Published: 11:55 PM, 12 September 2026
Framework for Import Trade in Free Trade Zones: A New Chapter in Bangladesh’s Trade Facilitation
On July 16, 2026, Bangladesh Bank introduced a comprehensive framework governing import trade into Free Trade Zones (FTZs), marking a significant step toward modernizing the country’s trade ecosystem. The initiative reflects a calibrated policy approach - balancing trade facilitation with prudent financial risk management - while aligning with global best practices in zone-based economic activities.
Free Trade Zones have long been recognized as catalysts for export-oriented growth, supply chain efficiency, and foreign investment. However, the absence of a structured financial and regulatory framework for import transactions within these zones often creates ambiguity for banks, investors, and operators. The newly issued circular addresses these gaps by establishing clarity on eligibility, transaction structure, financing, and risk management.
At the core of the framework lies a clear definition of eligible entities permitted to undertake import activities within FTZs. These include industrial enterprises engaged in manufacturing and export-oriented production, importers on record authorized for trading, and licensed logistics service providers. This categorization is important as it delineates operational boundaries while ensuring that only compliant and recognized entities participate in FTZ trade. By doing so, the central bank aims to minimize misuse of facilities and ensure traceability of transactions.
One of the most notable features of the framework is the formal recognition of consignment-based imports. Under this arrangement, goods imported into FTZs for storage, warehousing, or distribution remain under the ownership of foreign suppliers until they are either used in production or sold to ultimate buyers. This provision is particularly relevant for modern supply chains, where inventory optimization and just-in-time production models rely heavily on deferred ownership structures.
From a banking perspective, the treatment of such consignment imports is equally significant. The framework clearly states that banks shall not recognize these goods as inventory of the FTZ entity, nor assume any exposure against them, until ownership is transferred. This distinction is crucial in safeguarding the balance sheets of financial institutions, preventing premature credit exposure, and ensuring that financing is aligned with actual economic risk.
The circular also provides detailed guidance on the treatment of purchase and sale transactions involving FTZs. When buyers in Bangladesh - including those in specialized zones - purchase goods from FTZs, such transactions are to be treated as imports, requiring compliance with standard import procedures, including IMP formalities. Conversely, when FTZ enterprises sell finished or semi-finished goods to domestic buyers, these transactions are treated as exports for the sellers and imports for the buyers. This dual recognition ensures consistency in accounting, regulatory compliance, and documentation through EXP and IMP procedures.
Another important aspect is the requirement that all payments related to FTZ transactions be settled in freely convertible foreign currency. This provision reinforces the external sector discipline of the economy, ensuring that FTZ operations remain integrated with international trade and financial systems. Additionally, FTZ enterprises are allowed to retain sales proceeds in designated foreign currency margin accounts, which can be used to settle import obligations abroad. This flexibility enhances liquidity management for businesses operating within FTZs and reduces transaction frictions.
The framework also addresses the tenor of import transactions, which has important implications for both businesses and banks. Goods imported under consignment arrangements may remain within FTZs for a period of 48 to 60 months. This extended duration provides operational flexibility, particularly for industries with long production cycles or strategic inventory requirements. On the other hand, usance import transactions - including those supported by buyer’s credit or supplier’s credit - are capped at 270 days. This limit aligns with prevailing foreign exchange regulations and ensures that short-term trade financing does not evolve into unregulated long-term exposure.
Financing provisions under the framework are designed to strike a balance between facilitating trade and maintaining financial prudence. Authorized Dealers are permitted to extend financing to FTZ entities in a manner similar to enterprises operating in specialized zones. However, the framework draws a clear line in the case of consignment-based imports: banks are prohibited from recognizing exposure until ownership of goods is transferred. Once ownership is established - through production use or sale - financing may be extended based on appropriate documentation, including the bill of entry.
In conclusion, the Bangladesh Bank’s framework for import trade into Free Trade Zones represents a forward-looking policy initiative. By combining trade facilitation with prudent risk management, it lays the foundation for a more efficient, transparent, and resilient FTZ ecosystem. If implemented effectively, it has the potential to strengthen Bangladesh’s position in global trade, support industrial growth, and contribute to sustainable economic development.
Mehdi Rahman writes on foreign trade
and monetary policies.s
