Importing into Free Trade Zones

M-1 is the opening paragraph. It tells us why Part M exists and who must follow it.

Why: two goals, side by side.

• To facilitate (make easier) import trade into Free Trade Zones (FTZs).
• To make sure banks practise prudent risk management, which simply means being careful with risk.

To do both, Bangladesh Bank has introduced a structured framework: a clear set of rules for these deals.

Who must follow it:

• Authorized Dealers (ADs), and
• Offshore Banking Units (OBUs),

when they provide financial services for transactions involving FTZs.

How: the instructions are to be followed in line with prevailing foreign exchange regulations. So Part M does not throw away the usual rules. It sits on top of them.

Dr Omar puts it this way: "A new road needs traffic signs on the first day, not after the first accident. M-1 puts up the signs."

M-2 answers Tamim's first worry: who is allowed to import into an FTZ? The answer is the entities operating within such zones, in three groups:

(a) Industrial enterprises engaged in manufacturing, processing, or export-oriented production. Think of a factory inside the zone that turns parts into products.

(b) Importers on record who are authorized to undertake trading activities. These are traders, like Tamim, who buy and sell rather than make things.

(c) Logistics service providers who are duly permitted to operate within FTZs. Think of the businesses that store, handle and move goods.

Two small words matter here. The traders must be authorized, and the logistics firms must be duly permitted. M-2 doesn't say who gives that authority or permission, or which papers prove it. It only says the importing entity must fit one of the three groups and operate within the zone.

Dr Omar smiles: "A zone is like a wedding hall. The cooks, the guests and the decorators all have a role. But you still need to be on the list to get in."

M-3 is the heart of the lesson. It explains the supplier's "pay when you sell" offer.

(1) Consignment imports. Imports into FTZs for storage, warehousing or distribution may be made on a consignment basis. Under consignment, the ownership/title of the goods stays with the foreign supplier until the goods are either:

• (a) used in production, or
• (b) sold to ultimate buyers.

So the goods sit in the zone, but they still belong to the supplier abroad.

(2) What this means for banks. For bank financing and exposure recognition, these goods must not be treated as the owned inventory of the FTZ enterprise until one of those two events happens. In plain words: the bank cannot count the goods as the customer's stock, and cannot treat them as the customer's asset when deciding how much risk it carries on that customer, until they are used or sold.

Dr Omar gives a home example. "My neighbour sells saris. A weaver leaves twenty saris at her shop. She pays the weaver only for the ones she sells. Until then, the saris are on her shelf, but they are not hers. If she asks her bank for a loan, she cannot say, 'Look at my twenty saris.'"

Tamim laughs. "So it was not a gift. It was a sari on loan."

M-4 tells us how buying from, and selling out of, an FTZ is treated. It has four parts.

(1) Buying from an FTZ is an import. When buyers in Bangladesh purchase goods from FTZs, it is treated as an import transaction. This includes buyers in specialized zones, and deals intra/inter FTZs (within one FTZ, or between FTZs). So the usual import procedures, including IMP formalities, must be followed.

(2) Raw materials may get usance. If the purchase is of industrial raw materials, usance import facilities of up to 270 days may be allowed, in terms of paragraph 1(1)(a) of Part-D. M-4(2) only points to that paragraph and doesn't repeat it. Lesson 16, Buy now, pay later: supplier's credit, explains that Part D paragraph in full.

(3) Selling out of an FTZ: export for one, import for the other. When FTZ enterprises sell finished or semi-finished goods to buyers in Bangladesh (again including specialized zones and intra/inter FTZs), the deal is an export for the seller and an import for the buyer. So the seller follows EXP procedures and the buyer follows IMP procedures.

(4) Payment and margin accounts.

• Payments for all these deals are settled in freely convertible foreign currency, not Taka.
• FTZ enterprises may keep their sales proceeds in designated margin accounts in foreign currency, for onward settlement abroad of their underlying import obligations. In short: the money from selling can wait in foreign currency to pay the foreign supplier.

Dr Omar sums up: "One sale, two mirrors. The seller sees an export, the buyer sees an import, and both hold the right form."

M-5 sets two clocks.

(1) Consignment goods: 48 to 60 months. Goods imported into FTZs under consignment arrangements may remain in the zone for a period of 48 to 60 months. That is four to five years, a long nap for a box of spare parts. This is subject to the applicable regulatory requirements. M-5 doesn't list those requirements, and it doesn't say when 48 months applies and when 60 months applies. It gives only the range.

(2) Usance imports: up to 270 days. Usance import transactions, including those supported by buyer's credit or supplier's credit, have a maximum tenor of 270 days, in line with prevailing foreign exchange regulations.

Notice the difference. The first clock is about how long goods may stay in the zone while they still belong to the supplier. The second is about how long a buyer may take to pay once a usance import happens. Same 270 days as M-4(2) and M-6(3), so the circular is consistent on that number.

Dr Omar: "One clock tells the goods how long they may rest. The other tells the buyer how long he may wait before paying. Mix them up and you will be late for both."

M-6 answers Rakib's question: can the bank lend, and against what? It has three parts.

(1) Financing like the specialized zones. ADs may finance FTZ entities in a manner similar to the facilities given to enterprises in specialized zones, as set out in Part-B of FE Circular No. 34, dated September 02, 2025. M-6 points to that circular but doesn't repeat its contents, so we won't guess them here.

(2) No exposure on goods that are not yet theirs. For consignment-based imports, ADs/OBUs must not recognize or assume exposure on the FTZ entity against goods whose ownership/title is still with the foreign supplier.

• A consignment is recognized as an import only when ownership transfers to the FTZ entity or another entity.
• That happens through consumption in production or sale to ultimate buyers.
• It must be supported by appropriate documentation, including the bill of entry.
• After the transfer, credit facilities may be admissible "as per (c) below". M-6's own sub-paragraphs are numbered (1) to (3), and the circular doesn't say which part "(c)" refers to, so we won't guess.

(3) Usance financing up to 270 days. For usance imports, ADs may arrange buyer's credit or extend supplier's credit facilities, with a tenor not exceeding 270 days. OBUs may provide such financing in foreign currency, in line with applicable regulations, as per paragraph 1(1)(a) of Part-D (Lesson 16 explains that paragraph in full).

A note on words: in Lesson 16, supplier's credit means the foreign supplier lets the importer pay later. M-6(3) speaks of ADs that "extend supplier's credit facilities" and doesn't explain the bank's part further, so we keep to its words.

Dr Omar: "A bank should lend against what a man owns, not against what he is minding for a friend."

M-7 is the safety belt. It has two parts.

(1) Paper that matches the deal. Any admissible financing must be supported by appropriate documentation and aligned with the underlying transactions. In plain words: the loan must follow a real trade, and the papers must show it. A loan for USD 50,000 of parts should sit on top of a real USD 50,000 deal, not a wish.

(2) Know your FTZ client. ADs/OBUs must carry out due diligence on FTZ clients. M-7 names three things this includes:

• assessing the contractual arrangements with foreign suppliers and buyers. For example, is the consignment contract clear about when ownership passes?
• verifying the ownership structure of the client. Who really owns the business?
• evaluating the production and sales cycles. How long does the client take to make, or sell, its goods?

The word "including" tells us this list is not necessarily complete. M-7 doesn't say how often the checks are done or which papers must be collected.

Dr Omar closes the circle: "In Lesson 30, the desk matched dates. Here we match facts. A bank that knows its customer's suppliers, owners and selling rhythm sleeps well at night."