How to get Export Registration Certificate (ERC) in Bangladesh

 

Comprehensive Guide to Operating an Export Business in Bangladesh

Bangladesh is a rapidly growing economy with an expanding export sector that offers tremendous opportunities for businesses. Establishing and operating an export business in the country involves adhering to a series of procedures and regulations. This article provides an in-depth guide for businesses, particularly those working in this related industry, to navigate the process of setting up and managing an export business in Bangladesh.

 

Step 1: Securing an Export Registration Certificate (ERC)

The first step in becoming an exporter in Bangladesh is obtaining an Export Registration Certificate (ERC) from the Chief Controller of Imports and Exports (CCI&E). The ERC is mandatory for engaging in export activities and ensures compliance with government regulations.

Required Documents for ERC Application in Bangladesh

To obtain an ERC, the following documents must be submitted:

  1. Completed Application Form: Ensure all fields are accurately filled out.
  2. Trade License: A valid trade license issued by the City Corporation, Municipal Corporation, or Union Parishad.
  3. Partnership Deed or Articles of Association: For partnerships or companies, provide the partnership deed or memorandum and articles of association.
  4. Chamber Membership: Proof of membership in a recognised chamber of commerce.
  5. Treasury Challan: Evidence of payment of the required fees through a treasury challan.
  6. Valid Trade License (Original)
  7. eTIN Certificate
  8. VAT registration certificate (BIN)
  9. Bank Solvency Certificate
  10. Office rent deed
  11. Two copies Photograph of the applicant
  12. NID/Passport of the applicant
  13. Any other documents as require

 

Step 2: Understanding the Export Process

Operating as an exporter requires familiarity with the key steps involved in the export process:

  1. Selection of Products: Choose products with a competitive advantage, high demand, and availability of raw materials. Priority sectors often include those with government incentives and tariff preferences.
  2. Market Analysis: Conduct a detailed analysis of export markets, focusing on factors such as GDP, market size, consumer behavior, and trading patterns.
  3. Finding Buyers: Build a list of potential buyers and maintain correspondence. Offer samples tailored to buyer specifications and negotiate terms.
  4. Export Financing: Secure financing through bank loans or other facilities to support manufacturing and shipment.
  5. Manufacturing and Shipment: Ensure products meet buyer specifications and adhere to international quality standards. Arrange for timely shipment of goods.
  6. Repatriation of Sales Proceeds: Ensure compliance with regulations on the repatriation of export proceeds within the stipulated time frame.

 

Step 3: Key Considerations for Product Selection

Choosing the right product to export is crucial. Consider the following factors:

  • Availability and cost of raw materials.
  • Local expertise and production capabilities.
  • Inclusion in government-incentivized sectors.
  • Demand in major markets like the EU and the USA.
  • Tariff preferences and trade agreements with developed and developing countries.

Step 4: Market Analysis and Buyer Engagement

Understanding the target market is essential for successful exporting.

Market Data Collection

Key metrics to analyze include:

  • GDP and GDP per capita of the target market.
  • Volume of trade and key trading partners.
  • Market size and trends for the selected product.
  • Tariff rates and restrictions.
  • Consumer behavior and preferences.

Buyer Correspondence

Effective communication with buyers is essential. Provide detailed information, including:

  • Product descriptions and raw material sources.
  • Unit prices and quality control measures.
  • Supply chain capabilities and certifications (e.g., ISO, government testing labs).
  • Terms of trade such as Incoterms and payment methods.

 

Step 5: Documentation Requirements

Exporting goods requires meticulous attention to documentation. Key documents include:

  1. Sales Contract or Letter of Credit (L/C): This outlines the terms of sale.
  2. Commercial Invoice: Includes details such as price, quantity, and buyer/seller information.
  3. Packing List: A detailed inventory of the shipment.
  4. EXP Form: Issued by authorized banks to certify the legitimacy of the transaction.
  5. Certificate of Origin: Specifies the origin of the goods, issued as either preferential or non-preferential.
  6. Shipping Documents: Include the Bill of Lading, Airway Bill, or Bill of Export, as applicable.
  7. Insurance Certificate: Ensures coverage for potential losses during transit.

Step 6: Ensuring Compliance with Legal and Regulatory Bodies

Export businesses in Bangladesh must coordinate with several ministries and regulatory authorities:

  • Ministry of Commerce: Sets export policies and provides guidance.
  • Export Promotion Bureau (EPB): Facilitates export activities and incentives.
  • Bangladesh Bank: Ensures financial compliance, particularly repatriation of proceeds.
  • National Board of Revenue (NBR): Oversees customs duties and tax regulations.
  • Bangladesh Standards and Testing Institution (BSTI): Certifies product quality.

