Optional PSI comes into force by month-end

The government is going to launch the optional pre-shipment inspection (PSI), which was earlier mandatory, for imported goods by the end of this month, as both the customs authority and the service provider companies have reached a consensus on payment procedures and other terms and conditions.
The optional PSI system, incorporated in the budget for the fiscal year 2013-14, could not be launched over the last six months due to a lengthy procedure in transition from the mandatory regime to the optional one.
The government would have to sign an agreement with the PSI companies before launching the optional service, an official concerned said.
Some of the multinational and local companies prefer to have their imported goods inspected by the PSI companies.
They were contacting the National Board of Revenue (NBR) and the PSI companies to know about when the service would be launched, sources said.
According to a recent letter of the NBR, the PSI companies will also be able to convert 75 per cent of their payments into foreign exchange.
The PSI companies will also be able to seek permission from the Bangladesh Bank (BB) or other relevant banks to convert the currencies received as bills into foreign exchange.
Under the optional PSI, the service provider companies will not get the bills from the customs houses. Rather, the importers will pay the bills to the PSI companies.
The PSI companies will be appointed for one year from the date of contract signing.
The tenure of their performance bond might be extended in the event of any unrealised amount of money owed by the PSI companies, the NBR letter said.
Officials said the NBR sent letters to the four PSI companies clarifying the tenure of performance bond or contract of the PSI companies and payment procedures to remove confusions about them.
They said half the year was spent to shape up the optional PSI system as the NBR had to answer queries of the PSI companies several times.
A senior official of Intertek Testing Services (ITS) said the PSI companies showed their interest in rendering the optional inspection service.
"We have written to the Internal Resources Division (IRD) that our performance guarantee is ready for submission. The companies have urged the government to expedite the contract signing procedure," he said.
The ITS official said the companies showed interest in the optional PSI system despite the prospect for the business remaining quite bleak because of sluggish imports caused by the ongoing political impasse.
A senior customs official said the government invited the existing four PSI companies to conduct the optional PSI but they found some PSI companies were doubtful about cost-effectiveness of the service, as it would depend on the desire of importers.
The four companies-ITS, BIVAC, SGS and OMIC-rendered the PSI services in Bangladesh for imports from five global blocks.
"The PSI system will be totally scrapped after signing of the WTO (World Trade Organisation) trade facilitation agreement," he said.
The customs wing already developed its capacity to handle the imported goods, he said.
In the mandatory PSI system, the companies were doing their job for imports from specific blocks. But the optional PSI system allows the companies to do the job for imports from all blocks.
Their inspection fees have been set based on the Cost, Insurance and Freight (CIF) value. The fee for the Block A has been set at 0.10 per cent of the CIF value. The fees are 0.145 per cent, 0.275 per cent, 0.350 per cent and 0.550 per cent for the Blocks B, C, D and E respectively. Importers will have to collect their certificates from the PSI companies on their own.  
In the last two years, the government excluded major import items in phases from the mandatory PSI to make the Customs capable of inspecting imported goods.
In the first phase the NBR excluded 3,000 products while 2,600 were excluded in the second phase. Bangladesh imports 6,472 products from different countries.
The government has withdrawn the mandatory PSI system in the current FY 2013-14 after several attempts aborted in the face of widespread criticism from both businesses and government officials.