Chittagong sea port and the ease of doing business index : Bangladesh perspective21 October 2019
Trade is called the engine of growth. According to the 7th five year
plan, Bangladesh has to attain around 8% of GDP growth by 2021. For
attaining 8-10% GDP growth, Investment of 35-38% GDP is essential, which
is 32% only at present. Foreign Direct Investment may fill this gap
provided the domestic investment environment is investment friendly.
Ease of Doing Business index provides objective measures of business
regulations and their enforcement across 190 economies. In this index,
190 economies are ranked according to 10 sets of sub-indices. These are
combined into an overall "ease of doing business" ranking. Among the ten
sets of sub-indices, 'Trading across Borders' is one in which
Bangladesh is ranked 173rd whereas the overall rank of Bangladesh among
190 countries is 176 in 2019. For enhancing this index, Chittagong sea
port is the main stakeholder as around 92% of country's trade is
occurred in this sea port.
The history of Chittagong port dates back to the fourth century B.C. Malayan history chronicles the journey of the sailor Buddha Gupta from Chittagong to Malaya in the 4th century B.C. The Arab traders considered Chittagong to be the delta of the Ganges. Chittagong port has been mentioned in the works of Ptolemy, Fa-hien, Hieu-en tsng, and Ibn Battuta. This was an important port used by the traders from the Middle East, China, Turkey, Europe to trade with this part of the world. Arab traders, who arrived in the 8th century, played a pivotal role in the spread of Islam in Bengal. The 16th century saw the arrival of the Portuguese. The Arakan Kingdom provided permission to the Portuguese and used them as a buffer against Mughal Empire. The Portuguese engaged in Piracy, Slavery and forced conversion in the region. Joao da Silveira was the first Portuguese Captain to reach the port. He arrived with his ship LopoSoana in 1517. The Portuguese named the port "PORTO GRANDE" (a great Port). The records show that the Porto Grande offered easy access and safe anchorage to ships of 20 feet draught.
It remained a port during Moghul time. Later in early 19th century the British took control of the Chittagong port. The port of Chittagong became a natural outlet for the Northeastern regions of the then British-India that led to the enactment of the Port Commissioner's Act of 1887. The British upgraded the port and increased efficiency. During the Bangladesh liberation war in 1971 the Pakistan navy mined the approaches to the port. After the end of Bangladesh liberation war, Rear Admiral of Indian navy S. H. Sarma was made Chairman of Chittagong Port Trust.
Container Port Traffic
The Port, handling capacity in Bangladesh is comparatively better than Asian as well as the global context.The average growth rate of container handling by port from 2008-2014 is around 8% in Bangladesh which is the highest in Asian countries except Vietnam (13.32%) and this rate is also much larger than the world average (4.98%) and south Asian average growth rate (5.95%). If we care to take a glimpse of the statistics of Chittagong Port over the last decade or more, we would find that in 2003 total volume of containers handled by Chittagong Port was 625160 TEUs (Port container traffic measures the flow of containers from land to sea transport modes., and vice versa, in twenty-foot equivalent units (TEUs), a standard-size container) and in 2015 it came to 2,024,207 (The Financial Express, 30 Nov, 2016 ). It means the volume more than tripled in a span of 12 years, marking an overall growth of 224%. Chittagong Port Authority (CPA) ostentatiously celebrated touching the milestone of handling 2.0 million TEUs in 2015 although it was supposedly marked to do so in 2016.
Source: World Bank, Average and Average Growth Rate are Own Calculation.
