Boosting trade efficiency through automation

In today's fast-paced global economy, automation and innovation are two major forces driving transformative changes in international trade and commerce. Regrettably, Bangladesh's trade ecosystem remains hamstrung by a lack of automation and bureaucratic inefficiencies, as highlighted in a recent study by the Bangladesh Institute of Bank Management (BIBM). The study conducted on banks involved in trade facilitation reveals that heavy dependence on physical documents (reported by 70 per cent of respondents) and a lack of automation (highlighted by 80 per cent) create significant obstacles for export-import trades from Bangladesh. The study underscores that the lack of digitalisation in trade services not only hampers efficiency but also increases the likelihood of errors and delays. Furthermore, manual operations provide opportunities for misuse and reduce the transparency necessary to attract and retain global trade partners. Other concerns include price verification for letters of credit (LC), complex regulatory frameworks, and restricted access to global trade finance networks - all of which erode confidence in the system and impede progress.

For example, one of the pressing challenges for exporters is navigating the complexities of the Harmonized System (HS) Code, a standardised classification system for traded goods. The lack of clarity in HS Code allocation has become a significant hurdle, often leading to unnecessary delays, financial burdens, and even harassment. Exporters allege that they often face demands for bribes from customs and tax officials under the pretext of HS Code compliance and document verification. These unethical practices not only create procedural bottlenecks for exporters but also tarnish the credibility of public institutions. The BIBM study pointed out that the taxation issues could be resolved by simplifying and harmonising tax codes and adopting automation. By integrating advanced technologies into customs and taxation systems, procedural complexities can be reduced significantly. For instance, an automated system could efficiently allocate HS Codes based on predefined parameters, minimising human intervention and the scope for corruption. Such systems could also ensure faster processing of export documentation, enabling businesses to meet tight deadlines and reduce costs associated with delays.

To this end, it is essential for the National Board of Revenue (NBR) and customs authorities to prioritise digital transformation. Simplified and automated processes can foster greater transparency and accountability, ensuring that traders are not subjected to undue harassment. Moreover, automation would align with global best practices, enhancing Bangladesh's competitiveness in the international market. However, automation alone cannot solve the problem. It must be accompanied by policy reforms that eliminate bureaucratic red tape and establish clear, unambiguous procedures. Stakeholders, including exporters, industry associations, and government agencies, must collaborate to design systems that address their specific needs while promoting fairness and efficiency. It will not only alleviate the burdens faced by traders but also pave the way for a more robust and business-friendly environment that benefits the nation as a whole.

Another critical takeaway from the BIBM study is the need to build capacity among stakeholders. Enhancing skills and knowledge is vital for effectively integrating technology and navigating evolving global trade dynamics. Small and medium enterprises (SMEs), in particular, stand to benefit significantly from improved access to trade finance through technological innovations, contributing to inclusive economic growth. Additionally, by fostering inter-agency cooperation and creating incentives to promote professionalism in trade services have been identified by the study as pivotal steps. Stakeholders, including financial institutions, regulatory bodies, and policymakers, would do well in coming forward to implement these reforms.