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Chittagong Port May Increase Service Charges in 2017

Apparel companies may be paying more to transport goods out of Bangladesh next year.

Officials said the government may impose additional service tariff rates for Chittagong’s port in June, The Financial Express reported. The ministry intends to bring the port’s charges and fees up to date.

“We sat today (Sunday) with the stakeholders to review the tariff structure for the port,” joint secretary of the shipping ministry A S M Mamunur Rahman Khalili said. “We have to review more in this regard.”

The potential hike could be five to six times higher than current rates, which have remained unchanged since 1986. Sixteen officials have been appointed by the ministry to update the tariff rates.

Chittagong’s port handles more than 90 percent of the nation’s foreign trade and has 60 tariff heads. According to ministry data, in the fiscal year 2007-08, only five out of 60 tariff heads were revised and many items remained static during this timeframe. Ministry officials said seven new tariff heads will be likely introduced, meanwhile five other items have been deemed obsolete and removed from the existing list.

Ministry data also indicated that the proposed hike could include a 900 percent tariff on the issue of certificates and charges on Lorries, a 454 percent tariff on gear testing, a 400 percent tariff on package repair and a 398.6 percent tariff on higher mechanical equipment.

Although Chittagong port’s tariff rates are lower than those of neighboring nations, the charge hike could change this figure greatly, affecting apparel companies that source goods from Bangladesh.

The charge hike proposal is timely with the nation’s other improvement initiatives. By 2021, Bangladesh would like to achieve $50 billion in apparel imports, in addition to improving its infrastructure to compete with other Asia-Pacific garment countries.  Although Bangladesh’s share of apparel markets would increase by three percent, the charge hike proposal could potentially damage international market appeal.