The private ICDs (Inland Container Depot) that have worked in strong coordination with Chittagong Port and kept this heart of economy beating in a rhythmic, healthy and sustainable way. The handling of about 92% of exports, including 100% of readymade garments (RMG), that used to take place in Chittagong Port even up to the end of the twentieth century is now being done by the Private ICDs and these export goods include all sorts of exportable RMG products worth USD 26 billion as well as other goods like jute and jute products, leather, tea, vegetable, beverage, handy crafts, bamboo, fabrics, broken plastic, ceramic, scrap, sugar, chemicals, building material, ship spare parts etc. Apart from this, private ICDs handle 26% of the total containerized imported goods that comes through Chittagong Port. The last but not the least, these ICDs store a huge volume of empty containers which is collectively almost ten times the volume usually stored by Chittagong Port. And this huge storage of empty containers plays a very significant role in keeping the export-import trade running
The first ICD policy in a much briefer form was first promulgated back in 1998 and then a detailed policy for the private inland container depots (ICDs) titled Private ICD/CFS Policy 2016 has been drafted and approved. In 2015, Chittagong Port handled a little over 2.0 million TEUs but very few people even in the shipping arena know that out of that two million the ICDs collectively handled 1.624 million TEUs. Presently the monthly volume of import-laden containers handled by all ICDs is about 22,000 TEUs per month, whereas the ICDs have a collective capacity of handling about 35,000 TEUs a month. The ICDs have been appealing to the National Board of Revenue which has sole jurisdiction over this matter to release more import items to private ICDs. It is worth mentioning here that Chittagong Port is the only port in the world which still strips import-loaded containers inside its premises and gives delivery of the goods directly to importers whereas it should act only as a transition point wherein only ship-shore loading-discharging operation should take place.(NurulQayyum Khan, President, BICDA, The Financial Express, 30 Nov, 2016).
Hydrology in the Chittagong port
Maintaining draught is the one of the important activities of the any sea port. Maximum permissible LOA of a vessel is 190 meters. Maximum Permissible Draught of vessel ranges from 8.50 m. to 9.50m.Inward and outward movement of the ships at night is limited to 165 meters length overall (LOA). Twenty four hours prior notice is required for programming. Tides are important for navigation as it determines the possibility of crossing the shallow area between Kutubdia points and the Karnaphuli entrance and bars within the Port Limit. Tides are semi diurnal with prominent diurnal effect. The approximate tidal range is between 2.0 and 5.5m.
Chittagong Port Authority has purchased a dredger named MV khonok which has the capacity 4500 MT. In a day, it can do works 6 times. However, the dredging work is going on by the privates, but the CPA has to carry maintenance expenditure for this dredging vessel.
A private organization is dredged in the jetty area without the cost. The benefit of the private organization is that, he will sell the sand. But, out of the jetty area, other private organization is dredging, but the port has to pay for it. Why this discrimination? One of the private organizations of Singapore wanted to dredge the Chittagong sea port without any cost. But the condition of the organization was that he will take away the sand to Singapore. However, the Chittagong sea port did not give permission. As, there are a lot of developing work is going on in Bangladesh, so the private organization certainly would be agree for dredging. However, the port authority has to give permission to take away the collected send in free of cost.
The sands of the dredging are throwing in the ocean. It again comes in the Karnafully river with the tide. There is an opportunity to use these sands in the industrial belt of the opposite sides of the Chittagong Port. The port authority can direct the private organization to carry the sands with free of cost or very cheap price following the certain condition of the port.
At present 190 meters long ship is permitted to enter at the Chittagong port. But the captain of the Chittagong port creates various artificial hindrances, but finally all the 190 meters long ship ship comes and anchor at the Chittagong port. Port authority should take proper measures for it.
Sadarghat 450 meter lighter zetty
Around 10 years ago, Sadarghat 450 Meter Lighter Zetty has been developed, but still it is not functioning. For increasing the efficiency of the port, the operation of the jetty is essential.
Pollution of the port
Maintaining the water pollution free in the port area is very much essential. For cleaning the hazardous material, Bay Cleaner-1 and Bay Cleaner-2 has purchased. During the accident of the fuel tanker in the Sunderban area, these two bay cleaner can be used. However, these two bay cleaner did not work. When the ship comes to the Chittagong port, they release the used mobile in the river.
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Most of the time, the private traders collect the used mobile and refine it and re-sale these used mobile which creates serious environmental pollution and reducing the lifetime of the engine.
Berth operation by the International operator
There is a total 18 Berth in Chittagong port. Among these 18 berths, twelve berth is called general cargo berth. Among the twelve berth, 6 are container berth and 6 are cargo berth. These general cargo berths are less deep area (Less than 8.5 meter draft). Chittagong Container Terminal (CCT) has 2 berth and it is in operation from 1991-2005 by the Chittagong Port Authority. After 2005, A private organization Saif Power tech is in operation. NCT has 4 berth and in addition, 1 berth is for Pangoan ICT. This terminal is in operation from 2010 to October, 2015 by Chittagong Port. After October, 2015, private organization Saif Power tech is in operation. These two terminals are the modern and deep area (9.5 meter draft) of the Chittagong port. Other than CCT and NCT, 12 berthis being operated by the individual private operator. According to the condition of the Chittagong Port Authority, one operator will be awarded only one berth. However, in CCT and NCT berth (7 berth), only one operator is working. For the efficient port operation, the international berth operator may be employed who has to supply all the required equipment's of the berth operation.
