Bangladesh Bank has issued detailed guidelines for operating the country’s first-ever Free Trade Zone (FTZ).
Under these new guidelines, businesses operating within the FTZ will be allowed to import raw materials and goods on a consignment basis without opening Letters of Credit (LCs).
Additionally, they will enjoy duty-free storage, processing, repackaging, relabeling, and re-export facilities for raw materials.
Bangladesh Bank issued the directive on Thursday, stating that these policies have been formulated to implement the Free Trade Zone facilities announced in the national budget for the current FY27.
The primary objectives are to further ease international trade, attract foreign direct investment, streamline the supply chain, and make risk management more effective for banks.
According to the guidelines, Authorized Dealer (AD) banks and Offshore Banking Units (OBUs) will conduct all FTZ-related transactions under existing foreign exchange regulations.
This facility will be available to manufacturing and export-oriented industries, authorized trading importers, and logistics service providers operating within the FTZ.
Under the new system, businesses can import goods on a consignment basis.
This means the ownership of the goods will remain with the foreign supplier until they are used in production or sold.
Consequently, banks will not consider these goods as the importer's inventory during this period, nor will they bear any associated credit risk.
This will reduce the pressure on working capital for businesses, allowing them to use raw materials as needed and settle payments later.
The Bangladesh Bank directive also clarifies the nature of FTZ-related transactions.
According to the guidelines, if a domestic company purchases goods from the FTZ, it will be treated as an import. Conversely, sales to an entity operating within the FTZ will be considered an export.
In both cases, proper export (EXP) and import (IMP) formalities must be completed.
All financial transactions must be conducted in freely convertible foreign currencies.
According to the guidelines, raw materials and goods imported on a consignment basis can be stored in the FTZ for a maximum of 48 to 60 months.
On the other hand, under deferred payment systems—which include buyer's credit and supplier's credit—the maximum payment period has been set at 270 days.
Banks will be able to offer financing facilities similar to those provided in Special Economic Zones (SEZs).
In addition, Offshore Banking Units will also have the opportunity to provide foreign currency financing under existing rules.
Under the new framework, businesses in the FTZ can bring in raw materials, spare parts, and other goods without paying any import duties.
They will have the opportunity to store, process, assemble, repackage, relabel, and re-export these products.
However, if these goods are supplied to the domestic market, applicable customs duties and taxes must be paid.
Stakeholders say this will allow small-scale industries to easily procure necessary foreign raw materials from within the country.
On the other hand, large exporters will also be able to start production quickly without having to wait a long time for raw materials to arrive from abroad. This will reduce the risk of production disruptions and make it easier to deliver export orders on time.
Businesses believe that the launch of the FTZ will bring a major positive shift to the country's export-oriented industries.
It will make the supply chain more efficient, reduce production costs and time, and significantly cut down product lead times.
As a result, the competitiveness of Bangladeshi export products in the international market will increase, which will also help attract new foreign investment.
Following international standards, the government is developing the country's first modern Free Trade Zone in Anwara, Chittagong. The Bangladesh Economic Zones Authority (Beza) is implementing the project.
