Korea-Bangladesh Trade Practical Guide

Korea-Bangladesh Trade Relationship Overview

Bilateral trade between South Korea and Bangladesh has grown steadily over the past decade, reaching approximately USD 2.8 billion in 2024. South Korea is Bangladesh's 4th largest import source, while Bangladesh represents an increasingly important market and sourcing destination for Korean companies. Over 400 Korean companies currently operate in Bangladesh, concentrated primarily in the garment, textile, and light manufacturing sectors.

Korean exports to Bangladesh are dominated by synthetic fabrics and textiles (approximately 35% of total exports), followed by iron and steel products (15%), machinery and equipment (12%), electronics and semiconductors (8%), and automobiles and auto parts (6%). Korean imports from Bangladesh consist primarily of ready-made garments (75%), knitwear (12%), leather goods (5%), and frozen seafood (3%).

The trade relationship is characterized by a structural complementarity: Korea supplies intermediate goods and capital equipment that feed into Bangladesh's export-oriented manufacturing sector, particularly the RMG industry. This creates a supply chain partnership rather than direct competition, making the bilateral trade relationship mutually beneficial and sustainable.

Import and Export Procedures

Exporting from Korea to Bangladesh

Exporting goods from Korea to Bangladesh involves several key steps that traders should carefully follow to ensure smooth customs clearance and timely delivery:

Trade License (IRC): The Bangladeshi buyer must hold a valid Import Registration Certificate (IRC) issued by the Office of the Chief Controller of Imports and Exports (CCI&E). Without this, customs clearance is not possible.
Letter of Credit (L/C): Most commercial transactions require an irrevocable letter of credit opened through an authorized dealer bank in Bangladesh. The L/C must comply with Bangladesh Bank's regulations, including foreign exchange guidelines and margin requirements (typically 10-100% depending on the product).
Pre-Shipment Inspection (PSI): Certain goods require mandatory pre-shipment inspection by authorized agencies. While Bangladesh has moved away from comprehensive PSI for most items, specific categories including used machinery, scrap metal, and certain consumer goods still require inspection.
Documentation Requirements: Standard export documentation includes commercial invoice, packing list, bill of lading or airway bill, certificate of origin (preferably Korea-Bangladesh preferential origin certificate if applicable), insurance certificate, and any product-specific certificates (e.g., health certificates for food products, conformity certificates for electronics).
HS Code Classification: Proper HS code classification is critical. Bangladesh uses the Bangladesh Customs Tariff based on the WCO Harmonized System. Misclassification can result in delays, penalties, and incorrect duty assessment. Korean exporters should verify HS codes with the Korea Customs Service before shipment.

Importing from Bangladesh to Korea

Korean importers sourcing goods from Bangladesh benefit from several preferential arrangements:

GSP Benefits: Bangladesh, as an LDC, qualifies for Korea's Generalized System of Preferences (GSP), which provides duty-free or reduced-duty access for many product categories. This is particularly significant for garment imports, where standard MFN tariffs can be 8-13%.
APTA Preferences: The Asia-Pacific Trade Agreement (APTA), of which both Korea and Bangladesh are members, provides additional tariff concessions on specified product lines. Korean importers should verify product eligibility and rules of origin requirements under APTA.
Korea Customs Procedures: Imports into Korea require electronic customs declaration through UNI-PASS, Korea Customs Service's single-window system. Korean importers must register as customs-cleared importers and typically use licensed customs brokers for clearance procedures.

Customs Clearance at Bangladesh Ports

Customs clearance in Bangladesh can be time-consuming compared to more developed markets. Understanding the process and common pitfalls is essential for smooth operations:

Chittagong Port handles approximately 90% of Bangladesh's seaborne trade. Average container dwell time has improved but still averages 10-14 days, compared to 3-5 days at major Asian ports. The introduction of the ASYCUDA World customs automation system has improved processing times, but manual interventions and physical inspections remain common.

Customs Duties: Bangladesh's tariff structure includes four main slabs: 0%, 5%, 15%, and 25%. However, the effective duty rate is higher when supplementary duties (0-500%), regulatory duties (3-5%), advance income tax (5%), advance trade VAT (5%), and other para-tariffs are included. Total landing costs for imported goods can range from 30% to over 100% depending on the product category.

Bonded Warehouse Facilities: For export-oriented manufacturers, Bangladesh offers bonded warehouse facilities that allow duty-free import of raw materials and intermediates used in export production. Korean companies with manufacturing operations in Bangladesh should leverage this facility to reduce input costs. Applications are processed through the Customs Bond Commissionerate.