The precondition of the tender document submission to the Chittagong port authority was not very much logical. Certain years' including the certain amount of container handling experience of birth operation in port was the precondition for the submission of tender for the berth operation. In Bangladesh, all the times, port were the only authority for the berth operation. On the other hand, port means the Chittagong port is the definition of port in the CPA act("Port" means the Chittagong Port as for the time being defined for the purposes of this Ordinance as per the definition in The Chittagong Port Authority Ordinance, 1976).If this condition is kept as the pre-qualification of the tender submission only the existing private operator will be qualified for the berth operation. It will not be competing for the Bangladeshi bidder as well as international private operator will not be able to participate in the tender. For the efficient berth operation, there is no alternative to ensure the efficient berth operator through the open completion, so that, local and international all the operators can participate in the tender. The following conditions can be introduced.
l The firm has to experience to operate the top ranking port berth in the world for the CCT and NCT. Because, these two terminals are modern. Efficiency of CPA will depend on these two terminal's berth operations. For ensuring the world class best operator, DPM method may be applied. There is an internationally recognized index regarding the top ranking birth operator or top ranking port who operates the berth.
l For the general berth, any national and international operator can employ through the international tender.
l Every firm or berth operator will be awarded at best one berth in the CPA.
l The birth operator has to set up all the required equipment's at his own cost for the birth operation.
For ensuring the above criteria the definition of the port has to Change in the CPA act. There is another barrier that CPA will be able to appoint the private berth at best 5 years at a time. The port equipment's price is significantly higher. So, no private operator will be agreeing to operate the berth with their own equipments. The CPA took initiative to change this regulation.
CPA has taken measures to appointment of Investor-cum-operator for the operation and management of New Mooring Container Terminal at Chittagong Port on Supply-Operate and Transfer (SOT) Basis. The CPA authority has selected 4 pre-qualified international operators.
These shortlisted operators are:
1. APM Terminals, Netherlands
2. Hutchison Port Investment Ltd, British West Indies
3. ICTSI, Dubai, UAE
4. P& O, London, U.K.
However, three times, CPA amendment in the condition of PQ and Invitation for Tender (IFT) for NCT (SOT) which was not legal. The CPTU review panel has given the verdict on 11.09.12 (Ref. CPTU 363.004.00.00.144-3-911 Date 11.09.12), that the amendment in PQ was not legal and mentioned that listed pre-qualified 4 operators is appropriate and the CPA can start the tender process by keeping the pre-qualified 4 operators. In this connection, it should be mentioned that the Honorable Finance Minister has written a letter on 23.11.2010 to the Honorable Shipping Minister that the PQ tender conditioned has been changed very ridiculously. However, finally, no above pre qualified internationally reputed operator was not appointed. M/S Saif Power Tec Ltd. Operates the NCT till today.
Map 1: Chittagong Port Berth or Jetty Facility
Source: Chittagong Port Authority
Equipment of Chittagong Port
Chittagong Port has only 4 Quay Gantry Crane (QGC) which are in operation. These are fixed crane and more efficient. However, in Chittagong Container Terminal (CCT) and Numoring Container Terminal (NCT), total 12 QGC (Fixed Crane) is required. The efficiency of a QGC is 30 containers per hour, but ship crane can handle only 17 containers per hour. The shortage of this Fixed Crane is increasing time, cost and congestion.
Chittagong Port has taken process for the procurement of the following 51 equipments in three phases. At present total employee of the maintaining department is 1111, whereas only 712 employees are working. Vacant post is 319. However, for the procurement of the new equipments, requirements of manpower is not considered. If, these equipment purchases, it may be under utilized due to the shortage of skilled employee.
Table 2: Procurements of Equipments Under Processing in Chittagong Port In Lakh Taka
* To be Procured Direct Procurement Method
The financial capacity of Chittagong port is sufficient to purchase these equipments. However, it becomes tough to purchase this large volume in time maintaining the quality, efficiency and transparency. In 2013, Chittagong port has taken to procure equipments amounting to 112 million taka, finally it is not procured.
