Experts suggest use of entre-pot trade, re-export as alternative to transit

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Nizam Ahmed Authorities concerned can facilitate transporting goods to, and from, northeastern states of India via Bangladesh by utilising the still-operational provisions of the country's export policy, before implementation of a massive investment programme for offering full rail, road and riverline transit on a regular basis to India, traders and experts said on Friday. If such an approach would have been taken earlier, the scope for both India and Bangladesh to go along the provisions of the export policy of the latter, as an alternative to the transit, could be better utilised, they said. At least, the same mechanism can still be tried for the time being until India is given full-fledged land transit facility, the effective use of which, according to experts, might take, at least, a decade for construction of the required infrastructural facilities that will involve an estimated cost of more than Taka 470 billion. Had the government implemented the provisions, the political controversy and debates in Bangladesh over the transit issue could be averted, the traders concerned said. "The provisions incorporated in the export policy in 2003 and retained in the export policy that was recast in 2007, could not be implemented because of unexplained reasons," Syed Toufique Ali, a former vice-president of the Dhaka Chamber of Commerce and Industry (DCCI), told the FE. But such provisions do still remain legally operative as those have not been scrapped, he added. The provisions of entre-pot trade and re-export, incorporated in those export policies, clearly authorize intermediaries in Bangladesh to import goods from any foreign country and re-export the same to that or another country, keeping a nominal margin as handling charges. "There is a fear that such provisions in the Bangladesh export trade policies of 2003 and 2007 about entre-pot trade and re-export will not fulfill the demand of India and as such it might not consider the same as a sustainable alternative to transit in the form that it (India) has been eying on," an economist said. However, he said until the time the required infrastructural facilities are not ready for regular, full-fledged transit, such provisions, if are implemented, will benefit both the countries. Under such provisions, Bangladeshi traders can import goods from any part of India or any other country through sea-ports or land-ports and re-export the same back to India or any other country. However, those provisions have grossly been overlooked while accepting the Indian proposal for allowing movement of goods through Indian states via Bangladesh, Syed Taufique Ali observed. Prior to giving full-fledged road transit facilities to India, some trial movement of goods has already started, despite mixed reactions among local traders, stake-holders, civil society groups, politicians and the vested interests. A new land route - between Ashuganj transshipment point to Agartala landport under Tripura state of India - under an existing river protocol of 1980 has meanwhile been incorporated. Heavy machineries were offloaded from some vessels at Ashuganj river terminal and were carried into India by Bangladeshi trucks and later by Indian ones over the past weeks, officials at Akhaura land-port said. The opponents of this extension of river protocol, as a covert arrangement, to land route transit, criticized the authorities concerned for allowing movement of heavy lorries, jeopardizing the existing fragile road conditions on the Bangladesh side. A number of local traders observed that in case of direct road transit, the Indian lorries will require to be loaded in India and unloaded again in India, after traveling across Bangladesh. "Though Bangladesh may get some 'tips' as transit fees, which are yet to be worked out, it will have no control on the consignments, and will have no rights to know about their contents," Mr. Ali said. As the owner of Netan, an export-import firm, Mr. Taufique Ali Khan got permission as far back as in 2007 the from Indian state authorities in Tripura and its central government in New Delhi to conduct handling of Indian goods under entre-pot trade and re-export system. In cases of entre-pot trade or re-export, Bangladeshi handlers (importer and exporter who has to be the same individual, group or firm) will also have a control on the goods and will be responsible for the safety of the consignments. Under this system, many Bangladeshi traders could be involved in handling the goods between entry- and exit-points on the borders or between ports in India and Bangladesh. "Under such an arrangement, Bangladesh and India could be in a win-win situation, both sides benefiting in the field of trade and commerce," Mr. Ali said. Under entre-pot trade arrangement, a trader who imports certain goods from any country can re-export the same to the same country or another one, by keeping a 5.0 per cent margin without opening the consignment and also without changing quality, quantity and size of it. This entre-pot trade can be done against back-to-back letters of credit (LC) provided by the buyers through "import permit on a returnable basis", obtained from the office of the Chief Controller of Imports and Exports (CCIE) in Bangladesh. In the case of re-export, the ports of import and export are different and consignments can be transported to the port of export against a 100 per cent bank guarantee equivalent to the amount of duties and taxes that would be returnable on execution of the export order. Consignments under entre-pot trade are not allowed to be taken out of port boundary, without special authorization. Under re-export, importers are allowed to change quality and size of consignments in re-processing and re-packing for, at least, 10 per cent value addition, before re-exporting. This can be done after payment of admissible duty and taxes under 100 per cent duty drawback arrangement, bank guarantee and under the bonded warehouse system against the export LCs, provided by buyers through "import permit on returnable basis" from the office of the CCIE in Bangladesh.