Bangladesh Bank has introduced the country’s first dedicated framework for import trade in Free Trade Zones (FTZs), setting out comprehensive rules on consignment-based imports, trade financing, foreign currency settlements and banks’ risk management.
The central bank issued a circular on Thursday, saying the framework is aimed at facilitating import trade into FTZs while ensuring prudent risk management by banks.
Under the new framework, manufacturing enterprises, authorised trading companies and logistics service providers operating in FTZs will be allowed to import goods on a consignment basis. In such cases, ownership of the goods will remain with the foreign supplier until they are either used in production or sold to the ultimate buyer.
Bangladesh Bank said goods imported under consignment arrangements will not be treated as part of an FTZ entity’s inventory for bank exposure purposes until ownership is transferred through production or sale. As a result, banks will not be required to recognise credit exposure against such goods before ownership passes to the importer.
The framework also states that purchases of goods from FTZs by buyers in Bangladesh will be treated as import transactions and will be subject to the country’s existing import procedures. Conversely, sales of finished or semi-finished goods by FTZ enterprises to buyers in Bangladesh will be treated as export transactions for the seller and import transactions for the buyer.
All payments relating to such transactions must be settled in freely convertible foreign currency. FTZ enterprises will also be allowed to retain export proceeds in designated foreign currency margin accounts to meet their underlying import payment obligations abroad.
According to the circular, goods imported into FTZs under consignment arrangements may remain in the zones for 48 to 60 months, while usance imports, including buyer’s credit and supplier’s credit facilities, will be allowed for a maximum tenor of 270 days.
Bangladesh Bank also allowed authorised dealer (AD) banks and Offshore Banking Units (OBUs) to provide financing facilities to FTZ enterprises in the same manner as those operating in specialised zones. However, lenders must carry out due diligence, including verification of ownership structures, contractual arrangements with foreign suppliers and buyers, and assessment of production and sales cycles before extending financing.