Present 4 Quay Gantry Cranes were purchased in 2005. The lifetime of these Quay Gantry Cranes is 15 years. After 2020, these 4 cranes may be inactive. So, the port authority has to take proper action immediately.
Development of power plant
Every year, container handling is increasing rapidly at the Chittagong port. Last year it increased around 18 percent. It can be drawn the inference that at the rate of refrigerator container will also increase same rate, that is, at the rate of around 18 percent which consume huge electricity. A large number heavy equipments have to procure or has to use for efficient management and the port operation. There are a few generator for covering the load shed. To maintain the feature increasing demand of container handling, port authority has taken a decision to develop a 30 MW capacity power plant. However, there is no seriousness of the development of the power plant. Shortage of power may create additional inefficiency of the Chittagong port.
Development of deliver yard and physical testing shed
Most of the examination is done in the open yard. Due to the rainy season and in hot temperature, it becomes very tough for the physical verification. It also reduces the quality of the traded commodity. The Labor colony area may be developed for delivery yard.
Development of the Chittagong Port capacity
There few development areas of the Chittagong port. These are:
a. Bay Terminal,
b. Patanga Container Terminal
c. Laldia Terminal
d. Chittagong Cruze Terminal
Creation of infrastructure company for rapid infrastructure
For the rapid development of the CPA infrastructure, a public limited infrastructure company may be created. The money for the development may be collected by selling the bond.
Introduction of CCTV in all Port areas
CCTV should be introduced by outsourcing for reducing theft and corruption.
Hook-point operation and illogical rebate payment
At present, private ICD provides around 60% export container delivery at the hook-point of the vessel. The rest of the export container is being delivered at the port yard. Port authority takes away to the hook-point for the shipment. The amount of port charge is 43 dollars, 65 dollars, and 97 dollars for the 20 feet, 30 feet and 45 feet container respectively. If the shipping agent directly provides at the hook-point, they will get rebate 30 percent in the Chittagong Container Terminal (CCT) and a 60% rebate in the General Container Barth (GCB). However, at present private ICD's are providing export container at the hook-point, but the rebate is still enjoying the shipping agent accordingly previous system which is quite illogical. A committee headed, but Traffic (Operation) at Chittagong Port to resolve the issue and the committee recommended that on average 25% of rebate will be provided to the private ICD as these private ICD's are providing the export container at the hook-point. It should be implemented immediately and the all the export container should be taken away to the hook-point by applying the better coordination system. It will reduce the congestion in the Port area.
Customs is an authority in a country responsible for collecting tariff and for controlling the flow of goods,
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including animals, transports, personal effects, and hazardous items, into and out of a country. The trade performance is more or less depends on the performance of custom activities, though many other agencies like port and infrastructure, general administration plays an important role. The efficiency of custom activities is not satisfactory in Bangladesh. Among the 13 Asian countries, the position of Bangladesh is only better than Lao PDR.
The Ranking of the Efficiency of Customs and Border Clearance in 13 Asian Countries
Source: World Bank, LPI Global Ranking Indexamong 16Countries, 2016
Dichotomization of the function and activities of revenue collecting agency and policy making agency
National Board of Revenue is the revenue collecting agency and the Internal Resource Division is the policy preparing agency. National Board of Revenue (NBR) is revenue earning department under the Ministry of internal resource division (IRD). This organization's prime objective is to earn revenue under the policy prepared by the ministry. Ministry should prepare the policy for not only the revenue maximization but also for the maximization of economic growth and finally maximization of the service to the people. The trade wave is going on in the present world and trade is the engine of growth is the present economic philosophy. All the developed nations are lowering the trade barrier for enjoying the comparative advantage. However, the employee of the custom and tax department will never want to reduce custom duty or income tax or trade barrier. If there is no tax or duty or barrier, then the employee of the custom and tax department think that the power of that employee is reduced and the revenue earning will be disturbed. There may have an elasticity of revenue with respect to tariff/duty may be negative and also elastic. If we reduce the tariff/duty, then then the earning of the revenue may increase. On the other hand, if custom rate of duty reduces, then the customs revenue may also be reduced. But this reduction of custom duty may facilitate investment environment and this may accelerate economic growth, then it will enhance GDP, then it will enhance per capita income and may increase income tax and finally may increase government revenue also.
