Govt aims customs efficiency by cutting cost, time

Infographic: TBS

The government is set to approve a project to modernise the country's major customs stations in Chattogram, Dhaka and Benapole at a cost of Tk1,686.46 crore aiming to meet the challenges of LDC graduation in 2026.

The World Bank will provide 87% of the money as a loan for the Customs Modernization and Infrastructure Development project.

According to sources in the Planning Commission, the project will be presented to the Executive Committee of the National Economic Council (Ecnec) at a meeting on 12 March for final approval.

The National Board of Revenue (NBR) believes the project will reduce the time and cost of handling imports and exports at the port by improving customs infrastructure and increasing the efficiency of officials.

The scheme is also expected to contribute to raising revenue through a modern toll system.

Of the projects' benefits, the most important include reducing the import and export clearance time by 25%; increasing assessed import and export declarations, and reducing average physical inspections at crucial border points to 5% from the current 10%.

Presently, import clearance at the Chattogram port takes around 11.5 days and export clearance takes about five days.

NBR officials said green-certified, resilient and gender-inclusive buildings for the Chattogram Custom House and Customs Excise and VAT Training Academy would also be built under the project.

The Chattogram Custom House will have the required infrastructure, an accredited collaborative laboratory and other facilities.

Laboratory equipment, desktop computers, laptops, multimedia projectors, and scanners will be purchased for three customs stations under the project.

An e-customs facility will also be introduced. This will decrease physical presence at ports by 60% and ensure that import-export processing can be done without visiting the customs station.

Businesses, which have long been advocating for the modernisation and automation of the country's customs houses, including the Chattogram Customs House, welcomed the move.

Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "The customs system must be modernised. We want to become a Smart Bangladesh. But there will be no Smart Bangladesh without customs automation or modernisation. The economy cannot be boosted using a manual customs system."

He said that if customs are modernised, import-export will increase, adding, "If it is $10 billion now, it will be $16 billion in the future."

Mohammad Hatem, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, "We hope that this work will be done correctly and within the specified timeframe."

He said this would benefit the business community and increase the government's revenue by checking duty evasion.

Furthermore, he noted that it would ensure traders needed to spend less time at the ports.

Farid Uddin, a former member of the NBR, said, "The project is said to include the construction of iconic buildings. But it has to be seen whether the private sector sees the currently persisting problems with customs continue."

He said the classification of items needed to be revisited, alongside addressing the complications arising with the valuation of imports.

"A few days ago, traders said they wanted assessments on current value [of imports] instead of the record-based valuation. Traders also face problems due to delays and testing in the customs," he said.

Farid said whether any international standard solutions were offered for these should be examined.

"It takes 30 seconds to submit a bill of entry in Europe," he said, highlighting how it took much longer in Bangladesh.

Priming for challenges

According to the proposed Development Project Proforma (DPP), graduation from LDC status will pose competitiveness challenges, especially as exporters will no longer have access to duty-free regimes in key global markets.

For Bangladesh, the loss of preferences in key markets could lead to an annual export reduction by as much as 11%, or approximately $6 billion.  

This may fundamentally challenge BBIN countries' position in global markets, requiring concerted efforts to develop a contemporary transport and trade facilitation system underpinned by a conducive policy environment for trade.

According to the survey report, there are infrastructural problems, poor transport systems, and a lack of capacity for customs houses in terms of regional communication networks, all of which are obstacles to the growth of trade in the South Asian region.

The project proposal also states that Chattogram Customs House is Bangladesh's most crucial import-export trade. Therefore, it was necessary to increase the port's capacity, alongside other ports, to expand business with the North Eastern states of India while also examining connectivity issues with the Matarbari deep sea port.

To deal with some of the issues in focus, the new project also includes modern customs policies and processes following global good practices; a proposed National Tariff policy; fully operational customs risk management commissionerate; an authorised economic operator; post clearance audit; pre-arrival processing; bonded warehouse regulations; formation of Bangladesh single window commissionerate; formulation of customs modernisation strategic action plan 2023-26; an e-learning platform; customs development strategy; and activities to strengthen the capacity of customs following good global practices.    

The NBR has set a target to complete the project by 2026.

The World Bank did the feasibility study of the project.