The British-era trade controls Bangladesh never let go

According to a 2022 commerce ministry public notice, importers, exporters and other businesses involved in international trade must obtain as many as 49 certificates and permits from the Office of the Chief Controller of Imports and Exports.

Businesses in Bangladesh must navigate multiple layers of administrative formalities to engage in international trade, including trade licences, taxpayer identification numbers, business identification numbers, VAT, and customs registration.

As if these layers of paperwork were not enough, businesses must also obtain separate Import Registration Certificates (IRCs) and Export Registration Certificates (ERCs) – relics of the British period trade controls that businesses say have little place in today’s economy.

The roots of the system date back to the Second World War, when the international shipping system came under severe threat. The then British government introduced the Defence of India Rules in 1939 to control trade in goods other than war materials and essential supplies.

After partition, severe foreign exchange shortages emerged in the newly formed East and West Pakistan. To maintain tight controls over imports, the Pakistan government expanded the British-era framework and enacted the Import and Export (Control) Act in 1950.

Nearly eight decades later, Bangladesh still retains a major part of that system.

The certificates previously had to be renewed annually, although businesses can now renew them for five-year periods. The Office of the Chief Controller of Imports and Exports in Dhaka, along with 13 regional offices across the country, issue and renew the certificates.

Ironically, the Pakistan government that enacted the law in 1950 repealed it in 2002, and businesses there no longer need separate certificates similar to Bangladesh’s IRCs and ERCs; they only need to complete web-based trader registration with customs.

This has raised questions about whether the IRC-ERC system remains necessary.

Mostafa Abid Khan, chief executive officer of the Bangladesh Foreign Trade Institute (BFTI), an organisation under the commerce ministry, questioned the rationale for requiring businesses to obtain and renew the certificates.

“The law under which the certificates are issued in Bangladesh was repealed by Pakistan two decades ago. Sri Lanka doesn’t require such certificates either. In India, a certificate is obtained once and does not need to be renewed,” he told The Business Standard.

“Bangladesh is now taking steps towards deregulation. Instead of requiring IRCs and ERCs and their renewal, businesses should be allowed to conduct import and export activities using their business identification number,” he added.

Cost of IRCs and ERCs
According to a 2022 commerce ministry public notice, importers, exporters and other businesses involved in international trade must obtain as many as 49 certificates and permits from the Office of the Chief Controller of Imports and Exports.

For importers, IRC fees start at Tk5,000, with a Tk3,000 renewal fee, for imports of up to Tk5 lakh. At the highest category, the IRC fee rises to Tk80,000 and the renewal fee to Tk32,000.

For exporters, there are six types of registration certificates. The fee for each starts at Tk10,000, with a Tk7,000 renewal fee. For an ERC for indenting services, the fee is Tk50,000, with a Tk25,000 renewal fee.

Businesses said the burden goes beyond obtaining the certificates. Importers and exporters must also pay renewal fees, adding to their costs and creating another layer of bureaucracy.

The burden is particularly heavy for small and medium-sized enterprises. While large companies can maintain dedicated compliance teams, smaller businesses often rely on third-party service providers, adding to the cost of importing and exporting, they said.

Despite these mandatory requirements, the Chief Controller’s office has only 14 offices nationwide to issue and renew the certificates, forcing businesses in some districts to travel elsewhere and adding to their time and costs.

Out of step with regional peers
Major Asian trading economies generally do not require separate import and export certificates for general trade. China allows businesses to engage in international trade through customs registration rather than a system equivalent to Bangladesh’s IRCs and ERCs.

Vietnam also does not require separate certificates for general imports or exports, although specific products and sectors may need additional approvals. Likewise, trade-dependent economies such as Malaysia and South Korea have no separate IRC-ERC requirement.

Mohammad Fazlul Hoque, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said there is no need for IRCs and ERCs in the current global trading environment.

“If we want to move business, investment and the economy forward, we must focus on deregulation and follow global best practices. If that is not possible, we should at least follow the best practices in the region,” he told The Business Standard.

He said the Import Policy Order already specifies prohibited goods and the government agencies whose approval is required for specific imports. “Imports have to be made by following customs procedures. So, there is no need for a separate import certificate,” he said.

Likewise, he said, the Export Policy Order lists prohibited goods, while the Export Promotion Bureau can oversee export-related matters. “Therefore, there is no need for separate export certificates or an office dedicated to controlling imports and exports,” he said.

A costly legacy
Business leaders said the system was designed when foreign trade was under strict state control. Today, digital trade platforms, automated customs, banking surveillance, and tax systems give the government far more effective tools to monitor transactions.

FBCCI Administrator Fazlul Hoque said scrapping the IRC and ERC would free business from harassment and bureaucratic complications. “Besides, the government would no longer need to maintain a large manpower for issuing and renewing these certificates.”

Govt reviewing unnecessary regulations
Commerce Secretary Md Ataur Rahman Khan told TBS that the government has launched deregulation initiatives to facilitate trade and investment, with a committee led by the commerce minister reviewing areas where regulations can be eased.

“The Import and Export (Control) Act of 1950 is also being reviewed. We have already held a meeting. First, we will examine which of the certificates required under the law are no longer necessary. Those requirements will be removed,” he said.

“If we then find that the law itself is no longer necessary, the government will certainly revisit it. If the law is still deemed necessary, it will be amended and simplified in line with current realities,” the secretary added.