Gold worth Tk 91,000 cr smuggled yearly in BD

Weak baggage rule main cause

Zarif Mahmud: Those concerned say that gold smuggling has become a tactic by taking advantage of baggage rules. As the days go by, the tactics of gold smuggling have also changed.
Ali Akbar, Rafiqul Islam and Md. Rubel landed at Hazrat Shahjalal International Airport from Dubai on 23 October 2022. According to the declaration, Ali Akbar deposited two gold bars and 98 grams of gold ornaments. On the other hand, Rafiqul Islam and Md. Ruble charges two gold bars. Besides, they had 196 grams of ornaments with them. After paying the customs duty, they are stopped as soon as they cross the customs zone through the green channel.
Allegations of harassment! But a search of Ali Akbar’s body curiously revealed the existence of paste-like (soft-sticky) gold hidden in his underwear. Later it was burnt and washed in acid and 464 grams of gold was seized. Another 928 grams of gold was seized from in the same way from Rafiqul Islam and Md. Rubel Islam. A total of 2 kg 382 grams of gold along with gold bars and ornaments were recovered from the three passengers.
Let’s take the case of Jamal Hussain, a resident of Dubai. He visits the country five to six times a month. Where other expatriates are afraid to come home after years of calculating expenses, how does he keep coming back and forth? A perusal of airport records shows that he has come and gone eight to 10 times in a month. It has also been seen that he returned to Dubai from the airport. Small consignments of gold were seized from him, but he was exempted by paying a fine.
How did Jamal Hossain get involved in the expensive capital gold business despite being a child of a middle-class family? The answer can be guessed, but the main hosts remain as always out of touch!
Let’s go back a bit. On December 8, 2013, Mohammad Akbar Hossain, returning from Qatar, was detained at the airport. His body was searched for gold. Surprisingly, although the gold was not found, several receipts of purchase of gold were recovered from him. There was information about buying 100 bars of gold from ACM Gold Jewelery from Dubai for 1700 dirhams. Whose weight was 11 kg 664 grams. Why did you buy so much gold, or where is the gold – massive interrogation began. During the interrogation, it was revealed that before getting off the plane, he left the gold bag under the D/8 seat of the plane. A friend named Sabuj is supposed to take the bag.
NBR customs detectives rushed to find the bag. But that bag and green air from the airport! Finally, it is known from the passport information that Akbar and Sabuj traveled at least 30 to 35 times from Dubai to Bangladesh and from Bangladesh to Dubai only in a span of six months. It is estimated that during this time they smuggled 150 to 200 kg of gold.
There is also a different picture of gold smuggling that is novel. After a long wait and efforts, a mother was able to go to Malaysia to see her expatriate son. Due to the complexity of the documents, the son could not come to the country for a long time. On the contrary, the son became emotional after seeing his mother abroad. They had a good time for quite some time. Then comes the turn of farewell. On October 12, 2019, the mother left for the country from Kuala Lumpur Airport in Malaysia. The flight also left on time, mother also landed in Dhaka. Suddenly the mother is no longer found. He did not return home. After many attempts, the husband and children in the country came to know that the mother was caught by the customs for carrying illegal gold. She was jailed for six months.
Later, it is known that after completing the immigration in Malaysia, as soon as the mother went in, an acquaintance handed her a black bag and said that there are chocolates with a gold chain for her daughter. Pay all duties and taxes. There will be people at Dhaka airport, they will accept the bag. But the mother was arrested on the charge of carrying illegal gold. She went to jail for not knowing the baggage rules.
Complaints have been made that passengers or carriers are mainly abusing the baggage rules and bringing a large amount of gold ornaments or gold bars into the country by various tricks. Later it is being smuggled to neighboring countries. On the other hand, importation of gold through legal means is accompanied by confusing policies, unusual duty rates and unusual delays in paperwork. The gold business is collapsing. The government is also losing thousands of crores taka in revenue.
At present, as per sub-rule (10) of Rule 3 of the Passenger (Non-Travel) Baggage (Import) Rules, 2016, a passenger can import gold bars or gold bars weighing 117 grams on arrival from abroad subject to payment of all duties. Passengers have to pay a customs duty of Tk 4,000 for every 11.664 grams (one load) of gold when bringing gold bars or bullion from abroad.
The stakeholders say that the total gold demand in the country is mainly met through the supply of gold that comes under baggage rules and old or acid gold. As much as 52 tonnes of gold in 2023 and 54 tonnes in 2022 arrived in the country through passengers under baggage rules. Apart from this, by misusing this facility, smugglers bring 5 to 10 times more gold from abroad to Bangladesh. These golds are again smuggled to other countries including India. The amount of which is more than 500 tons. Because, the facility of bringing gold under baggage rules in India is very limited. It is very difficult to bring gold under it only because of India, Pakistan or Nepal. Because of this, 90 percent of the gold coming to Bangladesh is being smuggled.
However, some changes have been made in the baggage rules in the proposed budget. The facility of bringing 24 carat gold has been canceled keeping the customs and taxes fixed in the rules. However, Bangladesh Jewelers Association (BAJUS) and related parties feel that the new rules will not bring any major changes in stopping gold smuggling.
