Trade Finance (Export)

–Trade Finance(Export)

Exporter means any person lawfully exporting goods from

Bangladesh to any other country of the world. After
shipment the exporter has to tender the documents to
the bank within the stipulated period for the negotiation
of the documents are drawn under a letter of credit.
Export credit means any credit provided by an institution to
an exporter in the form of packing credit or post-
shipment credit.
 –Trade Finance(Export)

• Export Registration Certificate(ERC): Procedure for

obtaining export registration certificate(ERC) the following documents
are required:
1. Application form
2. Nationality certificate
3. Partnership deed (registered)
4. MOA, AOA & Certificate of incorporation
5. Bank certificate
6. Income tax certificate
7. Valid Trade license
8. Copy of rent receipt of the business
9. Fees paid by treasury chalan
 –Trade Finance(Export)
Export Formalities:
1. Procedure for Registration of Exporter
2. Books and Register/Ledger required for export
3. Export L/C checking and advising
4. Formalities of Back to Back L/C opening
5. Accounting of B/B L/C
6. B/B bill checking
7. Mechanism of acceptance
8. Pre-shipment financing
9. Export document checking and negotiation
10. Calculation of offering sheet for fund disbursement system
11. Proceeds realization correspondence
12. Formalities of back to back payment system
13. EXP form reporting to Bangladesh Bank
14. Disposal of EXP forms
15. Export incentives
16. Disputes and Settlement of export
 –Trade Finance(Export)

• Export Order Collection:

1. Digital world: Digital world changed each human being in
the world widely for the past two decades. Information technology
plays a vital role in all sectors especially in international business.
Before 1990s, getting a contact of foreign buyer was a herculean
task. Now world changed like anything. I will always put you as first
tool of international marketing as the utilization of internet service.
2. Effective Communication: Effective
communication plays an important role in business market. If you
can  effectively communicate with the buyer to convince the quality
and price of your product, the buyer will surely take initiation to ask
you send sample of your product and later place the order.
 –Trade Finance(Export)

3. You can send samples: You can send samples as

per buyer’s requirements. While sending export samples, at least two
sets of samples to be drawn properly. One you can send to the buyer
and one can be retained with you. The sample you retained helps you
to match with the sample you sent to buyer while manufacturing or
procuring, once you obtained final purchase order from buyer.
 –Trade Finance(Export)

4. Attend in trade fair: Attend in Trade fair, exhibit your product.

There are many International Trade fairs conducting within the country
and abroad, where you can exhibit your product to attract foreign
buyers.
5.  Export promotion agencies: Export promotion agencies have
different source of contacts in international level. They help you to
guide proper marketing in the trade. They also extend their services in
finding buyers for your product.
 –Trade Finance(Export)

6. Commodity Board: Commodity Board also plays a vital role in

international marketing to help their members to find a foreign
market. You can have a frequent contact with them for necessary sales
leads to communicate.

7. Government embassies : Respective Government embassies extend

their service in helping exporters to find an international market in
their country.
 –Trade Finance(Export)

8. Personal meet: Once you have a personal contact, you can visit the
buyer in person and generate a good business relationship.

9. Appointing an Agent : Some of the exporters appoint an agent in

the targeting country, and through the said agent exporter orders are
procured. All the required services are done by this agent including the
technical problems if any.
 –Trade Finance(Export)

10. Through contacts of friends and relatives:

Personal relationship of friends and relatives also helps to generate a
good business relationship between buyer and seller for mutual
benefits. 
 –Trade Finance(Export)

• Bond Entitlement:  Bonded warehouse facilities are subject to yearly

entitlement. Yearly entitlement is allowed based on production
capacity of capital machinery and previous year’s performance (i.e.
export and usage of raw materials) of the bonder. However, direct
exporters in the RMG sector are not required to have annual
entitlement. They can import inputs/raw materials and related items
based on the requirement of Utilization Declaration (UD) and Master
LCs. Entitlement of raw materials required are determined using input-
output coefficient.
 –Trade Finance(Export)

•Export Letter of Credit (LC)

• LCs provide Exporters with the confidence to allow them to ship their
goods in advance of the receipt of payment. An LC is a conditional
payment guarantee provided by the Importer's bank to the Exporter.
The Exporter normally receives the payment guarantee prior to the
shipment of goods.
 –Trade Finance(Export)

•Realization of Export Proceeds: On
receiving the documentary bill of exchange, the importer releases

payment in case of sight draft or accepts the usance draft undertaking

to pay on maturity of the bill of exchange. If the details are found to

be in order then the export transaction is treated to be completed.

 –Trade Finance(Export)

• The export credit guarantee schemes (ECGS) available

in Bangladesh are administered by the Sadharan Bima Corporation

(SBC). The ECGS covers the risk/solvency of buyers and political risks

inherent in foreign trade.

 –Trade Finance(Export)

• Sadharan Bima Corporation (SBC), the only state owned General

Insurance Corporation in Bangladesh which introduced Export Credit

Guarantee Scheme with effect from 1st January, 1978 through its Export

Credit Guarantee Wing as per order of the People’s Republic of

Bangladesh in order to promote national exports. The wing has been

subsequently converted into an autonomous department having

separate budgetary and accounts.

