IMPORTING FROM BANGLADESH
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UK imports from Bangladesh had reached £600 million by November 2004, an increase of 13% on the same period in 2003. Ready-made garments, which enjoy tariff free access to the EU under the Generalised System of Preferences Scheme (GSP), account for approximately 79% of all imports with seafood and textile yarn and fabrics being the most significant other sectors. The UK is historically the largest investor in Bangladesh with over 50 companies operating in the market.
This guide highlights some of the key features of the Bangladeshi market, and explains how you can start to win import business there. It also identifies sources of support to help you.
ASSESS THE OPPORTUNITY TO TRADE WITH BANGLADESH
Firms from EU Member States are only minor investors in Bangladesh, with the majority of foreign investment coming from the United States and other Asian countries, according to the Bangladesh Board of Investment. However, a significant level of investment is provided by several governments of European Member States, namely: Denmark, France, Germany, Netherlands and the United Kingdom, particularly from bilateral funds and financial institutions to fund infrastructural development.
REGIONAL FOCUS
Dhaka, the capital and by far the largest city in Bangladesh, has grown to become the country's main commercial centre. The second city, Chittagong, is home to Bangladesh's largest seaport and a thriving business scene. Sylhet, Khulna and Bogra are the country's other commercial centres.
UNDERSTANDING BANGLADESH CUSTOMERS
Bangla (Bengali) is the official national language, but English is the key language for commerce. Most business people you deal with, when importing, are likely to speak good English.
Bangladesh business culture tends to be formal and follows a hierarchical structure - for example business cards are exchanged after the initial introduction. It's normal practice to start meetings with small talk rather than getting straight down to business. A good rule of thumb in meetings is to follow your host's lead.
BUILDING RELATIONSHIPS
It is generally accepted that to do business in Bangladesh a foreign company needs to appoint an influential local partner (usually an agent), who knows how business is done and can navigate a path around Bangladeshi bureaucracy. The appointment of the right agent is considered to be fundamental to success.
See the business link guide to entering overseas markets.
Winning new business can take longer than you would like. You should be prepared to invest time and effort in building a long-term relationship.
TRADE VISITS TO BANGLADESH
Successfully importing from Bangladesh depends on building relationships, and often requires several face-to-face meetings. Trade visits can help you identify potential customers and key contacts, and find out what they think of your product. You can also use them to build relationships with local advisers and other key contacts.
Find out about trade visits and business opportunities on the events section of the website.
To make the most of trade visits, plan well in advance. Make sure you have a clear objective and organise all the support material you need. Try to make appointments with target contacts in advance, and reconfirm them shortly before you travel. Make sure you're speaking to people who make importing decisions. If you have local agents, use their expertise. In an organised trade visit, the organisers should help you find contacts.
UK IMPORTING PROCEDURES
Customs
When an importing ship or aircraft arrives at the UK location where goods are to be unloaded, the goods must be 'presented' to Customs (Her Majesty's Customs & Excise or HMCE) by the person who brought them into the EC or the person who assumes responsibility for their onward carriage (this includes freight haulage companies, shipping and aircraft lines). Goods may be presented by:
- Using an approved computerised trade inventory system linked to customs; or
- Lodging Form C1600A at the designated Customs office
All goods must be presented within 3 hours of their arrival at the place of unloading.
Summary Declaration
After presentation the goods must be covered by a summary declaration containing the information needed to identify the goods. The summary declaration should normally be made at the same customs office as presentation. The summary declaration must be made by:
- The person who conveyed the goods into the EC; or
- The person who assumes responsibility for their onward carriage
- The shipping, airline or haulage company; or
- The representative of any of the above
In the UK the prescribed form of summary declaration is Form C1600. Customs may also accept commercial documents or computer records, if they contain the necessary details. Acceptable commercial documents include:
- Bills of lading
- Air way-bills
- Container manifests
- Load lists
- Manifests
- Consignment records (on computerised inventory systems)
An import declaration is required for goods from third countries. When goods are imported into the UK it is the responsibility of the importer or his authorised agent to declare them to Customs. In most cases a Single Administrative Document (SAD) is used for this purpose. Further information on the SAD can be obtained from H.M. Customs & Excise web site: www.hmce.gov.uk
In addition to the above paperwork, some products may require import licenses or health certificates, as outlined in Other Regulations and Requirements.
All imported goods are liable to be examined by Customs. If goods are selected for examination, the opening, unpacking and re-packing must normally be done by employees of the dock company or an agent of the importer. The examination of goods normally occurs at the place where they are being declared for importation.
Customs Duties
Customs duties and other charges that are due must be paid, deferred or secured before the goods are cleared by Customs. It is advisable to show invoices with no freight costs incorporated, only the value of the imported goods, as import duty will be charged on the total amount presented for that shipment. Charges payable on imported goods may include:
- Import duties
- 'Additional duties' on flour and sugar
- 'Countervailing charges' on fruit and vegetables
- 'Variable charges' on processed goods
- 'Compensatory charges' on oils and fats
- 'Extra charges' on eggs, poultry or pig meat
- 'Sugar levies' on processed goods with sugar in them
- Value Added Tax (VAT)
- Excise duty on alcoholic beverages
Commodity Code
The charges payable are linked to the Commodity Code (similar to an HS code, but more detailed) for a particular product. Exporters will need to find out what the Commodity Code for their product, and the associated import duty, is likely to be. This will be necessary in determining a pricing strategy for the product.
To obtain the Commodity Code for your product, contact H.M. Customs & Excise, Tariff Classification Helpline on Tel: This service gives a verbal reading on the appropriate code and respective import duty for a particular product. It is also possible to obtain a written ruling on the product's Commodity Code known as Binding Tariff Information (BTI). This service is advisable for more complex food products, as it involves closer consideration of the product's composite ingredients and is legally binding. This is available directly from Customs & Excise on the telephone number given above.
It is also possible to look up the Commodity Code and relevant import duty for your product on the Internet at: http://europa.eu.int/. However, as stated above, rather than making your own estimation of Commodity Code it is advisable to do a BTI for more complex food products.
Value Added Tax
The UK standard rate of Value Added Tax (VAT) is 17.5%. While UK foodservice outlets must charge the standard rate of VAT on everything they serve, retail food products, in general, do not have VAT on them. However, some exceptions, which do incur VAT, are:
- Ice Cream and similar products and mixes for using them
- Confectionery
- Alcoholic beverages
- Other beverages, and preparations for making them
- Potato chips (crisps), roasted or salted nuts and some other savoury snack products
- Products for home brewing and wine making
VAT can also be a value located somewhere between the Standard (S = 17.5%) and the Zero (Z = 0%) rates. For assistance when a case is less straightforward, contact: the VAT Helpline Tel: 5 4419, Her Majesty's Customs & Excise web site: www.hmce.gov.uk or write using the address in Useful Contacts.
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