Import trade of Bangladesh is controlled under the Import & Export control Act (IEC) 1950. Authorized Dealer Banks will import the goods into Bangladesh following import policy, public notice, F.E circular & other instructions from competent authorities from time to time.
Definition on Import:
Buying of goods & services from foreign countries for sales is considered as import. The person or organization who import the goods & services from foreign countries is known Importer and from which goods & services are imported is known as Exporter. In case of Import, the importers are asked by their Exporters to open a Letter of Credit (L/C). So that there payment against goods & services is ensured.
General Provision for Import
Regulation of Import – Import of goods under this order shall be regulated as under:
Banned list: Banned goods are not allowed to import through the foreign exchange transaction. Such as Live Swine, Eggs of shrimps and prawns etc.
Restricted list: Any item, which is restricted by the “Import Policy Order 1997-2002” in Annexure –1(b) shall be importable only on fulfillment of the conditions (b) specified therein against the item.
Free Importable Items: The items which are not included either in the Banned list or Restricted list shall be freely importable:
In addition to the conditions mentioned in the Restricted and Banned Lists the conditions restrictions and procedures for import of various items mentioned in the test portion of this Order, shall as usual apply in case of import of those items.
Types of Importer
Goods are imported for personal use, commercial or industrial purpose. So there are three kinds of importer such as:
Letter of Credit (L/C)
Letter of Credit (L/C) is a payment guarantee to the seller by the issuing bank on behalf of the importer. In other words, it is a letter of the Issuing Bank to the beneficiary undertaking to effect payment under some agreed conditions. L/C is called documentary Letter of Credit, because the undertaking of the Issuing Bank is subject to presentation of some specified documents. Through the L/C Buyers & Sellers enter into a contract for buying and selling goods/ services and the buyer instructs his bank to issue L/C in favor of the seller. Here bank assumes fiduciary function between the buyer and seller.
To import a person should be an importer. In accordance with Import & Export Control Act, 1950 the office of chief Controller of Import & Export provides the registration to the importer. After getting this person has to secure a letter of credit authorization from Bangladesh Bank. Then he becomes a qualified importer; He is the person who requests or instructs the opening bank to open an L/C. He is also called opener or applicant of the Letter of Credit.
Import Registration Certificate
Import Registration Certificates are issued by the office of chief controller of imports and exports. Intending importers are to submit applications to CCI & for registration along with required documents are as follows:
Income tax certificate along with TIN
Membership certificate from Trade Association Certificate of incorporation, Article and Memorandum of Association. Partnership Deed for partnership firm.
Preliminary Steps for Opening L/C
Before opening the L/C Bank will takes the subsequent steps:
Applicant to be Bank’s A/C Holder: Bank will open the L/C on behalf of an entity who has an account with the Bank. Unknown person will not be allowed to open L/C.
Registered importer: Before opening the L/C bank must confirm that the L/C applicant is a registered importer or personal user, and the IRC of the importer has been renewed for the current year.
Permissible item: The item to be imported must be permissible and not banned item. If the item is from conditional list, the condition must fulfill to import the same.
Market Report: Bank will verify the marketability of the item & market price of the goods. Sometimes the importer may misappropriate the Bank’s money through over invoicing.
Sufficient Security or margin: Price of some items fluctuates frequently. In case of those items Bank will be more careful to take sufficient cash margin or other security.
Business Establishment: Bank should not open an L/C on behalf of a floating businessman. The importer must have business establishment, particularly he must have business network for marketing the item to be imported.
Restricted Country: Goods not to be imported from Israil.
Credit report of the beneficiary: It the amount of L/C in one item exceeds TK. 5.00 lac, supplier’s credit report is mandatory. Bank will collect credit report of the beneficiary through its correspondent in abroad
Application of the client to open the L/C: The client will approach to open the L/C in Bank’s prescribed form, duly stamped & signed, along with the following paper & documents: Such as
Indent / Performa invoice.
Insurance cover note with money receipt.
Membership certificate form chamber of commerce / Trade Association.
Tax payment certificate / declaration.
IMP & TM form signed by the importer
IRC, Pass book, Trade license Membership certificate & VAT, registration certificate in case of new client.
Export L/C in case of back-to-back L/C.
Permission From Ministry of Commerce: If the goods to be imported under CIF (cost insurance & freight), then permission form ministry of commerce to be obtained.
Presentation of the Documents
The seller being satisfied with the terms and the conditions of the credit proceeds to dispatch the required goods to the buyer. Then he has to present the documents evidencing dispatching of goods to the negotiating bank on or before the stipulated expiry date of the credit. After receiving all the documents, the negotiating bank them checks the document against the credit. If the documents are found in order the bank will pay accept or negotiate to Bank. Then bank checks the documents.
The usual documents are:
Bill of lading
Certificate of origin
Nor negotiable copy of bill of lading
Bill of exchange
Pre-shipment inspection report
Steps Involved in Import procedures
Procurement of IRC from the concerned authority
Signing purchase contract with the seller
Requesting the concerned bank (importer’s bank) to open an L/C on behalf of the importer favoring the exporter/seller/beneficiary.
The issuing bank opens/issues the L/C in accordance with the instructions/request of the importer & request another bank (advising bank) located in sellers exporter’s country to advice the L/C to the beneficiary. The issuing may also request the advising bank to confirm the credit, if necessary.
The advising bank advises the seller that the L/C has been issued.
As soon as the exporter /seller receives the L/C & is satisfied that he can meet L/C terms & conditions, he is in a position to make shipment of the goods.
After making shipment of the goods in favor of the importer the exporters submit the documents to the negotiating bank for negotiation.