A big-budget project costing Tk 20 billion is framed to upgrade infrastructures of customs and VAT offices to enable them to meet growing demand for trade and transit facilitation, officials say.
The National Board of Revenue (NBR) has framed the project to strengthen capacity of customs and VAT administration with fund support from the World Bank (WB).
Officials feel that the investment in customs and VAT infrastructures has become imperative as the government is offering transit facilities to neighbouring countries and striving for Bangladesh to graduate to a middle-income country by 2026.
The Ministry of Finance (MoF) has sought nearly Tk 16.53 billion worth of fund support from the World Bank for the upgrading to meet growing demand for domestic revenue mobilisation and trade facilitation.
The Economic Relations Division (ERD) of the MoF has outlined the project, titled 'Strengthening Capacity of the Customs and VAT Administration'.
On February 13, 2023, Planning Minister MA Mannan, in principle, endorsed the preliminary development project proposal (PDPP) with the estimated cost involving foreign assistance.
Of the total cost, the government is set to contribute Tk 3469.60 million while rest would be managed from foreign financing.
Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), says development of the customs infrastructure is needed simultaneously with trade-liberalisation move.
He thinks country's transportation and other sectors would be "economically benefited with the opening up of transit facilities".
About transportation load from transit Dr Rahman says pressure on Chattogram and Mongla seaports would be reduced to some extent following investment in the Matarbari deep-sea port, Payra port and so.
A senior customs official in a field-level customs house has said the VAT and customs department needs investment in its infrastructure development on an urgent basis to meet the growing demand for trade liberalisation.
The government of late has opened up ports for transit and transshipment facility through using seaports for India and land ports for Bhutan.
"Increased volume of vehicles would move on the roads and pass through the customs stations following the opening up of transit facility for neighbouring countries," says the official.
"Customs would need skilled manpower and advanced infrastructures and logistics to deliver the service and ensure foolproof security," he adds.
The goal of the project is to improve infrastructure of existing customs, excise and VAT offices, to conduct study on the potential challenges and capacity building needs of customs and VAT officials of the NBR after Bangladesh's graduation from the least-developed country (LDC) status and to strengthen government through capacity building of customs and VAT officials by local and foreign training and study abroad.
The ERD has sent a PDPP to WB Bangladesh country Director Abdoulaye Seck in this regard.
As per PDPP, the National Board of Revenue (NBR) would be executing agency of the project, expected to start this year and end in June 2028.
The project would equip customs and VAT offices with non-intrusive inspection (NII) devices, transportation facilities for regular surveillance activities, and laboratory facilities.
According to the PDPP proposition, proper implementation of the project would help increase revenue collection, expand VAT net, expedite taxpayer services, and increase the tax-GDP ratio.
Bangladesh government is implementing different connectivity and port-infrastructure projects under ADB-SASEC programme.
The main target of this proposed project is to facilitate trade. Already, some of the trade-facilitation moves have been taken with assistance of the WB group.
"This project would be supplementary to the existing projects in this sector," the PDPP reads.
Under the project, full-fledged infrastructure of 17 customs, excise and VAT commissionerate offices and customs houses would be developed to facilitate business.
Customs and VAT officials would be able to expand its net to the grassroots level and growth centres, it says.
Under the project, some 650 officers of different levels can get short/medium-and long-term trainings and capacity-building opportunities to sharpen their expertise to meet the challenges of revenue collection alongside providing better taxpayer services.
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