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Discussion Contents
Basics of International Trade
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Sales Contract
The Exchange of Goods
Transfer of Funds
Trade Documentation
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Common Documents
BL, CO & GSP
Discrepancies
Export Regulations
However, in case of export of goods, full payment for which value has been
received by the exporter in advance through the bank, the Bill of Lading and
other documents may be endorsed by the bank in favor of foreign importers
and the same may be sent directly to the importers abroad by the bank.
Bill of Lading
Airway Bills
The export L/C and the export sales contract specifically provide
for negotiation of export bill against FCR/HAWB issued by a
freight forwarder
The freight forwarder is operating in Bangladesh with necessary
approvals to act as agent of non-resident principal along with
authorization of Bangladesh Bank
The banks to whose order the relative Railway Receipts, Bills of Lading
etc. are drawn shall endorse the same to the order of their foreign
correspondents but in no case they shall make any blank endorsement or
endorse it to the order of the consignee unless they have obtained specific
or general approval of the Bangladesh Bank therefore.
In
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Challenges;
Marketing
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Export procedures
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Import Regulations
Valid Import Registration Certificate (IRC) issued from competent authority. However,
IRC is not required if the purpose of import is own consumption.
Valid membership certificate from Chamber of Commerce & Industry or any Trade
Association recognized by CCI & E
Proof of Tax Identification Number (TIN) issued from income tax authority
A declaration that the importer paid Income Tax or submitted tax return for the
preceding year
Importer.
Letter of Credit Application Form (Stamped form) duly signed
IMP Form
Insurance Cover Note covering 110 percent value of the L/C
amount
Money Receipt of the Insurance Cover Note (Proof of payment,
i.e. pay order, credit advice)
Proforma Invoice/ Indent (Indenter's valid permission from BBK
for respective suppliers)
Credit Report of the Exporter if value exceeds BDT 200 M
approximately USD 2900 for Proforma Invoice and BDT 500M
approximately USD 7,200 for Indent.
Types of Importers
Industrial Importer (Manufacturing Company)
Commercial Importer (Trading House/Company)
Own consumption
Sales Contract
Legally, there are four basic elements of a
sales contract.
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At what price.
Unit and total price.
Clearly specify the currency.
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In what quantity.
Of what quality.
New, used, premium, standard, etc.
Delivery schedule
Product warranty
Payment schedule
It is a form of a quotation.
Specify a time limit for the validity of the offer.
TRANSFER OF FUNDS
What is an L/C ?
What is an L/C
In summary, an L/C is:
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The Applicant is the party that arranges for the letter of credit to be issued.
The Beneficiary is the party named in the letter of credit in whose favor the
letter of credit is issued.
The Issuing or Opening Bank is the applicants bank that issues or opens
the letter of credit in favor of the beneficiary and substitutes its
creditworthiness for that of the applicant.
An Advising Bank may be named in the letter of credit to advise the
beneficiary that the letter of credit was issued. The role of the Advising Bank
is limited to establish apparent authenticity of the credit, which it advises.
The Paying Bank is the bank nominated in the letter of credit that makes
payment to the beneficiary, after determining that documents conform, and
upon receipt of funds from the issuing bank or another intermediary bank
nominated by the issuing bank.
The Confirming Bank is the bank, which, under instruction from the issuing
bank, substitutes its creditworthiness for that of the issuing bank. It ultimately
assumes the issuing banks commitment to pay.
Types of L/Cs
There are various kinds of letter of credit. The types of
them are irrevocable credit, revocable credit,
confirmed credit, unconfirmed credit documentary
credit, clean letter credit, fixed credit and revolving
credit.
Irrevocable letter of credit: Irrevocable letter of credit is
one in which the issuing bank gives a lasting
understanding to accept and in due course to pay bills
drawn upon it. The only condition is that the exporter
fulfills the terms and conditions stipulated in the letter
relating to documents. The irrevocable letter of credit
gives a complete protection to the exporter as it is
guaranteed not by a foreign bank.
Governed by Bangladesh Bank FE Circular No 9, Dtd 9 July, 1997 and FE Circular No 2, Dtd
11 July, 2007.
Items allowed for Import Without LC
Perishable Food Items, up to $5000 per shipment by land
Industrial Raw Materials & Capital Machinery, without limit
Documentation required
Full Set LCA Form
Full Set IMP Form (required for import payment)
Importers Application as per format in Attachment KA
Accepted Pro forma Invoice / Indent
Valid Import Registration Certificate (Industrial)
LCA registration to be done within 3 business days from date of issuance of Pro-forma Invoice
/ Indent
Payment can only be settled through the Authorized Dealer with which LCA Registration has
been done.
