Major importing countries oppose restriction on foreign shipping lines

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Nazmul Ahsan
Some diplomatic missions in Dhaka, including those of major importers of Bangladesh goods, have expressed their serious reservation about the recent government decision to bar the fully foreign-owned shipping companies from doing business in the country.
In joint as well as separate letters these missions have requested the government to lift the ban, according to official sources.
The heads of foreign missions in Dhaka representing countries like the US, France, Korea, Sweden, European Commission and Denmark have written a letter jointly to Foreign Minister Dipu Moni requesting her to look into the matter.
Besides, the office of the USTR (United States Trade Representative) has also asked the Bangladesh government to withdraw the licensing requirement for the foreign shipping companies and help them operate smoothly.
The National Board of Revenue (NBR) has issued a Statutory Regulatory Order (SRO) recently saying that fully foreign-owned shipping companies would not be granted licences to operate in Bangladesh.
The SRO stipulates that foreign shipping companies would only be granted licence if they form joint ventures with local companies and own a maximum of 49 per cent stakes in such ventures.
The existing foreign liners operating in the country will have to abide by the new directive before seeking renewal of their licence, added the SRO.
According to the SRO, the shipping companies who will jointly operate their business will have to appoint local managing directors or chief executive officers.
Besides, the number of foreign employees in each of the joint venture companies will not be more than two and their salaries as well as other expenses will be borne by the principal company, the NBR notification said.
It also said joint venture shipping companies will have to invest at least 25 per cent of their net profit locally each year.
The paid up capital for joint venture will not be less than US$ 1.0 million.
The license validity period has been extended to four years instead of existing two years.
When asked, a high official in the Customs department said a licensing authority, headed by a joint commissioner of Chittagong Customs, would be constituted soon in accordance with the SRO provisions.
'We would obviously issue notices to foreign shipping companies giving them time to meet the criteria,' a customs official told the FE.
Currently, there are three fully foreign-owned companies operating in the country. They are Maersk Line, APL and NYK.
According to shipping circles, the combined market share of the three companies is around 50 per cent.
Maersk Line, a Denmark-based shipping company, has been operating for a long time in Bangladesh.
APL, is a wholly owned subsidiary of Singapore-based Neptune Orient Lines, a global transportation and logistics company engaged in shipping businesses in Bangladesh for long.
The Japan-based NYK (Nippon Yusen Kaisha) is a leading shipping company, and it is mainly involved in transporting vehicles.
The heads of the foreign missions concerned in Dhaka in their joint letter said the licensing requirement should not be given effect since it would hurt the interest of foreign companies working here.
Besides, the ambassador of the US and the head of the EU delegation in Dhaka have expressed their concern through separate letters to Dipu Moni and Commerce Minister Faruk Khan.
'Changing the licensing and investment rules for an important sector would also have a negative effect on Bangladesh's overall investment climate, making foreign investors uncertain about the government's commitment to foreign investment more broadly,' states the letter of James F. Moriarty, addressed to foreign, commerce and shipping ministers.
Meanwhile, Bangladesh Embassy in Washington in a recent letter said the USTR wanted the rules to be withdrawn.
The letter, written by the official concerned in the Bangladesh mission in Washington, said country's export prospect might be hampered badly following the new licensing regulation.
'Any change will be harmful to the export growth of Bangladesh,' reads the letter.
When asked, local shipping business operators said no country in the world allows fully foreign-owned shipping companies operation. He claimed that the country's Foreign Private Investment (Promotion & Protection) Act, 1980 and Bangladesh Merchant Shipping Ordinance, 1983 also debarred fully foreign-owned shipping companies from operating in the country.
Ahsanul Hoque, chairman of Bangladesh Shipping Agents Association told the FE: "The new provision will ensure the interest of the country."
He said the new rules would also ensure transparency and accountability in transferring fund.