UNNExT workshop on Paperless trade facilitation for Small .... Bangladesh _ BFTI _ Mr... · UNNExT workshop on Paperless trade facilitation for Small and ... Summary of procedures

ACJ Cl

UNNExT workshop on

Paperless trade facilitation for

Small and Medium-sized Enterprises

2-4 February 2015United Nations Conference Center (UNCC)Bangkok, Thailand

ACJ Cl

By

Mohammad Farhad

Research Fellow, Bangladesh Foreign Trade Institute

3

TF Reforms for SMEs: The Case of Bangladesh

Objective of the Presentation

Briefly discuss Bangladesh’s Participationin International Trade and role of SMEs

To provide an overview of implementedand ongoing Trade Facilitation reformsspecially for SMEs in Bangladesh

To discuss future Trade FacilitationChallenges for Bangladesh

4


Introduction

Bangladesh has posted a robust and resilient economic

performance over the past decade, accompanied by a sustained

decline in poverty.

The average annual real GDP growth of the Bangladesh economy

during the last ten years was over 6%, aided by conducive

macroeconomic policies, strong export growth and favourable

weather. GDP growth was broad based with agriculture, industry

and service sectors performing well.

Export-led growth, largely induced by increasing ready-made-

garment (RMG) exports and remittances from overseas workers,

have been the drivers for Bangladesh’s economic development in

the past decades. Poverty declined from 57% of the population in

1990 to 31.5% in 2010 and estimated at 25.6% in 2014.

5


Introduction

Bangladesh’s involvement in international trade has been

increasing significantly in the past decades, with export

values more than quadrupling in the period 2001/02 to

2011/12 and the ratio of total trade to GDP accounting

now more than 50% of GDP.

However, comparing the trade to GDP ratio with other

countries in the region, it shows that there is still room for

improvement, which confirms Bangladesh’s strategy of

accelerating economic growth by increased and diversified

exports, including increased services exports, resulting in

deeper integration into global trade.

6


Introduction

Source: World Bank

Overview of Bangladesh’s International Trade

-10.00

0.00

10.00

20.00

30.00

40.00

50.00

60.00

1961 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2011 2012 2013

Trade (% of GDP) GDP growth (annual %)

Imports of goods and services (current billion US$) Exports of goods and services (current billion US$)

7


Overview of Trade Performance of Bangladesh (Import)

-40%

-20%

0%

20%

40%

60%

80%

0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.01972-73

1974-75

1976-77

1978-79

1980-81

1982-83

1984-85

1986-87

1988-89

1990-91

1992-93

1994-95

1996-97

1998-99

2000-01

2002-03

2004-05

2006-07

2008-09

2010-11

2012-13

Pe

rce

nta

ge

US

$ M

illio

n

Financial year

Import Growth

8


Overview of Trade Performance of Bangladesh (Export)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

5000

10000

15000

20000

25000

30000

35000

1972-7

3

1975-7

6

1980-8

1

1981-8

2

1982-8

3

1983-8

4

1984-8

5

1985-8

6

1986-8

7

1987-8

8

1988-8

9

1989-9

0

1990-9

1

1991-9

2

1992-9

3

1993-9

4

1994-9

5

1995-9

6

1996-9

7

1997-9

8

1998-9

9

1999-0

0

2000-0

1

2001-0

2

2002-0

3

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

2008-0

9

2009-1

0

2010-1

1

2011-1

2

2012-1

3

2013-1

4

Perc

enta

ge

Mill

ion U

SD

Financial Year

Export Growth

9


Contribution of SMEs to the Bangladesh Economy

In Bangladesh, 90 per cent of the private sector enterprises

are SMEs and about 70-80 per cent of non-agricultural

workforce is working in the sector.

The SMEs contribute up to 25 per cent of GDP including

about 40 per cent of gross manufacturing output and

employed around 25 per cent of the total labor force.

The services sector is primarily composed of SMEs

responsible for the bulk of employment growth.

SMEs contribution to national export is also significant

through different industries such as ready-made garments,

jute, and leather etc.

10


Bangladesh’s trade facilitation performance

Source: OECD 2013

11


Trading Across Borders in Bangladesh

Summary of procedures and documents for tradingacross borders in Bangladesh

Source: Doing Business 2014 Bangladesh

12


Trade Facilitation Reforms implemented in Bangladesh

Bangladesh has 2 seaports, 1 internal container depot (ICD), 3airports for international transaction of goods and 28 LandCustoms stations. However, more than 90% of internationallytrade goods are carried by sea.

