Sunday, February
F 26, 2017

http://da
ailyasianage.ccom/news/49753/bangla
adesh-may-ree-export-everrything

Bang
glades
sh ma
ay re-export every
ything

Historicaally nei-ghborringcou-ntriees have somee conflict of in
nterest causing obstacles in friendly
relation. The
T inequality in size andd strength of economy inffluences the behavior
b of some
s countries
towards neighbors.
n Thhere may be difference in
n the rate of growth
g but neeighbors can supplementt and
support each
e other. So
ome nations try not to tak
ke cognizancce of reality because
b of hisstorical and
political reasons.
r

They donn't always maake enough diistinction bettween economic integratiion and polittical unificatiion.
In our cou
untry, 'deshb
bikri' (sale ou
ut of the coun
ntry) is a wid
dely used term
m. The econoomies of
neighboriing countriess are usually interdepend dent. The form
mal and inforrmal trade is a really of th
he
game. The border security or any other measures are not effective to stop economic co-operation and
transactions.

The better option is to open up the procedure and reduce the formalities as low as possible to get of
the formal and informal trades. Usually the bigger and relatively better economies have the headache
to protect their businesses from inflow of low cast products produced in small and cottage industries.
The other threats are influx of importer products of other origin products enter into the bigger
economies.

The smaller countries frame their economic and trade policy focusing on demand of bigger neighbor
economies. They promote free economic zone to cater the need of bigger economies and gain benefit
of being neighbor of bigger economies. The Mexico and Canada has industrial and economic policy
on the basis of demand of USA. The FDI from other countries in Canada and Mexico are also driven
by demand in USA.

These countries are also in trade of products from third counties. It includes inward processing,
manufacturing under bond, export-processing zones, temporary admission for re-exportation in the
same state, and Customs warehousing. Another method is drawback duties/ taxes to be paid at the
time of importation and then refunded after the finished goods are re-exported. The other options
are free zone for manufacturing and trading, temporary admission, transit and corridors etc.

A free trade zone (FTZ) is one or more special areas of a country where the usual trade barriers such
as tariffs and quotas are eliminated and bureaucratic requirements are lowered in hopes of attracting
new businesses and foreign investments. Most FTZs are located in developing countries, and they are
labor-intensive manufacturing centers that involve the import of raw materials or components and
the export of factory-finished products.

Free trade zones came about because of the need to promote trade between and amongst nations.
Free zones or bonded warehouses became increasingly popular in the last decade, with many
countries attempting to promote exports of non-traditional manufactured goods, strengthen the
competitiveness of exporters, attract investors, diversify the economy , create employment, transfer
technology, expand trade and transport linkages to the country as a whole, promote tourism,
encourage foreign direct investment (FDI), and achieve development and growth.

Sometimes referred to as Free Trade Zones, Duty-Free Zones, Tax-Free Zones, Free Export Zones,
Special Economic Zones, Export Processing Zones, by whatever name, such zones are considered
legally outside the Customs territory of the country and thereby subject to an entirely different
Customs tariff and income tax regime.

The process is simple like break-bulk and shifting of goods from one container to another,
sorting/repackaging/re-labeling, further assembly or manufacturing, etc. Free trade zones have
transformed themselves into leading service centers for attracting foreign investment in the world
and are greatly needed.

The location of FTZs in underdeveloped parts of the host countries attract employers, thus reducing
poverty and unemployment and stimulating the economy of the host country. They are normally
organized around major seaports, international airports and national frontiers -- areas with many
geographic advantages for trade like Hong Kong, Singapore and Nigeria.

There are more than 3000 FTZs in more than 225 countries, with nearly 50 million workforce
engaged in them at various times and seasons. The FTZ is meant for manufacturing and re-export of
products imported from other countries.

Re-exports consist of foreign goods exported in the same state as previously imported, from the free
circulation area, premises for inward processing or industrial free zones, directly to the rest of the
world and from premises for customs warehousing or commercial free zones, to the rest of the world.

It creates opportunities of development of trading centres and diversified economic bases. Trade,
service, industry, banking, etc. are free. Vendors and shipping forwarders, shipping agents and
customs brokers, exporters and importers, manufacturers and investors have free entry to free zones
without much formality. The FTZs are so important that the World Free Zone Summit held in Dubai
on 2 November 2010 called for "increased synergy between free zones".