Step 7: Drafting a Sales Contract

A well-drafted sales contract minimises disputes and ensures clarity. Essential elements include:

A sales contract formalises the agreement between the exporter and the buyer, outlining the terms and conditions for the sale and delivery of goods. Below are the key elements, paraphrased and explained:

  1. Contract Number: A unique identification number assigned to the contract for record-keeping and reference.
  1. Contract Date: The date when the contract is executed or signed by both parties, indicating the start of its validity.
  1. Page Number: Identifies the specific page of the contract for clarity, especially in multi-page agreements.
  1. Buyer Information: The legal name, address, and contact details of the purchasing party.
  1. Seller Information: The legal name, address, and contact details of the exporting party responsible for providing the goods.
  1. Item Number: A unique identifier assigned to each product or category of products listed in the contract.
  1. Description of Goods: Detailed specifications of the goods being sold, including type, material, and features.
  1. Quality Specifications: Defines the quality standards or grades of the products as per the agreement.
  1. Unit Price: The price of a single unit of the product, specified in the agreed currency.
  1. Total Amount: The overall cost of the goods, calculated by multiplying the unit price by the quantity ordered.
  1. Payment Terms: Conditions regarding the mode and schedule of payment, such as advance payments, Letters of Credit (L/C), or installments.
  1. Shipment Details: Information about the shipping arrangements, including the delivery method, port of loading, and port of destination.
  1. Packing Specifications: Details of the packaging requirements, such as type of materials used, size, and labeling instructions.
  1. Guarantee/Warranty: Assurance provided by the seller regarding the quality, functionality, or lifespan of the goods, including terms for replacement or repairs.
  1. Arbitration Clause: Specifies how disputes related to the contract will be resolved, often through arbitration, and identifies the governing laws or arbitration body.
  1. Product Description: A comprehensive explanation of the product’s nature, features, and intended use, tailored to the buyer’s requirements.
  1. Quantity and Quality: Details of the quantity being sold, along with reconfirmation of the agreed quality standards.
  1. Packaging Requirements: Specific instructions for the packaging of goods to ensure safe transit and compliance with buyer or regulatory requirements.
  1. Sales Terms: Terms under which the goods are sold, such as FOB (Free on Board), CIF (Cost, Insurance, and Freight), or other Incoterms.
  1. Unit Price: A repetition to emphasize the per-unit cost of the product for transparency and clarity.
  1. Total Price: Reconfirmation of the overall contract value, ensuring consistency with the payment terms.
  1. Terms of Payment: Specific details about the payment schedule, including due dates, penalties for late payments, and acceptable currencies
  2. Delivery Schedules: Timelines for the shipment and delivery of goods, including any milestones or deadlines agreed upon.

 

Step 8: Leveraging Financial and Government Incentives

Bangladesh offers various incentives to exporters, including:

  • Cash subsidies for specific sectors.
  • Duty drawbacks on imported inputs.
  • Tariff preferences under trade agreements like GSP, SAPTA, and APTA.

Step 9: Finalizing Export Logistics

Efficient logistics management ensures timely delivery and reduces costs. Key considerations include:

  • Selection of reliable carriers.
  • Coordination with customs for clearance.
  • Compliance with packaging and labeling standards.

 Renewal of IRC

ERC is required to be renewed every year. The required documents are:

  1. ERC and Passbook ( Original copy and Two set Photo Copy)
  2. Renewal Application by the applicant
  3. Treasury Challan of the annual renewal fee at Bangladesh Bank or Sonali Bank (Original copy and Two set Photo Copy)

The applicant is required to arrange the below-mentioned documents and deposit the annual renewal fee at Bangladesh Bank or Sonali Bank

Govt Fee:

Registration: Official Fee: 10000 + VAT 1500 = 11500

Renewal: Official Fee: 7000 + VAT 1050 = 8050

Conclusion

Exporting from Bangladesh presents significant opportunities for businesses willing to navigate its regulatory framework. By adhering to the outlined steps and collaborating with experienced legal professionals, exporters can ensure compliance, optimize operations, and tap into global markets effectively. Legal firms play a vital role in guiding businesses through this complex process, making them indispensable partners in export success.