Lengthy procedures followed for clearing the import and export goods at the Chittagong port have been listed as a major constraint to facilitating smooth international trade, a recent study has revealed.
The clearance of an import cargo at Chittagong port on an average takes more than 11 days and for an export consignment it takes nearly five days, the study said.
The study titled 'Bangladesh Time Release Study' (TRS) was conducted by the Chittagong Port Authority at the directive of the National Board of Revenue (NBR) at the seaport with the support of the International Finance Corporation (IFC), from October 23 to November 5, 2013.
The study recommended introduction of a paperless processing system, a robust risk management system and establishing some form of connectivity with the port authority to reduce the customs clearance time.
The National Board of Revenue (NBR) has finalised the report recently and it would be unveiled this week.
Org-Quest Research Limited (OrQuest), a Bangladeshi research company, was hired by the IFC to assist in conducting the TRS.
The study was based on the response to some 1,013 questionnaires on import and 1,185 on export.
The TRS identified some general problems that add to the cost of trade. These are port congestion, complicated and duplicative customs procedures, complex and non-transparent administrative requirements and high costs of processing information resulting from limited automation.
"Trade-related transaction costs such as freight charges and other logistical expenses are a crucial determinant of Bangladesh's ability to participate competitively in the global market," it said.
The NBR decided to carry out the study to assess the time taken from the arrival of goods until their release. It seeks to take necessary steps to minimise the time.
The main objectives of the study are to examine existing procedures and identify constraints, and to propose measures to reduce the time required for the release of goods.
The TRS found that customs processes were not the only constraint to trade. Other departments were also responsible for the delay.
"Currently, customs release and clearance times are impacted by repetitive processes that allow other stakeholders to unduly influence the total overall time taken to release goods," the study noted.
Procedures and practices should be reviewed as a matter of urgency to remove delays, duplication and unnecessary actions by customs, other government agencies, the port authority, shipping and clearing and forwarding (C&F) agents, it added.
"For customs, some improvements can be effected immediately to improve the situation pending transition to a fully electronic declaration and risk management system, which will allow for the effective risk segmentation of cargo to expedite simplified release procedures for low risk traders," the TRS said.
It recommended a fully integrated electronic declaration system incorporating direct trader input, automated risk assessment and client segmentation.
The procedures should be reviewed within six months to one year with the aim to enhance efficiency, streamline or eliminate the problems.
The TRS also recommended introduction of a 'system-generated random quality control provision' on receipt of declarations replacing the existing 100 per cent physical checking.
It recommended increased customs control over the overall 'end to end' clearance processes to cut the processing time.
It suggested the customs authority to find out 'low-risk' trade to separate their release and clearance process. The study tested the low-risk products through a 'pilot programme' on a selected number of highly compliant companies.
The study identified some 33 items, including goods which are perishable and less vulnerable to tax evasion that can be cleared at off-dock facilities from the port to avoid delay in their release.
The items are rice, melt-able and re-roll-able scrap metal, animal feed other than fodder, wheat, mustard, waste paper (HS code 48.07), peas, lentils, raw cotton, hard coke, carbon black, marble chips, ball clay, onions, ginger, garlic, fertilizer, soda ash, PVC resin, staple fibre, containerised square or round log, date palm, sugar, bitumen, empty beverage cans, marble stone, sodium sulphate, wood pulp and global salt.
Other recommendations include customs post-clearance audit, centralisation of declaration, risk assessment and determining client segmentation in a centralised office for transparency and establishing connectivity or an interface for the customs with the Chittagong port.
The TRS recommended the NBR to continue dialogue with the business community and jointly discuss ways for improvement and promotion of procedures.
The TRS also suggested introduction of 'authorised trader' scheme to allow traders, who would meet certain criteria, to enjoy simplified procedures such as direct release, prior release, simplified declaration, deferred payment etc.
"Accepting the key findings of the report, the NBR needs to determine realistic goals to reduce the overall number of days taken for the release of cargo at Chittagong Port. It also needs to develop a comprehensive action plan to achieve these goals in the short, medium and longer term. Attainment of these goals should be measured through future TRS studies," it said.
The TRS is one of the World Customs Organisation's (WCO) most important trade facilitation instruments, based on similar initiatives in the US and Japan where it was developed. It is a unique tool and method for measuring the actual performance of the customs activities as they are directly related to trade facilitation at the border.
"The time required to release goods has also increasingly become the measure by which the international trading community assesses the effectiveness of border clearance processes in individual countries," the TRS said.
Bangladesh became a Contracting Party to the Revised Kyoto Conventions (RKC) in September 2012. As part of this accession, the customs is required to undertake a set of reform initiatives to fully comply with the RKC.
For customs modernisation, the NBR is implementing its Customs Strategic Action Plan 2013 - 2016 to bring reform in line with best international practices.
The TRS of Chittagong (the largest seaport) and Benapole (the largest land port) is also a mandatory conditionality for the tranche 2 of the Asian Development Bank-financed South Asia Social and Economic Cooperation (SASEC) loan programme.
The Chittagong Port is the principal seaport of Bangladesh handling about 92 per cent of import-export trade of the country. The port is ranked as the world's 90th busiest.
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