If the NBR promulgate the rules, then the employee of the NBR hardly does support to reduce the tax rate or the custom duty and hardly would like to simplify the custom rules and regulations. So, the function of the National Board of Revenue and Internal Resource Division should be dichotomized. The National Board of Revenue should have no official capacity to promulgate any SRO or any policy decision. The Ministry will promulgate SRO and any policy decision with the consultation of the Tariff Commission.
The logic behind the policy preparation by IRD instead of the NBR: Some of the policy maker may say or the NBR official claims that, they are the expert or well known people regarding the custom rules and regulation. In general, Ministry is the supervisory body of the policy implementing agency. So, the executing body should not prepare the policy. Secondly, NBR officials are continuously coming connection to the traders and there may be a possibility to be biased in favor of the certain traders. Then, it may be quite tough to the NBR to take a neutral policy for the nation. Thirdly, well known people always should not be the investigator or decision maker or judge. Suppose, in a criminal case, the accused person is the extremely well known person regarding the specific facts. However, he or she should not the judge of that case. A person, who is very efficient in the application of law, may be the judge. Because, the well known person, that is, the accused person will not take the proper decision, though he/she knows the real fact and what should be the judgment. Considering this logic, NBR should have no official capacity to take any policy regarding the custom and at the same time Chairman NBR should not be the ex-officio of the IRD secretary.
Mis-declaration, physical verification, penalty and cost
Sometimes, due to mis-declaration, customs officer take necessary action against the importer, shipping agent, freight-forward agent or C&F agent. However, this imported goods came in the importer after the customs procedure of the exporting country. There may be illegal communication between importer and exporter. But, most of the cases, without the assistance or inefficiency or irresponsibility customs authority, exporting country cannot export illegally or mis-declared goods.
Sometimes, the intelligence of the custom gave the information that there is illegal goods or any illegal matter in the imported goods. Then the importer has to carry the additional retention cost of port, it takes time, the port becomes more congested. The intelligence of custom takes many times to the completion of the inquiry. As, after the completion of the customs procedure, the intelligence has got the illegal matter, so the prior examined customs officer or authority should be penalized.
Difference custom duty and Bank guarantee
Sometimes due to the conflict between the importer and the customs officer regarding the HS Coode declaration of the traded good, amount of duty become differentiated. Then the importer has appealed to higher authority or has to go judicial court. Until the decision of the court or the appellate authority, the traded good can not be released. This increases huge time and cost of the importer. If the customs authority takes differentiated amount bank guarantee and release the traded goods, the problem can be solved easily.
Protocol sign for Illegal Import
Due to mis-specification or mis-declaration orillegal trade, both the customs authority as well as good importer has to suffer a lot. When any importer imported any illegal goods or try to import any illegal mods, the importer, C&F agent, Freight Forward Agent, Shipping Agent first become the victim of the circumstances. It increases the huge time and cost of the international trade. However, the customs authority of the exporter country should be first responsible for this illegal trade. Because, the responsibility of the customs authority of the exporter country is officially responsible to check or examine the trade commodity. If the importing country, writes the letter to the exporting country to identify the responsible customs authority who did not perform his duty properly and take appropriate action against the identified personnel, the illegal trade will reduce. On the other hand, the government of Bangladesh could sign a protocol to the major trading countries regarding the illegal Trade. Major Trading countries are given below according to the trade statistics, 2016 of Bangladesh.
Table 3: Trade Partners of Bangladesh, 2016
Source: European Union, Trade in goods with Bangladesh (http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113349.pdf, Retrieved on 17.04.17)
The above table clearly indicates that EU 28, China, India and USA contribute 54% of total trade. So, if the government of Bangladesh arranges a sign of fair trade protocol to the significant trade partner of Bangladesh.
Test of danger commodity by navy
If the importer imports any danger commodity like explosive, acidic chemical, Bangladesh Navy comes to examine it. In the import policy or custom policy order to do this test by the Bangladesh Navy. This convention is continuing only in Chittagong port, but not in Mongla Port or any other Land port. BCSIR is more competent to do this danger cargo test. There should be uniform test procedure in all the ports in Bangladesh. BCSIR should get the responsibility for testing the dangerous cargo.
ASYCUDA world software and the modernization of the custom procedure
In 1981 UNCTAD received a request from the secretariat of the Economic Community of Western African States (ECOWAS) to assist in the compilation of foreign trade statistics in their member States. After an initial evaluation it became quickly apparent that this would require the involvement of Customs clearance offices, and the modernization of Customs clearance procedures, to achieve quality results.
