Bangladesh Customs automation – long on talk, short on progress

Narayanganj-based MB Knit Fashions Limited imported a chemical in 2015, but officials of Chattogram Customs were suspicious that the company might have brought in some other product through misdeclaration.

So, samples were sent to the Bangladesh Council of Scientific and Industrial Research (BCSIR) in Dhaka for testing, and it took 20 days to get the results, making the company spend extra time and money.

But, according to the importer, the task should have been completed in two days had the whole process been automated and brought under a single entity.

MB Knit Fashions’ case is not unique. Hundreds of import and export consignments are sent to different institutions – including the BCSIR, the Bangladesh Standards and Testing Institution (BSTI), the Bangladesh University of Engineering and Technology (Buet), the Plant Quarantine wing under the Department of Agricultural Extension, and the Drug Administration – for testing every year, which sometimes take two months or even longer.

In the process, businesses have to suffer harassment apart from losing both time and money, which is one of the major reasons why Bangladesh lags behind in ease of doing business.

Ease of doing business for importers and exporters, particularly automation and modernisation of customs operations as part of following best practices in the international arena, has been much discussed over the past decade, but little progress has been made on the ground.

Projects hit snag

In 2017, the National Board of Revenue (NBR) initiated a project dubbed “National Single Window” to bring the activities of 39 agencies dealing with customs-related activities under one umbrella and thus enhance trade operations by eliminating paperwork and reducing time through maintaining up-to-date information.

The National Single Window project – aimed at delivering a user-friendly electronic system that streamlines and automates procedures for international trade-related permits, licences, certificates, and customs declarations – was initially slated for completion by 2019, but three years into the expiry of the deadline it is yet to be completed.

Authorities now aim to complete the project by next year, though some former officials of the NBR have expressed doubts about its implementation even within this period.

Similarly, automation of the customs bond system has been much discussed but little has been implemented.

A trial run of automating some operations was inaugurated last week, which is said to start in full swing from July next.

In addition, a provision known as Authorized Economic Operator (AEO), a system that allows bringing goods or raw materials belonging to trusted traders directly from the port to importers’ warehouses without needing customs clearance, was piloted in 2019 with three companies.

But the number of such importers has not increased thereafter. In fact, the three companies are not using the facility properly owing to a lack of capacity of the customs department and the reluctance of importers.

Nonetheless, initiatives have been taken up recently to bring some more institutions under this facility.

At the same time, initiatives such as pre-arrival processing of cargo, and post clearance audit (PCA) that were scheduled for completion by 2020 are yet to be done. The initiative to formulate a new customs law conducive to automation also has been in limbo for a long time.

The problem is not only with the automation projects related to customs. The VAT Online Project – initiated to make all VAT-related work fully automated – is going slow. Progress in income tax automation is also small.

Asked, former NBR member Farid Uddin expressed his disappointment and said much has been said about automation for the last eight or nine years, but in reality the work has slowed down a lot.

“Money will be spent, but it seems the projects will not be implemented,” he said.

Khondaker Muhammad Aminur Rahman served as director of the NBR’s National Single Window project for quite a long time. When approached by TBS, he declined to comment on the slow pace of automation.

However, an official of the NBR’s customs department proffered the explanation that the automation projects could not get the expected momentum mainly because of the Covid pandemic.

The official added that indecisiveness mid-way after the commencement of the National Single Window project also has delayed the work to some extent.

He, however, said in the cases of import through ASYCUDAWorld software, bills of entry and payments are now being done online. Besides, e-auction and e-tender services are operational at some customs houses.

Lack of consistency blamed

Dr Muhammad Abdul Mazid, former chairman of the NBR, feels that a lack of consistency is one of the reasons for the non-implementation of the automation initiatives on time.

“It might turn out that some people in the agency concerned may not want it. Also, there is a lack of coordination with other related agencies.”

Mazid, however, did not hold anyone solely responsible for this.

According to the World Bank’s latest Ease of Doing Business report, Bangladesh ranks 168 out of 190 countries. A lack of customs and port expertise is one of the key reasons for this backwardness.

Besides, according to the World Bank Logistic Performance Index (LPI) 2018, Bangladesh is behind all its major competing countries, including China, Vietnam, India and Cambodia. The country is ahead of Pakistan and Nepal only. Again, the country performed the worst in customs clearance among the LPI indicators.

On the other hand, according to Agility Emerging Markets Logistics Index 2022, Bangladesh ranked the lowest among four emerging South Asian economies. Bangladesh dropped one position to rank 39th among 50 of the world’s most promising emerging logistics markets.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TBS that the completion of the customs automation initiatives would help to reduce harassment of traders and save their time and money.

“But a few among those who are responsible for doing this might not want to do this because their income will decrease,” he observed. Manzur Ahmed, adviser to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told TBS that as a signatory to the Trade Facilitation Agreement of the World Trade Organisation, Bangladesh is pledge-bound to implement automation activities, but they are not being implemented properly.