All rules, regulations and statutory orders are published

Any changes made during budget are also available via internet

Import licensing system was abolished back in 1985 for allproducts other than the products which require special importpermit for health, environment, SPS and other reason.

While 25 signatures were required for clearance of import andexport consignments in 1999, the number is reduced to 5 atpresent and Customs is trying to further reduce the procedureand release time by automation.

Initiative was taken to introduce ASYCUDA in 1992.

13



ASYCUDA++, has been put in place in Dhaka CustomsHouse, Chittagong Customs House (CCH), BenapoleCustoms House, Mongla Customs, and the ExportProcessing Zone.

Direct traders input (DTI) has been introduced in Dhakaand Chittagong Customs Houses allowing electronicsubmission of bill of entry

In 2009, Customs installed four container scanners at theChittagong port to detect contraband/illegal shipmentsand weapons, aimed at ensuring security while facilitatinglegitimate trade.

A selectivity system has also been implemented at the portof Chittagong, where shipments are screened against pre-determined risk criteria and then processed through theappropriate channel.

14



Chittagong Port Authority (CPA) operationalized itscontainer management system (CTM), which hasfacilitated automation of import operations.

The category of "green channel" imports are released withminimal documentation checks and no physical inspection,"yellow channel" imports undergo a full documentationcheck, and "red channel" imports that account for 10% to12% of the total, receive full documentation and physicalinspection.

A post-audit system is also under development to verifythe accuracy of green channel and yellow channelclearances. The Government plans to extend the systemto include both imports and exports and to implement thesystem at other customs offices.

15



The turn-around time at Chittagong port has, according to theauthorities, improved due to various measures, includingprivatization of port-handling operations, introduction ofmodern handling equipment and introduction of CTMs.

The port of Chittagong clears 40% of bills of entry in twoworking days or less.

With assistance of UNCTAD, work has been underway toupgrade ASYCUDA++ to ASYCUDA WORLD and install the systemto all Customs stations. AYCUDA WORLD has already beeninstalled at Chittagong Customs House and DHAKA ICD.

IT is centrally operated under DC-DR concept. One data center(DC) at NBR connecting all customs stations/houses with onedisaster recovery (DR) site at Chittagong. Nationwideconnectivity through fibre optic cables (NBRNET) from twoservice providers to ensure 99.98% up time.

16



All authorized stakeholders can login from anywhere & notrequired to come to custom houses to submit declarations.

Paperless operations introduced for bill of entry,assessment notices etc., meaning as soon as assessment iscompleted no print outs are given from customs. Allassessed docs are sent to importers/agents directly byemail. Documents contain barcode to prevent frauds. Thisalso helps importers to know when assessment iscompleted.

The introduction of Authorized Economic Operators (AEO)and the Single Window (SW) system is under activeconsideration at the NBR

17


Ongoing Trade Facilitation interventions in Bangladesh

� Government initiatives using own resource with technical support from UNCTAD : Introduction of ASYCUDA WORLD

� Asian development Bank: Modern and effective customs administration and/or management.

� USAID: Improve Trade–Related Information and Transparency , Operationalize National Single Window and Enhance Supply Chain Security

� ADB/UNESCAP: Introduction of Trade and Transport Facilitation Monitoring Mechanism (TTFMM)

� IFC/World Bank: Develop National Trade Portal to make all regulatory trade related information and other information useful to Bangladeshi importers and exporters easily and readily available in a single integrated website.

18


Probable benefits of trade facilitation reforms for

Bangladeshi SMEs

Reduced cost of transaction

Reduced time

Increased trade

Ensuring availability of information

Ensuring timely delivery of inputs required for industry and increasing productivity in the industry through proper time management.

Reducing taxation anomalies

Ensuring transparency in trade across the border

19


Trade Facilitation challenges for Bangladesh

Making The rules and regulations available to all and continue the practice

Coordination among the various regulatory authorities and bringing then under one umbrella

Publishing import and export procedure for specific products

Advance ruling

Transit procedures

Institutional capacity building

Ensuring same system at all customs stations especially at LCSs

Resource mobilization

ACJ Cl

Thank you for your kind attention