On the other hand, the legal import of gold into the country is very less. According to Bangladesh Bank and NBR data, only 60 kg of gold was imported into the country from 2021-22 financial year to April 2023-24 financial year. Gold has not been imported so far in the current financial year. If the figures for 2019 are also considered, it can be seen that even 200 kg of gold was not imported. If there was import as per the demand then this sector would have received a revenue of Tk 20 crore to Tk 25 thousand crore.
But there is a demand of 20 to 40 tons of gold per year in the country. According to a study by the Export Promotion Bureau (EPB), the demand for gold in the country is about 43 tonnes. According to Bajus, 18 to 20 tonnes of new gold is required to meet the country’s gold demand annually. According to CPD data, new gold demand is 18 to 36 tonnes. That is, the current market demand for gold is entirely dependent on the misuse of the old gold and baggage rules.
Research director of the Center for Policy Dialogue (CPD) Khandkar Golam Moazzem told, “Our local gold market is completely dependent on the misuse of old gold and baggage rules.” 52 tonnes of gold entered the country in 2022 through carriers (passengers) abusing baggage rules. On the other hand, according to the 2018 gold policy, the demand in Bangladesh is four tonnes, although the actual demand is eight to 10 times more. The actual demand of gold in the country’s market is 18 to 26 tons. Only 10 percent comes from refining old gold. The source of the remaining 90 percent is smuggled gold. Abnormal duty rates, confusing policies, inordinate delays in import paperwork and cornering of the gold business by syndicates are among the reasons behind gold smuggling.
Tk 91,000worth of gold and diamond smuggling annually
Border of 30 districts of Bangladesh with India. A major part of the gold smuggled into India passes through the districts of Meherpur, Kushtia, Chuadanga, Jhenaidah, Jessore and Satkhira. Bajus’s initial idea is that illegal gold ornaments, bars, used old jewelery and diamond ornaments worth about Tk 250 crores are coming to Bangladesh every day through water, land and air routes across the country by misusing the hard-earned foreign currency of migrant workers. Which at the end of the year (365 days) stands at more than Tk 91,250 crore. The entire money is being smuggled abroad through hundi. As a result, while the government is losing remittances on the one hand, gold and diamond smugglers are smuggling the money abroad. For this reason, Bajus leaders have demanded revision of baggage rules along with vigorous campaign by law enforcement agencies. According to them, there is a need to reduce the duty-tax in the gold import policy besides adding several conditions while keeping the duty-tax facility for a maximum of 50 grams.
In this context, Gold World leader and Bangladesh Jewelers Association (BAJUS) vice-president Masudur Rahman said, the difference between baggage rules and gold import rules is sky-high. For example, according to the baggage rules, if you bring 10 pieces of gold jewelry or gold, it becomes valid only after paying a tax of Tk 40,000. There is no further cost. Why would traders import legal gold with only 4 percent tax? In the current import policy, even if you bring five kg of gold, no profit is seen. If gold is available with 10 percent less duty than import in baggage rules, then why import?
In 2023, only 52 tons of gold came with customs and taxes under baggage rules. But 10 times more gold than this came to Bangladesh, which was not caught. Where did so much gold go? Trafficked to India. There is a flaw in the gold import policy. We have made proposals to NBR several times before the Budget. There are also guidelines. Even if the door is opened keeping the baggage rules, it will not be imported. The reason is one, the price of imported gold is much higher than the price of gold coming in baggage rules.
Citing an example, he said, ‘Under the baggage rules, the cost of bringing gold of Tk 100 is Tk 104. On the other hand, the price of the same gold fell by Tk 118 to Tk 119 as per the import policy. Is such a gap acceptable?
Masudur Rahman also said, ‘Baggage rules are a controversial rule. This time the change brought here will not be of any benefit. Because, if a carrier brings 24-carat gold ornaments into the country by hand under the baggage rules, there is no duty to pay. On the other hand, 24 carat gold ornaments are not even sold in our country. The price of such ornaments is very high. Which does not work in our country. Bajus proposal should be followed if one aims to earn billions from gold sector. Development is not possible without providing additional facilities in this sector.
Bajus general secretary Badal Chandra Roy said, “By amending the baggage rules, gold bars should be stopped and tax-free gold ornaments should be reduced to 50 grams instead of 100 grams. Apart from this, it is necessary to keep such rules that no more than two ornaments of the same type can be brought.
“We also need to coordinate with the rules of the neighboring countries in bringing jewelery and gold bars (baggage rules). Our proposal is that a passenger will enjoy the benefit of baggage rules only once in a year. Apart from this, I demand a joint study involving BAJUS to determine the impact of dollar crisis, smuggling and money laundering due to misuse of such facilities.
According to Iftekharuzzaman, Executive Director of Transparency International Bangladesh (TIB), ‘smuggling is a big problem in the gold sector. To solve the problem, the government made a gold policy. It is not possible to stop smuggling in the name of irregularities, corruption and illegal imports in this sector only with policies. This requires proper implementation of the law. Smuggling is a crime, bringing gold or goods illegally is also a crime. They are not actually regulated. Because of that crime does not stop.
