Bangladesh Bank Issues Guidelines for Duty-Free Imports Under New Free Trade Zone Policy

The Bangladesh Bank has issued new directives on duty-free imports for traders, particularly concerning raw materials and components, under the recently announced Free Trade Zone (FTZ) policy. This initiative, part of the national budget for fiscal year 2026-27, aims to attract both domestic and foreign investment by simplifying trade procedures and enhancing risk management for banks. The guidelines clarify how businesses can import goods without Letters of Credit (LCs) and leverage the FTZ framework. Authorized Dealer (AD) banks and Offshore Banking Units (OBUs) will facilitate these transactions under existing foreign exchange regulations. Eligible importers include manufacturing and export-oriented enterprises, authorized trading companies, and logistics providers operating within the FTZs. The new structure allows for shipment-based imports where ownership of raw materials remains with foreign suppliers until they are used in production or sold, with banks not counting these as inventory or assuming credit risk. Imports from FTZs by domestic buyers will be treated as imports, while sales by FTZ entities will be considered exports for the seller and imports for the buyer, requiring adherence to XP and IMP processes. All financial transactions must be conducted in freely convertible foreign currency. Goods imported on a shipment basis can be stored in FTZs for up to 48 to 60 months, while deferred payment imports, including buyer's and supplier's credit, are limited to 270 days. AD banks can provide financing facilities similar to specialized zones, and OBUs can offer financing in foreign currency according to regulations. This framework enables businesses within FTZs to import raw materials, parts, and finished goods without paying duties, facilitating storage, processing, assembly, repackaging, relabeling, and re-exportation. Products can also be supplied to the domestic market upon payment of applicable duties and taxes. Industry stakeholders believe the FTZ will strengthen export-oriented and local manufacturing sectors, improve supply chain efficiency, reduce lead times for exports, and enhance global competitiveness. The Bangladesh Economic Zones Authority (BEZA) is developing a modern FTZ in Anwara, Chittagong, expected to boost trade, investment, and exports, potentially creating a global hub in Bangladesh.