Bangladesh : South Asia Subregional Economic Cooperation Integrated Trade Facilitation Sector Development Program

Industry and trade / Industry and trade sector development - Trade and services

Performance in cross-border trade and binding constraints. Customs and other border clearance operations are inefficient and costly because of poor facilities at BCPs, excessive physical inspection of cargoes, and time-consuming documentation processes. Insufficient coordination between customs agencies of neighboring countries delays border clearance. Limited capacity of Bangladesh customs offices hinders sustained and holistic implementation of WTO TFA. The World Bank's Logistics Performance Index of 2018 indicated weaknesses in Bangladesh's customs operations and quality of infrastructure, resulting in an overall logistics performance index score of 2.58 out of 5, and a ranking of 100 out of 160 economies. Insufficient public investment and lack of coordination among government agencies have hindered the development of border infrastructure and clearance procedures to respond to growing trade and demand.

Border crossing facilities. While Bangladesh has 23 declared LPs at BCPs with India and Myanmar, the subregional trade accounts for only 10% of the total trade of Bangladesh. Most existing customs offices of the National Board of Revenue (NBR), and the cargo transshipment and storage facilities of the Bangladesh Land Port Authority (BLPA) are underdeveloped, and their capacity is insufficient to handle international cargoes. Cargoes have to wait a long time for customs clearance and cargo transshipment at the LPs. Time release survey of the Asian Development Bank (ADB) revealed that the average time required from entry to the LPs to exit from the LPs are about 4 hours for import and 3-6 hours for export at Akhaura, Sonamasjid, and Tamabil BCPs, 40%-60% of which are waiting time for subsequent steps. While SASEC corridors are being developed, border crossings remain as bottlenecks to subregional trade. Also, perishable goods cannot be traded under such slow and unpredictable operations by the existing trade facilities. Bangladesh needs to integrate customs clearance and cargo handling operations at BCPs by building well-equipped LCSs and modernizing LPs through the government's internal coordination of the NBR and BLPA to make cross-border trade faster, less costly, more predictable, and more secure so that trade with other SASEC countries will be expanded and diversified.

In 2020, international transit cargo operations started at Chattogram port, where almost all maritime cargoes of Bangladesh are handled. International cargoes unloaded at Chattogram port can be transported to the northeastern region of India through Bangladesh without customs clearance. This SDP will support expansion of the international transit cargo operation to the whole country. Improvement of integrated trade facilities at Akhaura, Sonamasjid, and Tamabil BCPs will enable cargo transportation between the northeastern region and other regions of India through Bangladesh, and also enable Bhutan, India, and Nepal to use Chattogram port for export and import. Chattogram port as well as Materbari port in Cox's Bazar, which is under construction, will be gateways for trade in the subregion.

Under the country partnership strategy for Bangladesh, 20212025, ADB will upgrade transport infrastructure, including SASEC corridors, across all modes to meet fast-growing transport and freight traffic demand, support trade routes, and yield maximum trade and economic benefits. In addition to the ongoing trade facilitation measures that focus on expediting trade and transit clearance, reducing transaction costs, and increasing compliance management efficiency, ADB will prioritize trade facilitation reforms and evolving initiatives that help sustain trade, particularly in critical goods, with due regard for public health and safety. Trade facilitation and customs modernization is one of the focus sectors of SASEC. The SASEC Trade Facilitation Strategic Framework adopted by the SASEC countries deals with priority areas such as customs modernization, cross-border facilities improvement, and institution and capacity building. This SDP aligns with the priority areas of ADB's country partnership and regional cooperation strategies.

Accelerated growth with industrialization and trade (Perspective Plan of Bangladesh, 2021-2041).

Expanded subregional trade and commerce (SASEC Vision: Powering Asia in the 21st Century).

Volume, efficiency, predictability, and security of cross-border trade in Bangladesh improved.

Customs legal framework complied with international standards.

Cargo clearance processes improved

Institutional capacity enhanced

Integrated trade facilities developed

Project Management Consultant. NBR will engage a consulting firm using the quality- and cost-based selection (QCBS) method with a standard quality-cost ratio of 90:10. An estimated 452 person-months (42 international, 410 national) of consulting services are required to (i) facilitate project management and implementation; (ii) supervise the civil works and goods installation in land customs stations at Akhaura, Sonamasjid, and Tamabil; and (iii) strengthen the institutional and operational capacity of NBR and BLPA.

Detailed Design Consultant. NBR will engage a consulting firm using the QCBS method with a standard quality-cost ratio of 90:10. An estimated 345 person-months (0 international, 345 national) of consulting services are required to prepare detailed designs of (i) the central customs facilities, including a central customs laboratory, a central customs warehouse, and a customs regional training academy in Dhaka, and (ii) integrated LCSs and LPs at other BCPs including Darshana, Birol, Sonahat, Sheora, Bibirbazar, Teknaf, and others, based on the engineering designs prepared by the project preparatory consultant engaged under TA 9879-BAN: SASEC Integrated Trade Facilitation Sector Development Program.

Internal Audit Consultants. NBR and BLPA will engage a consulting firm separately using the consultants' qualification selection. An estimated 12 person-months (0 international, 12 national) of consulting services are required to support internal audit of NBR and BLPA.

Works. NBR will nationally advertise bidding for works to be conducted inside the existing NBR lands at Akhaura, Sonamasjid, and Tamabil. An integrated customs building with customs information technology equipment, a customs laboratory, a seizures warehouse, staff accommodation facilities and parking areas, and a power generator house will be built. Also, BLPA will nationally advertise bidding for works to be conducted inside the existing BLPA's lands at Akhaura and Tamabil. An administration building, a cargo transshipment dock with canopy, a temporary storage warehouse, an X-ray scanning facility, a weigh bridge, and a driver restroom and truck parking areas will be built.

Goods for LCSs and LPs. NBR will internationally advertise bidding for X-ray cargo scanners, radiation portable monitoring detectors, non-intrusive detectors, chemical detectors, and customs laboratory equipment; and nationally advertise bidding for closed circuit television system, computer devices, and office furniture at LCSs. BLPA will nationally advertise bidding for closed circuit television system, computer devices, and office furniture at LPs.

Goods for Project Administration. NBR and BLPA will purchase computer devices, office furniture and equipment, and personal protective equipment at PIU offices. Request for quotations will be used for purchase of goods worth less than $100,000.