Development of export genneral menefist (EGM) through online
Though the Import Genneral Menefist (EGM) is developed, but the Export Genneral Menefist (EGM) online system is not developed. It is very essential for increasing the export efficiency regarding the custom procedure.
Scope of the change after sail
According to the customs act, there is no scope of the change, any mistake after sail the ship or carrier. But, there should have scope to change at least, clerical mistake.
Single window for custom clearance in Bangladesh and custom modernization
A committee is formed, headed by the NBR chairman for the custom clearance in a single window. However, the committee sits several times in the meeting. Chairman NBR is the busiest government personnel for the generating the revenue as well as many of the policies related works. Besides the regular government regular activities, he has to hear many business people. For the implementation of this Single Window for Custom Clearance in Bangladesh, a project has been taken. The project cost is around 7500 million taka or 68 million Dollar (10% GOB funded and 90% WB funded). For the implementation of this project, a complete separate entity is required who will full time work for the implementation of this project and letter a small unit under have to be formed to continue the service.
A strategic action plan (2014-2017) has been taken to modernization. The vision o the program is to "Make Bangladesh Customs an innovative and professional leading border agency that contributes to the security and economic prosperity of Bangladesh through cooperation, coordination, coherence, commitment and courage" and the mission is "We manage the border in order to protect the community and the environment, ensure efficient and effective revenue collection, while facilitating legitimate trade and travel in compliance with Customs and allied legislation, and international standards." And the mission follows follows as to increase revenue,
improve office management, impressive Stakeholder relations, use ICT as an enabler, ensure integrity in the management.
Participants of the 2-day Customs Modernization Workshop. In the workshop, most of the officers are from the NBR. There is a large amount of shortage of custom officers in Bangladesh. The intensity of physical and mental stress of the regular custom officer's is very high. According to the Nobel Laureate Rabindranath Tagore, leisure is very essential for the creation and modernization. The responsibility of the every activity of the planed modernization program was on one or more than one of the custom officers. The last year of the customs modernization, that is, the fiscal year of 2017 is going to finish, but the significant progress is not observed during the visit of this study.
Suggestion: The principal responsibility of the modernization program of the customs procedure must not be from the busy custom officer. But for the technical assistance, in the every activity, one of the officers may be from the custom department.
There are two types of bonded warehouse, public bonded warehouse (port, BEPZA, custom house, ICD) and private bonded warehouse. There are also two types of private warehouse. Private warehouse is permitted for providing the facility of the import based exporter who enjoy tax free import only for the exported goods. Special bonded warehouse (for 100% export oriented garment industry) and General bonded warehouse. For getting the Bond license, 22 documents following documents are essential.
1. Filled up prescribed form 2. BIDA, BSCIC registration certificate 3.TIN certificate, 4.Tax clearance certificate of the all directors certificate 5.Trade license 6.Fire license 7. VAT clearance certificate 8. Certificate of the concern association 9. Name of the owner and directors attested by notary public and lean bank 10. National ID/ Passport/ word commissioner's certificate 11. Boiler Certificate (if necessary) 12. Memorandum and Article of Association certificate of incorporation for the RJSC 13. L/C, Invoice, B/E, B/L VAT Chalan, import documents for the machinery importer 14.Blueprint of the warehouse 15.Ownership documents of the land of warehouse 16.Bank solvency for the completion the Bond 17.Copy of IRC and Export registration certificate 18.Gas and Electricity connection certificate19.Certificate of the environment department 20. Treasure chalan of license fee 50000.00 taka, including 15% VAT (7500.00 Taka) 22. A declaration in the 500 taka's non-judicial stamp that the importer will follow all the existing rules and regulation of the country.
Utilization declaration (UD)
Since 1993, GMEA is providing UD. It is the amount of utilization certificate of raw materials to producing the export commodity against the master L/C. On average, 500 to 700 UD has to issue by the GMEA. It is actually very tough to provide the UD after proper examination.
On the other hand, the customs authority has to audit the all warehouse about the proper utilization of imported raw materials to its export amount. There are 3800 warehouses under the Customs commissioner of Dhaka. However, only 46 bond officer is employed in examining and maintaining records and auditing in this warehouse. On average, 200 warehouses are under one bond officer. So, it is quite impossible to properly do his function. As a result, providing UD and auditing by the Customs authority have to complete their duty very reluctantly. So, the purpose (infant industry argument) of the bonded warehouse is not working. However, this system is increasing the cost of the producer and additional hazard.
