Bangladesh 2020 Import Policy Overview
Bangladesh's import policy is governed by the Import Policy Order 2015–2018 (currently extended), with three primary objectives: protecting domestic industry, conserving foreign exchange, and fostering import-substitution industries. Total imports in 2020 declined 8.6% year-on-year to USD 49.4 billion, reflecting the impact of COVID-19 on the previous year's USD 54 billion. Customs revenues account for 12% of government tax receipts, giving the tariff system significant fiscal importance as well.
The tariff structure comprises five nominal duty bands (0%, 5%, 10%, 15%, 25%), but effective rates substantially exceed headline figures once Supplementary Duty (SD, 0–500%), Regulatory Duty (RD, 0–5%), Advance Tax (AT, 0–5%), and VAT (15%) are stacked on top. Capital goods and raw materials attract low rates of 0–5%, whereas finished goods and consumer products face 25% CD plus SD, conferring high levels of effective protection. Korean exporters targeting Bangladesh must thoroughly understand the tariff architecture, LC issuance requirements, restricted product categories, and non-tariff barriers such as standards, certification, and sanitary/phytosanitary measures.
Tariff Structure and Effective Duty Rates
A defining feature of Bangladesh's tariff system is the wide gap between nominal and effective duty rates. Beyond the basic Customs Duty (CD) ceiling of 25%, Supplementary Duty (SD), Regulatory Duty (RD), Advance Tax (AT), VAT (15%), and Advance Income Tax (AIT, 0–5%) are levied cumulatively, pushing effective rates on finished goods to 80–150% or higher. For passenger vehicle imports, for example, the combined burden of CD 25% + SD 100–500% + RD 5% + VAT 15% + AIT 5% produces an effective rate exceeding 200%. By contrast, industrial raw materials and capital goods face CD 0–5% with zero SD and VAT exemptions, yielding effective rates of only 5–10%. This structure represents a deliberate "tariff escalation" strategy designed to protect domestic assembly and processing industries while encouraging raw material imports.
| Product Category | CD (%) | SD (%) | RD (%) | VAT (%) | AIT (%) | Effective (%) | Notes |
|---|---|---|---|---|---|---|---|
| Industrial raw materials | 0–5 | 0 | 0 | 0–15 | 0 | 5–20 | Duty-free eligible |
| Capital goods (machinery) | 1–5 | 0 | 0 | 0 | 5 | 6–10 | Industrial investment |
| Intermediate goods (parts) | 10–15 | 0–20 | 0–3 | 15 | 5 | 30–55 | Assembly use |
| Foodstuffs (grains) | 5–10 | 0 | 0 | 0 | 5 | 10–15 | Food security |
| Pharmaceuticals | 5–10 | 0 | 0 | 0 | 5 | 10–15 | Essential health |
| Consumer electronics | 25 | 20–45 | 3 | 15 | 5 | 80–100 | Protected sector |
| Passenger vehicles | 25 | 100–500 | 5 | 15 | 5 | 200–800 | Luxury goods |
| Cosmetics | 25 | 30–45 | 3 | 15 | 5 | 90–110 | Korean export item |
Non-Tariff Barriers and Import Regulations
Non-tariff barriers in Bangladesh present practical market access challenges on par with formal tariffs. Letters of Credit (LCs) are required as a rule, and banks apply stringent credit assessments — importers may be required to place 10–100% cash margins depending on creditworthiness. Following COVID-19, Bangladesh Bank raised LC margins on luxury and non-essential goods to 50–100%, effectively suppressing imports of those categories. BSTI (Bangladesh Standards and Testing Institution) certification is mandatory for 78 product categories covering food, electrical goods, chemicals, and construction materials. Halal certification for food and cosmetics, Bengali labeling, and expiration date marking are all legally required. Korean exporters must prepare for these technical barriers well in advance. The 7–10-day clearance period at Chittagong — compared to roughly one day in Korea — makes engagement of a qualified C&F Agent essential.
Export Strategies for Korean Firms Targeting Bangladesh
Bangladesh's import policy prioritizes domestic industry protection and foreign exchange conservation, applying high effective tariff rates (80–200%+) to finished goods and consumer products. Korean exports to Bangladesh are concentrated in industrial raw materials and intermediates (5–15% effective tariffs), while consumer goods face the dual challenge of high tariffs and non-tariff barriers (BSTI certification, halal requirements, Bengali labeling). Practical hurdles — mandatory LC settlement, 7–10-day clearance times, and the requirement for a C&F Agent — demand thorough preparation. HS Code optimization and advance BSTI certification are the most effective tools for reducing tariff costs. In the absence of a Korea-Bangladesh FTA or CEPA, MFN rates continue to apply, making a bilateral trade agreement a pressing priority for securing preferential tariff access.