National Board of Revenue (NBR) chairman Abu Hena Rahmatul Munim said about gold import, ‘We are trying to provide policy support in various ways; So that gold is imported, smuggling is stopped. Still, I don’t know why there is not much response to gold import and smuggling is not decreasing.
Preventing gold smuggling has become a big challenge for us. It (smuggling) may not involve the gold traders of the country, but the illegal traders inside or outside the country. Apart from this, there are various reasons. However, we are trying to see whether the smuggling trend is increasing due to the revenue burden.
What does baggage mean?
According to the rules, ‘Baggage’ means a reasonable amount of foodstuffs, clothing, household or other personal effects, each item weighing not more than 15 kg, imported by a passenger from abroad. It is also commonly referred to as baggage.
What is in baggage rules
The Passenger (Non-Travel) Baggage (Import) Rules- 2012 were repealed and the Passenger (Non-Travel) Baggage (Import) Rules- 2016 were introduced on June 2, 2016. Passengers arriving by air and water under these rules get duty and tax benefits. According to section 3 of the rules, handbags, cabin bags or other baggage not exceeding the total weight of 65 kilograms brought with a passenger of 12 (twelve) years of age or above arriving by air and sea will be redeemable without payment of all duties and taxes. On the other hand, regardless of the period of stay abroad, a passenger arriving by land can import baggage worth a maximum of $400 without payment of all duties and taxes, as stated in Section 4 of the Rules.
The matter of bringing gold and silver is mentioned in section 9 and 10 of the Baggage Rule. It is said there that a passenger can import gold ornaments weighing not more than 100 grams or silver ornaments weighing 200 grams (one type of ornament shall not exceed 12) without paying all types of duties and taxes.
On the other hand, according to section 10, a passenger can import gold bars or gold bars or silver bars or silver bars weighing not more than 234 grams or 20 tolas while coming to the country from abroad subject to payment of all duties and taxes. However, a baggage declaration form is required for all passengers. In the budget of the financial year 2023-24, the rules were amended to 117 villages instead of 234 villages.
According to Section 6 of the Rules, a passenger can import two mobile phones free of all duties and taxes and an additional one subject to payment of duties and taxes.
Sections 6, 9 and 10 have been amended in the proposed budget. Which is going to be passed on June 30.
The changes brought in the baggage rules in the proposed budget
The National Board of Revenue has proposed changes in three aspects of the ‘Passenger (Non-Tourist) Baggage (Import) Rules – 2016’ in the proposed budget. They are – addition of definition of gold ornaments, specifying the facility of bringing mobile phone and canceling the facility of bringing gold and cigarettes in case of passengers below 12 years of age.
A passenger returning from abroad can bring gold ornaments up to 100 grams duty free. The government has been providing this facility in the baggage rules for a long time. This facility has been maintained this time as well. However, to prevent misuse of this facility, the definition of gold ornaments has been mentioned as ‘gold ornaments i.e. designed and wearable ornaments made of gold of 22 carats or less’. As a result, there is no opportunity to melt 24 carat gold bars and make them like bangles.
The second major change has come in the convenience of bringing mobile phones. As per the new rules, a passenger can bring two used mobile phones duty free while returning from abroad. Apart from this another new mobile phone can be brought. However, the duty-tax has to be paid for this. In total, a passenger can bring three mobile phones from abroad.
The third change in the baggage rule is to stop bringing gold bars and gold ornaments for passengers below 12 years of age. This was not clear in earlier regulations.
What is in baggage rules of South Asian countries
In India, which borders South Asian countries, a male person can bring only 20 grams of gold or gold ornaments worth Tk 50,000 duty-free. On the other hand, a female passenger can bring 40 grams of gold or gold ornaments worth Tk 1 lakh duty-free. More than this i.e. 21 to 50 grams of gold or gold ornaments will have to be taxed at the rate of 3 percent. In this way, from 50 to 100 grams, 5 percent and above 100 grams, 7 to 9 percent will have to be paid. In this way, there is a provision to pay customs duty up to 12 percent maximum in India.
On the other hand, workers returning from working abroad in Nepal can bring up to 100 grams of raw gold. For that he has to pay tax. If the passenger brings up to 50 grams of gold, he will have to pay a tax of Tk 9,500 for every 10 grams. If the passenger brings more than 50 grams of gold, a tax of Tk 10,500 per 10 grams is levied on the additional gold. That is, for an additional 50 grams, a duty of Tk 52,500 will have to be paid. And if you bring more than 100 grams of gold, it will be confiscated.
If the gold ornaments are more than 50 grams, the duty is charged at the rate of Tk 10,500 for every 10 grams and Tk 12,500 for every 10 grams if it is more than 100 grams. If you bring gold ornaments more than this, there is a provision to confiscate it.
Another SAARC country, Pakistan, can import up to 100 grams of gold without paying any duty. However, if more than 100 grams is imported, 10 percent of the value of the gold has to be paid.