Jebel Ali Free Zone in Dubai, UAE, is probably the most successful zone in the world. Created in
1985, this free zone has no taxation. The restrictions are minimal, and there is no obligation to have a
local partner. Staff can be recruited from anywhere. There are excellent port facilities, warehouses,
office space, and factories already built and ready for lease. The port is the busiest in the Middle East
and now the 10th busiest in the world.

Aqaba Special Economic Zone in Jordan is another recent bold initiative to turn the entire port city
area of Aqaba into a duty/tax free zone in an attempt to attract economic development and FDI.
What is interesting with the Aqaba Special Economic Zone Authority (ASEZA) is the authorities'
decision to create a separate Customs service to operate inside ASEZA.

ASEZA Customs is autonomous from the national Jordanian Customs administration, in an attempt
to provide a focused, specialized and a better level of service to firms operating inside the zone.
ASEZA has been very successful in a very short period of time at attracting several billion USD of FDI
since its creation in what was otherwise a seriously economically depressed region of southern
Jordan. ASEZA constitutes a pilot/catalyst for nationwide Customs reform. Colon Free Zone in
Panama operates almost exclusively as an entrepot/warehousing hub, focusing on commercial
warehousing and repacking operations for firms that export finished goods to the Caribbean and
Central America.

Singapore was traditionally a re-export economy by virtue of her historical role as an entrepot for
Southeast Asia. Singapore's imports included goods for re-exports. A noteworthy change for Dutch
trade is the recent growth of imports from China. A large share of goods imported from China is
destined for other countries. Exporting partners often declare the Netherlands as the destination of
goods intended for re-export.

This is because suppliers are unaware of the final destination of goods. Asia supplies 25 per cent of
the Netherlands' goods for re-export, with China as the leading supplier from the region. Other large
re-exporting countries include Belgium, Germany and the United States where more than 10 per cent
of their exports are re-exports.

Vietnam has introduced temporary entry of goods and transit provisions, temporary import for re-
export and transit of goods. The ASEAN nations are exploring trade and investment opportunities in
Malaysia under seamless trade, utilising the country as a gateway to emerging markets in South Asia
and the Middle East under the ASEAN Free Trade Agreement (AFTA).

The position of Bangladesh within the global map makes it a natural candidate to become a regional
hub of economy. However, the globe wouldn't come to it unless it aligns itself to become a hub. Re-
export has a big promise for the economic development of Bangladesh. It also has the potential to
facilitate trades for land-locked Nepal and Bhutan and land-locked Indian provinces in the North-
East.

Bangladesh has allowed transit to India for re-entry of their goods to 7 sisters in eastern part of
Bangladesh. There is a criticism of agreed transit fees. India wins in negotiation with Bangladesh.
Bangladesh already have six export processing zones (EPZs) and provide manufacturing facilities
only. It has also declared to set up 100 FTZs both in public and private sector. But in India, the terms
Free Trade Zones and Export Processing Zones are synonymous. India has 10 Free Trade Zones
(FTZs) for local and foreign investment.

They allow manufacturing and trading of foreign products for re-export. Because of this Indian
policy, Bangladesh is now importing products of other origins from India through FTZs. These FTZs
are new challenge to Singapore, Dubai FTZs. If India can re-export to Bangladesh, why should
Bangladesh voluntarily restrict (under bureaucratic process)re-export to India and other countries?
We can adapt same policy like India.

There is a wonderful policy decision of Bangladesh Government for re-export of LPG. According to
report of Daily Financial Express on 16th February 2017, The Energy and Mineral Resources Division
(EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) has already
published a gazette notification of the policy styled 'LP Gas Operational Licensing Policy 2017.

The licensees under this policy would hold the authority to supply LPG to households, auto-gas
stations, and to commercial and industrial clients through engaging dealers or franchises. They can
also export bottled LPG or LPG in bulk quantity after attaining no- objection certificate (NOC) from
the EMRD and necessary approval from the commerce ministry. Bangladesh can also allow exporters
to allow export all possible products in a manner similar to LPG export to our neighbors. It may take
advantage of being neighbors of India, China and ASEAN countries.

The writer is legal economist