Strict customs regulations contribute to many unsold goods, causing their quality to deteriorate while stored in sheds, he added. 

Customs officials told TBS that the National Board of Revenue (NBR) is supposed to carry out all activities, including auctions, through the Asycuda software, but the software has not been launched yet. 

As a result, manual auction procedures are used, making it challenging to collect accurate data and requiring extensive paperwork. Consequently, the officials in charge of the auction wing often face punitive transfers and may be reluctant to carry out their duties effectively. 

The officials also said some bidders exploit the system by booking products through Delivery Orders (DO) but not paying their dues. They showcase the goods to potential buyers before deciding on a buyer and finally paying for the products. Such practices have led to demands, often politically motivated, to retain certain goods.

In response to these challenges, Nahidunnabi, deputy commissioner (Auction Branch) of Chattogram Custom House, emphasised the need for an online auction process. 

He highlighted a recent case where an invoice was settled without the corresponding auction taking place, demonstrating the potential benefits of an online system in providing readily available information and streamlining the process.

Nahidunnabi further explained that even if there are legal cases, auctions can still be conducted. Extended storage of products in sheds due to cases leads to spoilage, he added. 

"However, if the quality of a product is poor, it is sent back to the customs branch for value verification, causing further delays. These issues collectively make it difficult to successfully complete the auction process," he concluded.