Tips for Faster Clearance: Engage a reputable local C&F (clearing and forwarding) agent, ensure all documentation is complete and consistent before shipment, use electronic submission through ASYCUDA World, maintain open communication with the importing bank for timely document release, and consider advance ruling requests for complex tariff classification issues.

Logistics and Shipping Routes

Efficient logistics planning is crucial for Korea-Bangladesh trade given the geographical distance and infrastructure constraints:

Sea Freight

The primary shipping route from Korea (Busan Port) to Bangladesh (Chittagong Port) typically involves transshipment at hub ports in Southeast Asia, primarily Singapore, Port Klang (Malaysia), or Colombo (Sri Lanka). Direct services are limited but growing with increased trade volumes.

Transit Time: 14-21 days from Busan to Chittagong via transshipment; direct services (when available) take 12-16 days
Major Carriers: Maersk, MSC, CMA CGM, Evergreen, HMM, and regional carriers like SITC and Samudera
Freight Rates: Container rates (20ft) typically range from USD 800-1,500 depending on season and fuel surcharges; rates have normalized after the post-pandemic spike but remain volatile
Matarbari Deep Sea Port: Currently under construction with Japanese assistance, this new deep-sea port (expected partial operation by 2026) will accommodate larger vessels and significantly improve logistics efficiency

Air Freight

Air freight is used for high-value, time-sensitive, or perishable goods. Hazrat Shahjalal International Airport (DAC) in Dhaka is the primary air cargo hub. Korean Air and Biman Bangladesh Airlines operate direct Incheon-Dhaka routes, while numerous carriers offer connections via hub cities.

Transit Time: 1-2 days direct; 2-4 days via connecting flights
Air Cargo Rates: USD 3-6 per kg depending on volume and commodity
Common Air Freight Items: Electronics components, pharmaceutical raw materials, garment accessories, samples, and urgent production inputs

Payment Methods and Trade Finance

Understanding payment practices in Bangladesh is essential for managing trade risk:

Letter of Credit (L/C): The most common payment method for imports into Bangladesh, required by Bangladesh Bank regulations for most commercial transactions. Korean exporters should insist on confirmed, irrevocable L/Cs from reputable Bangladeshi banks. Major banks include Sonali Bank, Janata Bank, BRAC Bank, and Eastern Bank Limited.
Telegraphic Transfer (TT): Permitted for certain categories including capital machinery, raw materials for export-oriented industries, and transactions below specified thresholds. TT payments are faster but carry higher risk for exporters.
Documents Against Payment (D/P) and Documents Against Acceptance (D/A): Used selectively for established trading relationships. D/A terms of 90-180 days are common in the garment sourcing trade.
Currency Considerations: Bangladesh's currency (Bangladeshi Taka, BDT) has experienced depreciation pressure, declining from approximately BDT 85/USD in 2022 to BDT 120/USD in early 2025. Korean traders should factor currency risk into pricing and consider hedging mechanisms for larger transactions.

Buyer Matching and Market Entry Support

Finding reliable business partners in Bangladesh requires a systematic approach. Several resources and strategies can help Korean companies identify and vet potential partners:

KOTRA Dhaka Office: The Korea Trade-Investment Promotion Agency maintains an office in Dhaka that provides market research, buyer matching, trade consultation, and business trip support services for Korean companies. KOTRA's buyer matching service connects Korean suppliers with verified Bangladeshi importers and distributors.
FBCCI and Trade Associations: The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and sector-specific associations like BGMEA (garments), BKMEA (knitwear), and BASIS (IT) are valuable resources for identifying potential partners and understanding sector dynamics.
Trade Fairs: Key trade events include the Dhaka International Trade Fair (January-February), Bangladesh Denim Expo (biannual), Bangladesh Textile Expo, and sector-specific exhibitions organized by CEMS and other event companies.
Due Diligence: Before entering any business relationship, conduct thorough due diligence including company registration verification through RJSC (Registrar of Joint Stock Companies), bank references, trade references from existing foreign partners, and if possible, factory or office visits. Korean companies can also utilize KOTRA's credit investigation service for Bangladeshi companies.

For Korean SMEs exploring the Bangladesh market for the first time, participating in KOTRA-organized trade delegations or utilizing the KOTRA GBC (Global Business Center) program in Dhaka provides a structured and lower-risk market entry pathway. These programs typically include pre-arranged business meetings, market briefings, factory visits, and post-event follow-up support.