Traders aggrieved over customs harassment in export-import trade 

A collage of Chattogram Customs House and the Chattogram PortBSS

Businesses have expressed grievance over what they called harassment by customs officials and lamented that it is disrupting their export-import trades. 

In a recent incident, an export-oriented garment factory, located on the outskirts of the capital city, faced a handsome financial penalty and additional losses due to alleged harassment and unwarranted delay at customs. 

The factory had opened a letter of credit (LC) to import 90,000 kg of clothes from China in three shipments through the Chattogram port. Some 22,000 kg of clothes were supposed to be shipped in the final consignment, but the customs authorities found 1,700 kg in extra. 

It prompted the customs authorities to seize the entire consignment on allegation of false declaration, fine the factory Tk 1500,000 in total, and impose an additional duty of Tk 450,000 for the extra clothes. 

On the condition of anonymity, an official of the factory said the delay in clearance of the shipment resulted in port charges amounting to Tk 1500,000, beyond the customs fines and duties. 

It took more than two months to complete the clearance process and they missed their shipping deadlines in the aftermath. Against such a situation, they sold the pre-ordered garment products to the foreign buyers at a 50 per cent discount, he added. 

The official pointed out that the issue could have been solved quickly under the existing regulation had the authorities been more sincere. 

It was mentioned in the master LC, back-to-back LC, and utilisation declaration (UD) that a 3 per cent discrepancy in goods is permissible, but the customs authorities disregarded this provision. There should not be any issues if the extra goods amount to even 2,600 kg, he explained. 

According to traders, such incidents of harassment are common in export-import trade.

The business leaders raised the issue during a meeting with the prime minister at the Ganabhaban on Saturday night. Salman F Rahman, the prime minister’s private industry and investment advisor, led the delegation that comprised leaders of different trade bodies. 

Apart from the customs issues, the business leaders urged to maintain bank loan interest rates between 11-12 per cent, ensure a stable dollar supply at fixed rates, uninterrupted gas-electricity supplies, and cash incentives. 

It was learned that a number of business leaders alleged in the meeting that the customs officials prioritise fine collection over taxes as they receive a portion of the fines. Some businessmen disclosed that the traders mostly pay bribes to the officials to avoid fines. 

In response, the prime minister asked why the businessmen pay bribes? One replied that they pay the bribes mainly to avoid harassment and unwarranted delay in the clearance process.

A delayed clearance of shipments disrupts their production and sometimes leads to the cancellation of purchase orders by foreign clients. Hence, they have no choice but settling any issues through bribes, he detailed.

One of the businessmen who attended the meeting told Prothom Alo seeking anonymity that they briefed the prime minister about up to 250 per cent fines inflicted on products imported through the HS code. There is a practice of duty evasion through the submission of wrong HS codes as it requires bribes to clear the way for such shipments.

Acknowledging the issue, the prime minister assured the businessmen of re-considering the commission system for customs officials and considering incentives if some new entities are brought under the tax net. 

SM Mannan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Prothom Alo that the customs officials are harassing the businesses using the legal provisions as they slap massive fines for insignificant discrepancies in HS codes, such as spelling flaws, or minor mismatch in weights.  

He alleged that the BGMEA members had to count fines ranging from Tk 100,000 to Tk 10 million for minor discrepancies. 

“We have been struggling to survive as the cost of doing business has gone up unusually. In such a situation, we need cooperation from the National Board of revenue (NBR). We believe that the custom officials are mostly honest and a handful of them harass the business,” he explained.   

In its business environment survey for 2023, which was released in January this year, the Centre for Policy Dialogue (CPD) noted corruption as the primary barrier for businesses in Bangladesh. 

As many as 68 per cent of businessmen identified corruption as their biggest challenge and they reported the highest level of corruption in export-import trade. Two-thirds of traders reported experiencing corruption when importing raw materials.

CPD research director Khondaker Golam Moazzem said the import-export process was supposed to be automated, but it did not happen. Some officials are reaping benefits of the loophole. 

He laid emphasis on ensuring more precise HS codes and proactive measures by customs authorities to address these issues.