 –Trade Finance(Export)

• The primary objective of the department is to boost up and

strengthen the export promotion drive in Bangladesh;
•
- By offering guarantee to banks and financial institutions to enable
exporters to obtain easily better loan facilities from them both at pre-
shipment & post-shipment stage;
•
- By providing a credit risk insurance cover to exporters against losses
resulting from both commercial and non-commercial (political) risks
in respect of goods sold to foreign buyers on credit. Broadly speaking,
the objective of ECG is to encourage exporters to export more, attract
newcomers to export business, promote new export products, to
open up new market.
 –Trade Finance(Export)

• Export Incentives: Cash incentives are given to

selected export sectors in order to encourage exports in accordance with
the export-led economic growth strategy of the country. The sectors to
enjoy such cash incentives and the respective rates to be provided are
updated every year through circulars issued by the Bangladesh Bank.
• Types of export incentives include export subsidies, direct payments,
low-cost loans, tax exemption on profits made from exports and
government-financed international advertising
 –Trade Finance(Export)

• Exports in 38 categories to enjoy cash incentive:

• 15 per cent cash incentive against export of rice.

• RMG exporters were enjoying 1-per cent additional special incentive

in addition to the 4-per cent cash incentive against export of new

textile and garment products and expanding export of textile items to

new markets — markets other than the United States, Canada and

the European Union.

 –Trade Finance(Export

• Small and medium industries of the textile sector would get cash incentive at

the rate of 4 per cent against export of apparel products.

• The 2-per cent cash incentive remained unchanged for exporters of apparel

products to the Eurozone

• Information technology-enabled services would get 15 per cent cash incentive

and information technology companies established in hi-tech park would also

get 4 per cent additional incentive for exporting products to new markets.
 –Trade Finance(Export)

• Exporters of pharmaceuticals, surgical instruments and appliances, photovoltaic

modules, motorcycles, chemical products, razors and razor blades, ceramic

products, caps, crabs, mud eels and galvanised sheets or coils would get 10 per cent

cash incentive in FY21.

• Cash incentives at the rate of 10 per cent would be applicable against export of

finished leather goods to be produced at factories in the Tannery Park at Savar in

Dhaka and at factories outside the Tannery Park which have their own effluent

treatment plants.
 –Trade Finance(Export)

• Exports of ship, plastic products, pet flex and locally produced paper
would be considered for 10 per cent cash incentives in FY21.
• Exporters of frozen fish would get 5 per cent cash incentive for their
products covered with ice weighing a maximum of 20 per cent of the
total weight, 4 per cent cash incentive for products covered with ice
weighing 20 per cent to 30 per cent of the weight, 3 per cent cash
incentive for products covered with ice weighing 30 per cent to 40
per cent of the weight and 2 per cent cash incentive for products
covered with ice weighing 40 per cent and above of the weight.
• Exporters of shrimp will get 10 per cent cash incentive if their
products are covered with ice weighing up to 20 per cent of the total
weight.
 –Trade Finance(Export)

• The exporters will get 9 per cent cash incentive for their products which are covered

with ice weighing 20 per cent to 30 per cent of the weight, 8 per cent cash incentive

for products covered with ice weighing 30 per cent to 40 per cent of the weight and 7

per cent cash incentive for products covered with ice weighing 40 per cent and above

of the weight.

• Export of diversified jute products will get 20 per cent cash incentive, exports of jute

yarn and twine would enjoy 7 per cent and that of jute hessian, sacking and carpet

backing cloth would get 12 per cent incentive.

 –Trade Finance(Export)

• Cash incentive at the rate of 15 per cent for the export of leather goods,
light engendering products, furniture, accumulator battery and shoes and
bags made from synthetic fibres and fabric would be given in FY21.
• Bangladeshi companies established in economic zones would get 4 per
cent additional cash incentive for exporting shoes and bags made from
synthetic fibres and fabric to new markets.
• Incentive at the rate of 20 per cent for the export of charcoal, agricultural
products, halal meat, potatoes and seeds would be applicable for FY21.
–Trade Finance(Export)

•Duty Drawback: Drawback is the refund of duties and

taxes paid on inputs/raw materials used for the manufacture of

exported goods and services. The term “Drawback” is used

exclusively for refund of duties and taxes against export.

 –Trade Finance(Export)

• UP and UD: Import under UD/UP: How much inputs and

packaging materials will be used in manufacturing exportable

products is basically determined by the Utilization Declaration (UD)

or the Utilization Permission (UP).

 –Trade Finance(Export)

• Bill of Lading : The bill of lading (BOL) works as a receipt of

freight services, a contract between a freight carrier and shipper and

a document of title. The bill of lading is a legally binding document

providing the driver and the carrier all the details needed to process

the freight shipment and invoice it correctly.

 –Trade Finance(Export)

•Bill of Entry : A written account of goods entered at the

customhouse whether imported or intended for exportation.

• The purpose of this document is to ensure that exported goods are

properly declared . The document(s) will need to be approved by
Customs before the goods will be allowed to be exported.
 –Trade Finance(Export)

• These most common five modes of transport are:

• Railways, roadways, airways, waterways and pipelines.

• Deemed Export: 'Deemed exporters' are those industries

that do not have any direct export operations, and instead
carry out their activities through subcontracting and receive
their proceeds in foreign exchange through local back-to-
back letters of credit.
 –Trade Finance(Export)

• For example, Dealer 'A' (located in Dhaka)

sells goods to Dealer 'B' which is an Exporter.
B, in turn, sells the goods to a customer 'C' in
Germany. Supply by A to B is treated
as deemed exports. Supply by B to C is
treated as Direct exports.
–Trade Finance(Export)

•Thank you very much