Pre-shipment inspection companies are calling for procedures to bring imports brought into Bangladesh on open account in line with those for imports brought into the country with letters of credit (L/Cs). Traders utilising L/Cs currently face a disadvantage compared with those making direct imports who may also be earning illicit profits from tax evasion.

Review L/C procedures

The inspection companies reckon direct imports worth millions of dollars each year are brought into the country according to local media. The Daily Star goes on to say that the inspection companies have been lobbying the central authority for tax administration in Bangladesh, the National Board of Revenue (NBR), to abolish the option for importers to pay a fine of less than US$900 for failing to arrange for goods to be inspected.

Three inspection companies are reported to have submitted proposals to the NBR requesting a review of procedures, not only for direct imports but also for imports made under L/Cs. The companies say the current procedures in which they are charged with verifying L/Cs received from the issuing bank cause unnecessary delays.

Currency shortages

Other problems experienced in L/C transactions with Bangladesh have included foreign exchange shortages. Earlier this year commercial banks faced some difficulties settling L/C payments due to scarcity of cash foreign currency in the interbank market.

In March representatives of private banks complained that the four state-run banks which dominate the banking sector and which are the major sources of foreign exchange, were not responding to the needs of the market. The central bank at the time rejected this charge.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.