(Last updated: 30 Mar 2011)

Business etiquette

Business tips

Visitors to Bangladesh should understand that social and business customs are more strongly observed and formal than in Australia.

Relationship building is a very important aspect to doing business and is best achieved outside of the workplace, usually during lunch or dinner.

In business circles, a handshake is very common, although men should not shake hands with a woman unless she offers her hand first.

Always use the right hand when receiving and/or offering items, such as a business card.

A plentiful stock of business cards is essential. Bangladeshis tend to be very free in exchanging cards even at social gatherings.

In business situations, men usually wear trousers, a long or short-sleeved shirt. Tie and jackets are worn in more formal situations, such as attending seminars, or visiting government offices. Local women wear a long dress called a 'sari' or a kameez set and foreigners usually wear trousers and a loose blouse for business situations. For informal dinners or functions casual evening dresses or long skirts are usually worn. Avoid wearing shorts or mini skirts.

Exchanging gifts is quite common in social circumstances, but less common between business colleagues. However, corporate gifts are widely used.

Avoid pointing the soles of your feet at people, or using your feet to point at something.

Relations between are more formal than in Australia. Public displays of affection, even between husband and wife, are frowned upon.

In business, it may take some time to establish the trust of your Bangladeshi hosts. Meetings will often begin with small talk. Do not rush this part of the meeting, and expect it to take some time, often over several meetings, for your Bangladeshi colleagues to feel relaxed and comfortable with you.

Most Bangladeshi business people have a fair knowledge of English. Often, in the presence of foreigners, Bangladeshis may converse among themselves in their native tongue. In most instances this is unintentional and this should not be construed as discourteous behaviour.

In business circles, Bangladeshis tend to be more formal than Australians. In a business meeting 'Mr MacDonald' is a safer form of address than 'Kevin'. 'Sir' and 'Madam' are also acceptable forms of address, until a foreigner gradually develops a first name basis relationship with a Bangladeshi.

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

Bangladesh import policy order 2006-2009 places control on the importation of some specific products. The full list is available from Austrade Dhaka.

The import of a number of products is the sole reserve of nominated government trading organisations. The import regime consists of:

• A banned list
• A restricted list
• Freely importable items (imports falling outside the above lists could be imported either freely or by fulfilling specified conditions)

All other permitted imports require a LCA (Letter of Credit Authorisation) form to be completed:

• These allow registered commercial importers to import under letter of credit without the need of an import licence.
• Importers must lodge a 10 per cent -100 per cent (depending on the business relationship with banker) cash margin against covering letters of credit.
• Import transactions are governed by regulations specified on the Bangladesh Import Policy Order (IPO) issued by the Chief Controller of Imports and Exports, Ministry of Commerce.
• Foreign exchange is controlled by the Bangladeshi.
• Bank in accordance with Foreign Exchange Control policy:
• Allocation is administered through authorised financial institutions.
• All imports must be supported by a letter of credit, except for the import of capital machinery and raw materials for industrial use.

There is a short list of prohibited goods – most second-hand goods are included. Penalties for the smuggling of illegal narcotics are severe.

Some engineering products must comply with established technical standards and require an inspection certificate issued by a recognised organisation.

Duty

In Bangladesh, there has been a successive reduction of duties in recent annual government budgets.

The peak rate of basic import duty has fallen from 350 per cent to 30 per cent since the early 1990s. The other applicable charges for opening letter of credit are:

• Advance income tax – three per cent
• Development surcharge, charged on most imports – 3.5 per cent
• Value-added tax – between five and 15 per cent
• Supplementary duty ranges from 10 per cent to 60 per cent is also applicable on luxury items

Customs duties levied on all imports except generator, IT equipment, raw cotton, textile machinery, certain types of machinery used in irrigation and agriculture, animal feed used by the poultry industries, and certain drugs and medical equipment.

Duty rates include:

• General input items: 7.5-15 per cent
• Basic raw materials: 7.5-25 per cent
• Intermediate and finished product: 25-30 per cent

On items classified as 'luxury', such as 'undesirable' items such as cigarettes, perfume etc, a supplementary duty is levied. Excise duties have been abolished on all items except manually prepared cigarettes, bank accounts, and textiles. Food and medicine used in the poultry and dairy sectors, raw cotton and textile machinery are exempt from VAT.

Visitors may bring approximately A$6500 without declaring it. Up to 200 cigarettes may be brought into Bangladesh and a maximum of one litre of alcoholic beverages.

Samples in reasonable quantity can be carried here during travel and no tax is required. However, duty is applicable on samples if sent by courier.

Product certification, labelling and packaging

Labelling

Outer containers should bear consignee's mark and port mark and should also be numbered (to accord with packing list) unless their contents can be otherwise readily identified. Buyers should guide exporters. Outer containers weighing more than one tonne must have the gross weight stencilled on the top and two sides.

Each receptacle containing pesticide must be in good condition and be marked with the correct technical name of the contents. It must also indicate the manufacturer's name, net weight or quantity of contents, and should bear a cautionary note with instructions for the safe handling and use of the product.

All goods must show the country of origin in large indelible letters, preferably in English, on label or container.

Drugs, pharmaceutical, pesticides, insecticides and chemicals are subject to special marking regulations.

Milk foods are subject to special regulations such as special marking or packaging requirements (eg. must be imported in tin containers).

Packaging

Packing should be strong and should guard against extreme heat in summer, humidity in rainy season and possible storage in the open.