Exchange Control Copy of Bill of Entry to be submitted to bank within 30 days of Payment.
Back to Back LC
T/T or
Cash
Adva
nce
Details
T/T is the easiest payment from and is typically used when
samples or small quantity shipments are transported by air.
T/T is also used between buyers and sellers who have
already established a mutual trust, as this negates the risks
associated with this, the fastest and cheapest form of
payment.
Documents like air waybills, commercial invoices and
packing lists will be sent to you along with the shipment in
the same aircraft.
As soon as the shipment arrives, you, with documentation,
can clear the customs and pick up the goods. Shipping
happens only after money is safely in seller's bank account.
It usually takes 3-4 days for such a wire transfer anywhere in
the world.
Allocation
of Risks
100%
buyer
's risk
Details
Allocation
of Risks
Evenly
shared
Payment
Details
Escrow
Allocation
of
Risks
Evenly
shared
Details
Allocation
of Risks
Mainly with
supplier
Details
Allocation
of Risks
100%
seller
risk
Commercial Invoice
Bill of Lading
Warranty of Title
Letter of Indemnity, etc
Required documents;
- Import export documents.
- Documents of Origin.
- Commercial Documents.
- Transport documents.
- Administrative Documents.
- Other Documents.
Commercial Invoice
Packing List
Transportation Documents [Bills of Lading, Air
Waybill (AWB), Forwarder Cargo Receipt (FCR)]
Certificate of Origin
Export License (Visa)
Customs Invoice
Declaration
Certificate
Letter of Indemnity / Letter of Guarantee
Drafts
Bank Collection Order
Common documents;
Commercial Invoice
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Bill of Lading
Purpose of B/L
A document supplied to the exporter by the shipping
company that is transporting the goods to their foreign
destination, listing, item by item, the goods being
shipped. It serves three basic purpose
1. To acknowledge receipt by the carrier of the
exporter's goods.
2. To indicate the carrier's contractual obligation to
transport the goods to their destination in exchange for
payment.
3. To record transfer of title (or ownership) from the
seller to the buyer when payment for the goods takes
place.
the number of copies, either negotiable or nonnegotiable, of the bill of lading that must be
supplied for customs purposes.
Some Latin American countries prohibit or
What is a F C R ?
It is basically a transport document issued
by a freight forwarder and acts as a receipt
for the cargo, and evidence of a contract
between the shipper and the forwarder. It
is not a document of title.
The forwarder assumes responsibility for
the cargo by issuing the FCR.
Warranty of Title
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Letter of Indemnity
Packing List
Invoice number.
Actual shipped quantity of the goods.
Description of the goods.
Package / Carton numbers.
Weight (NNW, NW, GW) and Carton Measurement per carton.
Quantity breakdown per package per size assortment and color
assortment.
How many assortments per carton.
Summary and total of quantity per PO, assortment, etc.
Summary and total of Weight per PO, assortment, etc.
Vendors name and address.
Marks & Nos.
Manufacturer's company chop and authorised signature.
When shipping products from one country to another, the products may have
to be marked with country of origin, and the country of origin will generally be
required to be indicated in the export/import documents and governmental
submissions. Country of origin will affect its admissibility, the rate of duty, its
entitlement to special duty or trade preference programs, antidumping, and
govern procurement.
Today, many products are an outcome of a large number of parts and pieces
that come from many different countries, and that may then be assembled
together in a third country. In these cases, it's hard to know exactly what is
the country of origin, and different rules apply as to how to determine their
"correct" country of origin.
Generally, articles only change their country of origin if the work or material
added to an article in the second country constitutes a substantial
transformation, or, the article changes its name, tariff code, character or use
(for instance from wheel to car). Value added in the second country may
also be an issue.
GSP
Objective of GSP.
" the objectives of the generalized, non-reciprocal,
non-discriminatory system of preferences in favor of
the developing countries, including special measures
in favor of the least advanced among the developing
countries, should be:
(a) to increase their export earnings;
(b) to promote their industrialization; and
(c) to accelerate their rates of economic growth."
Q&A