Quantity variation Bangladesh Bank online system
In the case of import, 10% variation (+/-) is accepted according to the regulation of custom, but, it is not updated in the Bangladesh Bank online system. However, from the July 2016, Verified Gross Mass System is introduced. In spite of the certification of the VGM authority,
if the weight becomes incorrect, the VGM certification authority should be awarded a penalty.
For the any amendment, the customs authority seeks all the original documents which increase cost and time of the trade. As the shipping agent and the freight forward agent is providing the correct information, so the customs authority should give the opportunity to the concern agency for amendment in lieu of only financial penalty.
Identification of importer and the C&F agent
Many of the documents (hard copy) is required for the identification of the importer and employed agent. If we use the server of election commission, no hard copy is required. Because all the information of the voter including fingerprint is available in the election commission server. So, fingerprint option in the electronic Bill of Entry and voter ID number can solve the manual identification problem. By including the voter ID number in the ASYCUDA software, these manual identification problems could be easily solved.
Second time physical verification due to custom intelligence
If one time physical verification of the imported goods, then the customs authority may again physically verify the same imported goods due to any information from any agency. Second time verification increases the cost and time of the imported goods. If the customs authority physically verifies any goods 2nd time and got any illegal goods or any wrong, then the officer who verifies first time should be penalized due to his insincerity or inefficiency and as well as the importer will be penalized according to the existing rules and regulation. On the other hand, if the customs authority did not find any fault in the second time physical verification, then the cost of the second verification has to bear the informer including the yard charge of the port authority.
Scanning of export goods
According to the condition of the ISPN, all the exported goods should be scanned before shipment. However, all the imported goods are scanned instead of export goods.
Regulation of export back container
When any container of export goods comes back to Bangladesh due to lack of compliance or any other difficulties, there is no section in the custom rules to resolve these types of problems. Sometime customs authority treated it as a import goods and the custom imposes an import duty, sometimes custom authority takes a declaration that the exporter will export it within the 6 months. So, this type of problems should be solved by issuing a circular. The circular may be that the return export goods will be considered as a duty free import goods. This will be examined as per the bill of entry of the concern export.
Classification of importer or green channel importer or automatic risk managements system
According to the Kyoto Convention, the good importer should not be examined. We can classify the importer and follow the rules of the Kyoto Convention. This will reduce the cost and time of export and import. But we have to select who will determine it. In the ASYCUDA system, the customs authority should introduce the list of the good importer and this importer will not be physically verified. This system is known as the Automatic Risk Managements System.
Scanning division creation in custom
The ARO are deployed for Scanning. They are given training for this work. ARO's are transferring frequently. Then the new untrained ARO's are coming in the area of scanning. The Chittagong custom has planned for scanning division and it has sent to the NBR. However, NBR, did not take any action for this purpose. There should be individual scan division who will work for scanning. IRD should take immediate initiative for the creation of separate scanning division.
Leave substitute from custom department
If any customs officer is on leave or engage any other purpose, there is no leave substitute for managing the present work. If the customs commissioner is absent, the Additional Custom Officer should work as leave substitute. But, this is not rightly working in the offices of custom.
Effectiveness of SRO: Frequently, NBR is issuing SRO for the trade facilitation or the interest of the state. Suppose, an SRO is issued on 1st January, 2017 regarding the tariff of any import or export commodity. The government should mention that if any importer already opened any LC for the importation of the promulgated SRO related commodity, they will not be effected. Because, an influential importer may import any commodity and when that commodity is nearer to the port, then he can issue an SRO by applying his influential capacity, which may be only for his personal interest of that importer but against the interest of the state. On the other hand, an importer may open any LC for the importation of any commodity for business or commercial purposes of calculating his profit. If the tariff rate changes after opening LC, he may be seriously affected.
Table 4: The present Strength of Human Resource of Custom Chittagong House
Source: Official Memo no. 120 (Date 1-3-17) and 122 (Date 1-3-17) of Chittagong Custom House
This is the present scenario of the Chittagong Custom House. This all around the same in all the Custom Houses of Bangladesh. This is actually a extremely vulnerable situation for the custom department. This is one of the causes of the excess time and cost requirements of the international trade.
