As a least developed country (LDC) for more than five decades, Bangladesh was used to enjoying a number of flexibilities as a World Trade Organisation (WTO) member. Now with the country's graduation out of the LDC status, the flexibilities will be gone and we will be in a competitive free market regime.
The Bangladesh government has already taken a smooth transition strategy and formed a core committee and a number of sub-committees to prepare strategies to meet graduation challenges. Business process simplification should be the core issue so that the cost of doing business is reduced.
Trade facilitation has been a priority to reduce consignment release time, which will ultimately reduce costs and bring competitiveness. The Trade Facilitation Agreement of the WTO has acquired greater focus and urgency since it was ratified in April 2016.
The Trade Facilitation Agreement recognises the importance of regular performance measurement, and article 7.6 recommends measuring the average cargo release time through the World Customs Organisation's Time Release Study (TRS). In recent years, the tool has been capturing a lot of attention worldwide in case of trade and investment issues.
Bangladesh has conducted four separate TRSs for different ports (Benapole land port, Burimari land port and Chattogram seaport) in 2019. Due to the Covid-19 pandemic, the TRSs could not be completed before 2022. Recently, the National Board of Revenue conducted a consolidated TRS on three ports (Dhaka, Chattogram and Benapole) and released its findings in September 2022. TRS has been conducted with the assistance of the World Customs Organisation, the Swiss State Secretariat for Economic Affairs and the Global Trade Facilitation Program (GTFP).
Currently, customs release and clearance times are impacted by repetitive processes that allow other stakeholders to unduly influence the total overall time taken to release goods. As per the TRS of Chattogram sea port in 2014, the time taken in Chattogram for the release of cargo for import was 11 days, 9 hours and 45 minutes, and for export it was 4 days, 22 hours and 38 minutes. If we look into the average release time for import consignment in Singapore and India, it was 7 hours, 27 minutes and 3 days and 23 hours, respectively, in 2019.
While comparing the average times for release determined by TRSs in 2014 and 2022 at Chattogram port, it is evident that completing the import clearance process from the arrival of ship to the final release of the goods takes an average of 11 days, 6 hours and 23 minutes, with the maximum being 49 days, 5 hours and 30 minutes and the minimum being 1 day, 5 hours and 46 minutes, in 2022, while the average was 11 days, 9 hours and 45 minutes in 2014. This means that on average 3 hours of release time was reduced from 2014 to 2022 at Chattogram port.
India reduced 13 hours of average time release in one year (that is, from 2020 to 2021), whereas Bangladesh reduced 3 hours and 22 minutes in 8 years, which indicates a very slow improvement in reducing releasing time for consignments. India has been able to increase their authorised economic operator (AEO) operations very speedily, which could be one of the reasons for its reduction of consignment releasing time.
The average time required to complete the import clearance process starting from arrival of the truck at the Benapole port to the final release of the goods is 10 days, 8 hours and 11 minutes, with the maximum time being 35 days, 8 hours and 26 minutes and the minimum time being 1 hour and 39 minutes in 2022. The average release time was 6 days and 23 hours in 2014, so there was a huge increase in cargo handling time, about four days, at Benapole port. The decline may be because of the poor infrastructure in the land port areas, the deficiencies in the port handling procedures and the shortage of warehousing and storage facilities.
Required steps for import at Benapole land port in 2014 was 42 for normal processing, with an additional 10 steps needed to correct any errors. It has been reduced to 28 steps now, which is a good example. However, in contrast, the required time for customs clearance procedures have increased significantly.
Required steps for import at Chattogram port was 32 steps in 2022, whereas it was 25 in 2014. It is evident that even though required steps have been reduced in both Benapole land port and Chattogram port, the average times for releasing consignments have not been improved. Methodological issues can be examined further to examine the reasons behind this grim picture.
In the case of Singapore, there are three simplified steps for releasing consignments: pre-clearance dwell time, customs clearance dwell time and post-clearance dwell time.
TRSs have given us a clear picture of consignment release time and processes in different modes of customs clearing ports. In order to improve customs clearance processes, there is a need for the integration of concerned stakeholders with the Automated System for Customs Data (ASYCUDA) and the National Single Window. The status of each step of consignment release could be tracked by a digital system and generate notifications for the concerned entities.
It is evident from research by BUILD, the public private dialogue platform that works for private sector development, that the implementation of pre-arrival processing provisions can cut the average release time by eight days. The full implementation of pre-arrival processing and the introduction of system-generated notifications for IGM submissions can improve the situation.
Presently, the time for consignment release by an AEO takes 13 days and 5 hours. On the other hand, a non-AEO consignment release takes 13 days and 13 hours. Presently, the National Board of Revenue is working on awarding ten more AEOs to those who have VAT compliance software. However, if the time requirement is almost the same for AEOs and non-AEOs, what are the benefits of an AEO policy? Ultimately, it is necessary to reduce time for releasing consignments.
Service providers for releasing consignments face a critical problem in identifying an assigned focal customs officer for the process, which is one of the reasons for delay. Uploading real-time examination data in the ASYCUDA with details of the assigned person would be helpful.
TRSs have also suggested some recommendations which, if implemented, could show better results in the future. Arranging motor vehicles and a walkie-talkie system in the examination or jetty area for smooth movement and communication is another possible solution.
In the case of air cargo consignments, the port authority should eliminate the requirement of submitting a hard copy of a signed Air Way Bill. Instead, virtual approval would suffice. It can reduce the release time by at least one whole day.
A full-fledged electronic system for uploading documents, implementing the requirement for a Customs Post-Clearance Audit function, and establishing connectivity or an interface for the Chattogram Port Authority cargo management system, are some of the priorities already identified.
Examples of an electronic data interchange method following the example of other countries can be established for filing truck manifests in advance of the arrival of a truck. All the suggestions of TRSs for reducing consignment release time need to be implemented phase-wise to see a better outcome in the upcoming TRS.
Ferdaus Ara Begum is the CEO and Md Nuruzzaman is Research Associate at BUILD, a Public-Private Dialogue Platform that works for private sector development.