In Bangladesh, the export sector is pivotal for economic growth, significantly contributing to foreign earnings. Recognizing this, the government extends substantial support to exporters through a variety of fiscal and non-fiscal incentives.
Financial Support and Incentives
Exporters in Bangladesh can access soft loans via the Export Development Fund, Export Facilitation Pre-finance Fund, and Pre-Shipment Refinance Programme. Additionally, cash incentives are offered on proceeds received, acting as direct cashback for exporters in specific sectors.
Duty-Free Imports and Tax Exemptions
For export-oriented businesses, duty-free imports of raw materials and capital machinery are allowed under a customs bond licence, or they can avail duty drawbacks on similar imports post-export. Export income is also exempt from VAT, reducing the financial burden on exporters.
Specialized Investment Zones
The government has established specialized investment zones such as export processing zones, economic zones, and hi-tech parks. These zones offer benefits like multi-year tax holidays, duty-free imports, and the free movement of foreign currency. Fully foreign-owned entities in these zones can engage in open account trade for both import and export, a practice generally restricted to major government and infrastructure projects.
Export Documentation and Procedures
For businesses outside these zones, cross-border exports under open account are subject to guidelines from Bangladesh Bank (BB). Exporters must submit shipping documents, including contracts or letters of credit (LCs), commercial invoices with approved HS codes, transport documents, and bills of export to authorized banks.
Raw materials can be imported through quasi back-to-back LCs, leveraging export orders to open subsequent LCs for procurement. Payment for these materials is usually deferred and settled from export proceeds. To control fund repatriation, carriers must issue title documents, like a Bill of Lading (BL), to the order of the exporters’ bank in Bangladesh, except for advance payments.
Foreign Currency Accounts and Repatriation
Exporters can open foreign currency accounts such as Exporter Retention Quota (ERQ), Single Pool Account, and 30 Days Foreign Currency Account to manage their earnings flexibly. Funds equivalent to back-to-back import obligations are held in these accounts until payment maturity, while ERQ accounts allow indefinite retention of a proportion of earnings for business purposes. Export proceeds must be repatriated within 120 days of shipment, a priority facilitated by Standard Chartered’s extensive network, offering low-cost pre-payment to exporters under Supplier Finance Programmes with major global buyers.
Regulatory Requirements
Exporters need an Export Registration Certificate (ERC) from the Office of Chief Controller of Imports & Exports (CCI&E) and must comply with the latest Export Policy and Bangladesh Bank’s Guidelines for Foreign Exchange Transactions (GFET), 2018 Vol 1.
Types of Exporters and Permitted Incoterms
Exporters include direct exporters of finished goods like footwear, readymade garments, and pharmaceuticals; deemed exporters supplying raw materials and accessories to direct exporters; and service exporters such as IT and software providers, who do not need an ERC. All Incoterms are allowed except Delivered at Place (DAP), Delivered at Place Unloaded (DPU), and Delivered Duty Paid (DDP) to avoid additional deductions on inward remittance.
Conclusion
Navigating the export landscape in Bangladesh may seem complex, but with the right knowledge and resources, it presents immense opportunities. Bangladesh’s commitment to supporting its exporters is clear through the extensive range of incentives and reforms. As exporters engage with global markets, they contribute to their growth and the economic dynamism of Bangladesh, reinforcing the nation’s reputation for resilience, innovation, and excellence. This drives the nation forward towards a new era of prosperity and global integration.
Rewritten by BTJ Team, extracted from original writer Mr. Luthful Arefin Khan, the author is the country head of transaction banking at Standard Chartered. Bangladesh.
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