Initiative to ease import release limps

Highlights

• Only 15 have been recognised as authorised economic operators (AEOs) – a status that allows them to clear their goods within 24 hours without physical examination, which currently takes over 11 days on average.
• The number is very insignificant compared to the number of businesses – more than 20,000 – involved in import and export in the country.
• A total of 90 companies have applied, but 75 could not come under this facility.
• The customs authorities said the companies failed to meet NBR's conditions, including using the designated VAT software, which ensures accounting transparency.
• Businesses blame the tightening of rules and regulations for the slow progress.
• Experts blame a lack of preparation for failing to meet the expected success.

In nearly a decade, there has been little progress in allowing businesses with a good track record to have their imports released quickly from ports under a special arrangement.

According to the National Board of Revenue (NBR), only 15 have been recognised as authorised economic operators (AEOs) – a status that allows them to clear their goods within 24 hours without physical examination, which currently takes over 11 days on average.

The number is very insignificant compared to the number of businesses – more than 20,000 – involved in import and export in the country.

Worse, even AEO holders cannot avail themselves of the intended benefits. Customs authorities have also received similar allegations.

A total of 90 companies have applied, but 75 could not come under this facility.

The customs authorities said the companies failed to meet NBR's conditions, including using the designated VAT software, which ensures accounting transparency.

Enamul Hoque, former commissioner of the Customs Valuation and Internal Audit Commissionerate, who was transferred last week, told The Business Standard, "We cannot provide the companies with the facility due to various limitations, such as the absence of NBR-prescribed VAT software or the updated documents. We will not compromise in this regard."  

He said companies are required to be centrally VAT registered, and their business identification (BIN) number must be single.

"But we have found multiple BINs. In addition, there is no proper security at the company's premises, nor is there a signatory representative authority to work with the customs authorities," he added.

Businesses blame the tightening of rules and regulations for the slow progress.

Envoy Textiles, which applied for the facility more than a year ago, did not come under the benefit of not using the designated VAT software.

Mizanur Rahman, deputy managing director of the company, said, "We will introduce the VAT software soon."

Due to these reasons, even such an excellent initiative as trade facilitation has not been successful so far.

An NBR study in September last year showed that Chattogram customs take 11 days and 6 hours on average to clear imported goods, which is far more than in competitor countries.

And globally Bangladesh lags behind its competitors in terms of port, customs and logistics performance.

According to the World Bank Logistic Performance Index (LPI) 2018, Bangladesh is behind all its major competitors, including China, Vietnam, India and Cambodia. Again, the country has performed the worst in customs clearance among the six LPI indicators.

Experts blame a lack of preparation for the failure to meet the expected success.

Former NBR chairman Muhammad Abdul Mazid told TBS, "This initiative is highly commendable in making customs clearance easier. But there is responsibility on both sides for the lack of momentum."

"The possibility of misuse remains if the facility is given to everyone without proper scrutiny. As a result, compliance has to be ensured. Again, the rules and regulations of the NBR need to be helpful in this regard," he added.

However, he thinks that the customs department should come forward.

Md Farid Uddin, former NBR member of the customs department, told TBS, "Even though this has been talked about since 2014, one of the reasons for not getting the expected success is lack of preparation on the part of the NBR. The digital environment required for that has not yet been ensured."

"Besides the NBR, the automation required by other related departments has also not been done properly," he added.

He said it was not right to blame only the businessmen. "The state will create the environment, and businessmen will follow that."

Munir Hossain, vice president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told TBS, "Only 15 out of thousands of companies means that it has not been successful. This may have happened because of the terms and conditions of the customs authorities."

AEO implementation at the ebb 

In early 2019, the NBR granted AEO facilities to three leading pharmaceutical companies for the first time on a pilot basis. In March this year, nine more companies were given this certificate. And on 30 August, it was given to three others.

Company officials said they cannot avail themselves of the benefits. 

Jahangir Alam, executive director of Square Pharmaceuticals, told TBS, "It was said that these licence holders can directly bring the goods to their warehouse as soon as they arrive at the port. But it hasn't started yet. We are not getting the benefits we are supposed to get."

A senior official of a leading pharmaceutical company told TBS on condition of anonymity that the firm is not actually getting any benefit from the customs authorities.

"Despite following all the rules, when our C&F agent told us about this facility for clearing the goods, the customs officials said they did not have any such instructions, so it could not be given," he added.

A C&F agent is a representative of an organisation that represents the importer with the customs authorities.

"They have less confidence in us. If that is the case, why did you give it (this certificate)?" added the official.

Acknowledging such allegations, Enamul Hoque said, "The corrections required in our management to identify them digitally are still in progress. Once these are done, it will be possible to provide those benefits automatically."

However, a senior official of Chattogram Customs House told TBS that the benefits are being provided to certificate holders if they apply.

The benefits companies are supposed to get  

The biggest advantage for these certified companies is that before the goods reach the port, the necessary documents will be verified online and customs-related procedures will be completed.

Within 24 hours of the arrival of the goods or raw material at the port, they can be directly taken to the warehouse of the importing companies without any physical examination. If the customs authorities want, they will go to the warehouse and verify the goods.

Besides, all kinds of communication with customs authorities will be done quickly online. They will get some other benefits, including getting duty drawn back in a short time and resolution through alternative dispute resolution (ADR) to resolve any dispute quickly.

Efforts to simplify AEO rules

According to NBR sources, the customs department will be developing new policies and standard operating procedures to make AEO more effective. They have already been drafted.

Enamul Hoque said, "We expect that the new policy and SOP will be finalised within the next month. Hopefully, through this move, the process will also get more momentum."

There has been an attempt to make the SOP simpler than the existing system.