Instructions for handling should preferably be expressed in English or self-explanatory symbols.

Packing material likely to carry diseases must not be used. Hay or straw used as packing require special certificates.

Special certificates

Livestock, plants and seeds require a health certificate issued by an approved authority (see 'Public health requirements'). Fruits and vegetables (except potatoes) excluded from this requirement.

Radioactivity test report and certificate to the effect that the product is fit for human consumption are mandatory for import of milk, milk food, milk products, edible oil, and other food items. Radioactivity test is also required for all poultry and animal feed products.

In addition, leaf tobacco requires a certificate attesting that it is free from ephestia elutella, or that this pest does not exist in the country of origin.

Used clothing requires a certificate of fumigation. Straw or hay used as packing requires a certificate stating that it is free of insects and diseases.

Drugs and pharmaceuticals require a special certificate - two copies of technical literature are also required.

Descriptive literature for manufacturers will facilitate clearance - some engineering products require an inspection certificate.

Methods of quoting and payment

Quotes should be by pro-forma invoice and in US dollar or Pound Sterling on Cost and Freight Bangladesh port. Freight and insurance components should be separately shown.

Payment for most imports must be made by irrevocable letter of credit (L/C). However, export can be made through cash against documents (CAD) system without any L/C in limited cases.

Payment for capital machinery and industrial raw materials could be made on DA (Document Acceptance) and DP (Deferred Payment) basis.

Payment by sight draft or usance bill is permitted for books, journals and periodicals.

Importers must lodge 10 per cent-100 per cent cash margin on letters of credit (see 'Import restrictions').

Documentary requirements

No prescribed form, with a minimum of three copies required. The invoice must be signed by the manufacturer of shipper and must indicate the:

• Name and address of both shipper and consignee
• Date and port of shipment, port of destination and name of vessel
• Bill of lading number and date
• Marks, numbers, weights and measurements and type of package
• Value of merchandise
• Letter of credit number and date

Fax signatures are not acceptable.

Must contain the following affidavit signed by the shipper or his agent and authorised by an approved authority (see 'Guidelines', section 2.3): 'We certify that the goods are in accordance with pro-forma invoice/indent number........, dated.........., and that they are of Australian origin.'

Pro-forma invoice

Five copies are required. Must give full description of goods, country of origin, gross and net weights and full C&F value (Incoterms 2000) or FOB (Incoterms 2000) plus freight charges.

Bill of lading/Airway bill

Three copies of original bill of lading.

No prescribed form, but must show the product name, gross weight, dimensions, invoice details or as specified in the L/C.

All negotiable copies must be sent endorsed to the order of the bank opening the letter of credit.

All postage parcels must be addressed to the bank opening the letter of credit and not to the consignee.

Packing list

Not compulsory but facilitates clearance.

Certificate of origin

Not compulsory but may be requested by the consignee or his bank.

Pre-shipment inspection

Pre-shipment inspection is mandatory for imports of all products, except perishable goods and agro-commodity such as wheat, rice, pulse etc. into Bangladesh. Bureau Veritas is the designated inspection agency for Australia to certify all Clean Report Findings (CRF). Exporters must obtain the CRF before making the shipment. The importer's bank will provide a Report for Inspection Number at the time of opening the letter of credit and the exporter will be required to contact the Bureau Veritas office to arrange inspection before shipment.

Customs authority contact details: National Board of Revenue – www.nbr-bd.org/contact.html

Public health requirements

All plants, seeds and livestock require certificates of health issued by an approved authority in the country of origin. In Australia this is usually the Australian Quarantine and Inspection Service (AQIS), Agriculture, Fisheries and Forestry Australia or the relevant state department of agriculture (see 'Special certificates').

Live animals, animal products, plants and plant products are subject to quarantine regulations.

Radioactivity test report from AQIS and certificate to the effect that the items are fit for human consumption are mandatory for imports of milk, milk foods, milk products, edible oil, other food items and poultry feed and animal feed.

Certificates of analysis may be required for foodstuffs and pharmaceuticals.

Drugs and pharmaceuticals require prior registration with the Minister of Health (see also 'Special certificates').

Raw and packaging materials for the pharmaceutical industry require Black List approval by the Director of Drug Administration.

Insurance

Must be arranged by importer with any local insurance company.

Weights and measures

The metric system.

Taxation

Corporate tax in Bangladesh is as follows:

• For industrial firms – 35 per cent for public companies and 40 per cent for privately owned companies.
• For banks and financial institutions – 40 per cent.

No distinction is made for the purposes of corporate income tax between foreign owned companies and Bangladeshi-owned companies, although some firms may qualify for a tax holiday in the initial years after entering Bangladesh.

A 15 per cent Value Added Tax (VAT) is assessed on the duty-paid value of most imports. Basic necessities are exempt from VAT.

A 2.5 per cent infrastructure development surcharge is assessed on the tariff value of most imports. A few selective imports are exempt from this surcharge.

A 2.5 per cent Advanced Income Tax is assessed on tariff value of most import.

Banking and finance

Major foreign banks in Bangladesh are Standard Chartered Bank, which is largest foreign banking operation in Bangladesh followed by HSBC, Citi na, Bank AlFallah, ICB Islamic Bank, Ceylone Bank.

Government banks are, Janata, Agrani, Sonali and Krishi Bank. There are 28 other private local banks operating in Bangladesh.