Industries lose Safta benefit as Customs refuses digital doc

Two major industries – cement and steel – are facing problems importing raw materials as the customs authorities are not accepting digital copies of certificates of origin issued under the South Asian Free Trade Area (Safta) agreement.

Even though the coronavirus pandemic has led to an increase in use of digital systems in imports and exports of goods instead of physical communications around the world, traders in Bangladesh are suffering as the bureaucracy is insisting on old methods here.

Both land ports and seaports are seeing such roadblocks. Businesses claimed more than 400 ships transporting cement and steel raw materials from India are stuck at Chattogram port due to this complication. A large number of loaded trucks are also stuck at Benapole.

As a result, production at cement and steel factories is on the verge of stopping, they added.

Cement and steel manufacturers said they could not unload raw materials brought at lower tariff facilities from India under the Safta agreement as the customs authorities are not accepting digital copies of the certificates of origin. On the other hand, India is not providing hard copies of the document because of the pandemic.

Officials of Chattogram and Benapole customs houses said they are still receiving digital copies of certificates of origin in case of general tariffs, but this opportunity is no longer available for getting Safta facilities.

"In a letter, the National Board of Revenue (NBR) gave an order to receive online documents until 30 June. They did not extend the validity of the order," said a senior customs official.

Customs authorities said digital copies have not been accepted since 1 July this year and this has put importers in trouble.

When contacted, Khondaker Muhammad Aminur Rahman, member (customs, modsernisation and international trade) at the NBR, said India can now provide hard copies of certificates of origin as the coronavirus situation has improved.

"We can extend the time for accepting digital copies only if the commerce ministry gives us directives in this regard," he said.

The commerce ministry makes the decision whether digital copies of certificates of origin under Safta will be accepted or not. Once the NBR gets the ministry's approval, it informs customs houses of the decision.    

Hafizur Rahman, additional secretary to the commerce ministry and chief of the trade-related cell of the ministry, said addressing the issue is taking time as it is linked to the South Asian regional agreement. "Traders also were not prompt to inform us of the matter. However, the ministry will soon give necessary instructions in this regard."

Md Shahidullah, vice-president of Bangladesh Cement Manufacturers Association, told The Business Standard the general tariff on fly ash import is 5%. "Under Safta agreement, it can be imported from India at 3%. Traders are not getting this facility as the NBR is not accepting digital Safta certificates."

He said there will be losses if goods are unloaded by paying 5% duty. "As a result, traders are not unloading imported raw materials."

No effective action has been taken by the commerce ministry in Bangladesh, the NBR or the Indian commerce ministry even though three months have elapsed, said Shahidullah. "Owners of cement industries are in trouble because of this."

Due to the pandemic, the Indian commerce ministry requested its Bangladesh counterpart to accept certificates of origin whether those were digitally signed or not. The Bangladesh commerce ministry allowed this facility till 30 June this year.

However, even after 30 June, all Safta countries have kept this facility effective, but Bangladesh customs authorities are not accepting digital certificates of origin anymore. They are asking for original hard copies which are not being provided by India.

As a result, both importers and C&F agents are in trouble, and many goods are stuck at Chattogram and Benapole.

Fly ash is a byproduct of coal burning in electricity generation power plants. It is mixed with clinkers in cement production, with the amount varying between 5% to 10%, depending on quality. Bangladeshi cement producers mainly import fly ash from India.

Amirul Haque, managing director of Premier Cement, said, while the prime minister is emphasising digitalisation, the NBR is holding back the process causing a problem for traders. "This is against the prime minister's vision."   

The steel industry is also suffering due to non-acceptance of digital certificates of origin. Hot rolled coils, scrap and several types of steel raw materials are imported from India under the low tariff facility provided by Safta.

Stressing the need for digitisation, BSRM Steel Chairman Alihussain Akberali, however, said, "Transparency is high for online documents. Their authenticity can easily be verified as each document has a barcode.

"These documents can also be verified easily by visiting the website of the Indian commerce ministry."