There is a rule that, for the vacant post, the authority has to take permission from the ministry of Public Administration for appointment. It's one of the time consuming policy which has very little benefit. If any authority takes any decision against the existing rules regarding the appointment in the vacant post, he has to suffer for that. This is also true for purchasing the vehicle. In spite of the availability of budget for purchasing vehicle after declaring condemned of that vehicle, It is needed to take permission from the ministry of finance for purchasing vehicle.
The economic growth rate of Bangladesh is very attractive comparatively neighboring Asian countries. It may be more attractive by enhancing the friendly investment environment for both the local and foreign investors. As, trade is called the engine of growth and present economic thought is to harvest the comparative advantage of the international trade, so, to make easier trade is very much important. As the investment-GDP ratio is less than the required or desired level, Foreign Direct Investment (FDI) may fill this gap by providing the friendly domestic investment environment. Ease of Doing Business Index provides objective measures of business regulations and their enforcement across 190 economies. Among the ten sets of sub-indices of the Doing Business Index, 'Trading across Borders' is one in which Bangladesh is ranked 173th whereas the overall rank of Bangladesh is 176 in 2017. The GOB has taken customs modernization projects, national single window projects and many other initiatives for the ease of trade. To enhance local and foreign investment, there is no alternative to develop the trade environment. Due to the gap of coordination among the various agencies, the country fails to attain the optimum output from its utilizing resource. The appropriate management system should be adapted for the efficient outcome. As related all the department has not simultaneously developed their automation system, the economy did not harvest the maximum benefit of the spent resources and comparative score is reduced for Bangladesh in the trading across the border index, though the government has taken many initiatives of the system automation (in 2010 Bangladesh's score was 69.09 but 2017 Bangladesh's score is 34.8).The paper identified the existing hindrance of the smooth trade and then the paper recommended the measures for attaining a better cross border trade.
Considering above discussion Chittagong Sea Port should take serious action regarding the following Issues:
1.For the efficient port operation, the international berth operator may be employed who has to supply all the required equipments of the berth operation. The definition of port ("Port" means the Chittagong Port as for the time being defined for the purposes of this Ordinance, which is defined in The Chittagong Port Authority Ordinance, 1976) in the CPA act and regulation has to change. The maximum operation period for a private operator also has to change from 5 to 15 years, as the private operator will use their own equipments. Otherwise, CPA has to create opportunity, so that any reputed international berth operator can participate in the tender legally. Chittagong Port Authority (CPA) has taken the initiative to procure equipments. If the private berth operator uses these equipments, they have to pay appropriate charge.
2.The Chittagong Port Authority (CPA) has taken the initiative to procure equipments. There should have an option, if the private berth operator uses these equipments, they have to pay appropriate charge.
3.To maintain the feature increasing demand of container handling or the efficiency of the CPA, the port authority has taken the decision to develop a 30 MW capacity power plant. The CPA has the financial capacity to develop this power plant. However, there is no seriousness of the development of the power plant. The CPA has to take serious initiatives to develop this power plant.
4.Most of the examination is done in the open yard. Due to the rainy season and in hot temperature, it becomes very tough for the physical verification. It also reduces the quality of the traded commodity. The Labor colony area may be developed for delivery yard.
5.CCTV should be introduced by outsourcing management system for reducing corruption and theft and ensuring transparency and the whole port area has to be taken under surveillance of the CCTV.
6.A private organization is dredging in the jetty area without the cost. The benefit of the private organization is that, it will earn money by selling sand. But, out of the Jetty area, other private organization is dredging, but, the port has to pay for it. All the jetty area and out of the Jetty area of the Chittagong sea port should provide among the private organizations for selling sand by dredging through the open tender. It will increase port income instead of expenditure.
7.Chittagong Port Authority should use MV khonok for dredging, which has the capacity to carry 4500 MT sand. The sands should be used only for development purpose. Throwing in the ocean of the collected sand is needed to be stopped immediately.
8. Sadarghat 450 Meter Lighter jetty has been developed, but still it is not functioning due to litigation. A private operator may be appointed for the operation of this jetty through open tender.
9.Maintaining the water pollution free in the port area and for cleaning the hazardous material, Bay Cleaner-1 and Bay Cleaner-2 needs to be utilized seriously.
(Dr. Sonjoy Chakraborty is Deputy Secretary of the Government. He is also one of the Researchers in the area of Business and Investment and an Economic Analyst.)