Published: 09:05 AM, 09 December 2025
Facilitating Service Export to Expand Export Portfolio
The term ‘Export’ includes the sending out of goods by land, sea or air, on consignment or by way of sale, lease, hire-purchase, or under any other arrangement. In the case of software, ‘export’ also includes transmission through any electronic media. Another export item - Services being intangible in nature are different from export of goods. Goods are deemed to be exported once they cross the country’s border but it is not always same in the case of export of services. Ironically many service firms are not even aware that they are exporting when they sell to visiting foreigners in their own markets. Serving a foreign tourist visiting Bangladesh are served by hotelier or other organization is export of service. The export of service occurs while the service exporter work from Bangladesh and service recipient overseas person or company having office or factory in Bangladesh or in other countries.
A wide range of services sold by firms in one country to customers in stationed in own countries or other countries such as accounting services, legal services, postal services, telecommunication services, financial services, office cleaning services, security services etc are exports. In recent time, most prominent service exports are done through computer and internet. There are companies providing customized software to foreigners. The local Internet Service providing website design or website hosting or website content management, data processing services, or database management services, Communication Services for foreign firms having office in own country or any other countries.
WTO formalize the recognition of service export with The General Agreement on Trade in Services (GATS). It is a treaty of the World Trade Organization (WTO) that entered into force in 1995. WTO categorized the 4 modes of services. (1) Cross-border exports, where the service moves across the border, (2) Sales to foreigners in own country (consumption abroad), (3) Commercial presence abroad, (4) Temporary migration to other countries for working (movement of natural persons). The treaty was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade.
All members of the WTO are parties to the GATS. The basic WTO principle of most favoured nation (MFN) applies to GATS as well. All members of the WTO are parties to the GATS. The fundamental principles of the GATS apply, in principle, to all service sectors. Bangladesh and other developing countries are beneficiaries of the GATS and enjoying facilities to export services to developed EU, American and Middle eastern countries. Bangladesh government recognizing the service exports in 2015 incorporating in the Export Policy order in 2015 but some of the service exports were allowed for long time without formal recognition of all the services.
When a service provider goes abroad (expatriates working in other countries) and work there recognized as service exporter. Any organization provide education or training overseas citizens in another countries also service export since those trained persons to back to own country to serve their own nation. In all cases of export of services must earn in foreign currency. According to the rule of Bangladesh Bank and Export policy order of Bangladesh, the proceeds of all categories of service must remitted in to Bangladesh through official channels. Another category of service exports is distribution Services by Indentors (agent of overseas companies working in Bangladesh) or commission agents in one country who are paid by foreign companies for sell to local buyers on behalf of overseas companies. This service has been recognized by Bangladesh’s Export Policy order in 2016.
It is obligatory on the part of the all exporters to realize and repatriate the full value of goods/ services/ software to Bangladesh within a stipulated period of four months from the date of export. The proceed of the exports may be retain in bank account of the exporter with banks in other countries subject to rule of BB. BB issued rule that these authorized accounts, retention of export proceeds abroad in any form without limiting to equity/portfolio investment, purchase of physical assets/virtual assets, maintenance of accounts regardless of currencies including cryptocurrencies constitutes contravention of Section 5(1)(e)(i) of the FER Act, 1947 and is subject to cognizance under Section 23(1) of the said Act as per SRO No. 59-LAW/2021 dated March 08, 2021..
These export proceeds should be converted to Taka through authorized dealer (AD) Banks. Exporter can retain the payment (received through inward remittance) in Export retention quota (ERQ) account and BDT account simultaneously. The account holder will have the option of retaining maximum 60-70% of the inward remittance in the foreign currency account.
Bangladesh entered into Internet based service export to provide service to overseas service recipients through online platforms. The service exporter individuals were facing problem to repatriate their export proceeds as service recipients preferred to pay through online remitters and through credit cards. BB not yet fully allowed to collect fund through credit or debit cards or any online platforms. Paragraph 23, chapter 8 of GFET outlines operational modalities on services delivered in non-physical form relating to ICT and other businesses. Service exporters can maintain notional/ merchant accounts to repatriate their income through concerned Authorized Dealers in Bangladesh as per FE Circular No. 44 of December 28, 2017, FE Circular No. 33 of October 18, 2021 and subsequent circulars.
The central bank has advised service exporters to open notional accounts with the Online Payment Gateway Service Providers (OPGSPs) having arrangement with AD banks in Bangladesh. AD will enter into standing arrangements with the internationally recognized OPGSPs and maintain separate Nostro collection account for each OPGSP to repatriate the service export-related payments. It will be ensured that no funds are retained in such accounts, and all receipts will be automatically swept and pooled into the Nostro collection account maintained by the ADs, according to the circular. In this context, ADs have to obtain detailed information from their service exporter-customers regarding the maintenance of merchant accounts with international market places/platforms and/or notional accounts with eligible foreign payment operators.
The foreign exchange policy of India is much more flexible. Participants in international exhibition/trade fair have been granted general permission vide 8 Regulation 5(E)(5) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016 for opening a temporary foreign currency account abroad. Exporters may deposit the foreign exchange obtained by sale of goods at the international exhibition/ trade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the AD Category – I banks concerned. A person resident in India being a project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions in the Memorandum of Instructions on Project and Service Exports (PEM). Bangladesh policy yet to provide to facilities to it’s citizens.
Bangladesh policy has recognized the service exports in documents only and not fully recognize all 4 modes of export of service. Bangladesh rules are very flexible for expatriates working abroad and offer various incentives to them but others services such as consultancy services, tourism service, shipping agency services, freight forwarding, repair and maintenance of foreign ships and planes, travels agency services for selling tickets for overseas airlines, sales services (indenting services), training services and local staffs of overseas companies, educational fees of overseas students in Bangladesh educational institutes etc.
The National Board Revenue (NBR) has imposed income and VAT on all the export proceeds except wages and salaries of expatriate. Interesting the local staff overseas companies who get salary through remittance of foreign currency through AD banks ignoring the WTO agreement and Export Policy order of the government. The foreign Exchange Regulation Act 1947 and relevant rules under the law may be revised to facilitate easy repatriation of export proceeds. NBR should recognize the service exports and withdraw illogical income tax and VAT on all sorts export of services.
M. S. Siddiqui is CEO, Bangla
Chemical. He can be reached
