The Impact of Customs Electronic Payments on Import Facilitation in Bangladesh

Abstract

The rapid increase of international trade evolves the necessities of trade facilitation. In international trade, delay or additional time consumption is often interpreted as the cost of trade which is a hindrance to trade facilitation. To minimise the hindrances of trade facilitation many initiatives have been introduced by different Customs Administrative Authorities across the globe. Customs electronic payment is one of those key initiatives to reduce customs clearance time and facilitate trade. This is also considered as one of the international best practices which can influence trade facilitation from various aspects e.g., reducing time and costs, increasing trade volume, ensuring transaction security, etc. This paper examines the impact of electronic payments on trade facilitation in Bangladesh by using the difference-in-differences estimator to analyse changes in the duration of payment and trade volume both in quantity and value based on the ASYCUDA World data from 2014 to 2020. The results show that there is a significant reduction of payment duration due to the use of customs electronic payments over traditional payments. On the other hand, I found that the trade volume in value for electronic payments user firms appears to increase, whereas the trade volume in quantity decreases. This suggests that the government of Bangladesh can consider initiatives to attract the importer or agents to use the electronic payments for the reduction of clearance time to facilitate trade.