Export Process of Handicraft Introduction

The people of Bangladesh are more familiar with the handicraft products but less familiar with the term handicraft. In our everyday life we have a great use of the handicraft products. Some people take it as their profession but almost every woman takes it as their hobby. Almost every woman somehow creates any handicraft products for their daily use. Handicraft is a type of work where useful and decorative devices are made completely by hand or by using only simple tools. Some handicraft products often have identifying features such as traditional or artistic deriving from the region or country of production by craftsmen, working generally on a COTTAGE INDUSTRY basis. The customer-oriented definition of handicrafts suggests that it is the creative expression of a group of people with unique artistic skills who apply their talents to the production of material goods, which reflect their culture and heritage. The most important industries in Bangladesh in early and medieval times comprised handicrafts and cottage industries. Prominent amongst them were TEXTILES, metal works, jewelry, wood works, CANE and BAMBOO works, and clay and POTTERY. Later, JUTE and leather became the major raw materials for handicrafts. The result is a fascinating variety of baskets, pottery, wall hangings, handbags, travel kits, toys, ashtrays, carpets, embroidered quilts, and so on. These products are characterized by utility, sustainability and environment friendliness blended with aesthetics appeal and is suitable for everyday use. The most prominent features of Bangladeshi handicraft the extensive use of individual skill and the interesting design motifs. In our Bangladesh we have a great prospect in handicraft business, because we are now exporting our handicrafts to foreign countries. We are being appreciated from those countries for our nice handicrafts. One important feature of this business is helping to reduce unemployment problem which is a great concern now-a-days for our country. Both male and female are contributing on this business. On this assignment our main concern is exporting process of handicraft, limitations and some recommendations to overcome those limitations.

Export Process of Handicraft Export procedure

There are two types of handicraft businesses I have found. First one is direct exporter and another one is indirect exporter. Indirect exporters are those who export their product to other countries thorough an export agent. Karika is one of them. According to the management of Karika, some export agents visit their shop and they take photos of their products. Then the agents send those photos to their target country. After choosing products from those photos they ask for some demo products. Karika then supply demo products as the importing country required. After examining all those demo products the importers make an order for original products to the agents. In this procedure the export agents take all the export related responsibilities. Only responsibility of the business owner is to provide required products on due date. But there is another business that directly exports their products. Jahanara Cottage is a direct exporter, and it has to do all the export related activities. According to Jahanara cottage and Bangla Craft (a concerning authority of handicraft in Bangladesh) the export procedure is:

Select the target markets Send them sample to choice Business Negotiation in between Seller and Buyer Receive order from buyer Collect L/C Produce goods for export Obtain Certificate of Generalised System of Preferences (GSP) Obtain certificate from concern authority Contract with shipping agent Collect insurance certificate Submit documents for customs approval Transport goods to port/ICD Obtain Bill of Lading (B/L) Collection of payment

Export Process of Handicraft Export related agencies and their functions

Ministry of Commerce The Ministry of commerce is responsible for overall trade and commerce related activities in our country. Import policy formulation, export policy formulation and export promotion, state trading, price control, commodity issues, tariff policy implementation and many other activities are executed by Ministry of Commerces decision. Export Promotion Bureau (EPB), Bangladesh under the Ministry of Commerce is a government agency of the country, entrusted with the responsibilities of promoting export of the country. National Board of Revenue (NBR) an organ of the Ministry of Finance, under the internal resources division. NBR is responsible for formulation and continuous reappraisal of tax-policies and tax-laws in Bangladesh. It lies at the apex of the whole revenue organization of the government. As a central bank, Bangladesh Bank performs the functions include maintaining the price stability through economic and monetary policy measures, managing the countrys foreign exchange and the gold reserve and regulating the banking sector of the country. On the other hand, the commercial banking system dominates Bangladesh's financial sector by accelerating countrys financial arena and economy. The Chittagong Port and the Mongla port are the tow important seaports of Bangladesh handling a big portion of import-export trade of the country. As such the importance of port in the national economy is paramount. The Chittagong Port Authority (CPA) is a basic services provider. Their objectives focus mainly on providing necessary services and facilities to the port users efficiently and effectively at competitive price. The associations take approval of the regulator, Director of Trade Association (DTO), Ministry of Commerce. TAs is authorized to carry out some regulatory functions like issuance of Certificate of Origin for export products and Utilization Documents (UD) of materials under bonded warehouse.

Export Promotion Bureau

National Board of Revenue

Central Bank and other Commercial Bank

Port

Trade association: (Bangla Craft for handicraft businesses)

Besides, many other export-import controlling agencies, insurance companies and other trade related companies help to export Bangladeshi handicrafts as well as other product.

Export Process of Handicraft Necessary Papers

In any foreign trade especially export transaction, preparing documents properly and submitting these to the appropriate parties is mandatory. Without proper documentation, exporter can be suffered a lot. Generally, the following documents are necessary before shipment.

Commercial invoice

Commercial invoice is the key export document. The commercial invoice will normally be presented on the exporter's letterhead and will be addressed to the importer. It contains full details of the consignment, including price and other related costs, in order to facilitate customs clearance. It must be signed and dated. An export contract (also referred to as a sales contract) is essentially an agreement between exporter and a foreign importer to do business. The export contract can take many different forms like a telephone offer, written offer or by using e-mail, fax, talex or cable. Bill of Lading is the most common form of transportation document. It is a document that establishes the terms of a contract between a shipping company (or its agent) and the exporter/shipper (or agent, such as a freight forwarder). Air waybills (AWB) are a form of BOL and are used for both domestic and international flights. It is usually the shipper - the exporter - (or their agent) that completes the AWB. It serves as proof of receipt of the goods for shipment, evidence of the contract of carriage, a means of clearing the goods through customs.

Export Contract

Bill of Lading

Airway Bills

Original Packing Lists

Preparing goods for shipment, it is also required to prepare a detailed export packing list that is a formal document that itemizes quite a number of details about the cargo. Pricing information is not required on the pack The Proforma Invoice serves as a negotiating instrument. The initial Proforma Invoice often sets the stage for the first round of negotiations if the exporter and importer have not yet had any real discussions. The letter of credit is the payment for a transaction, meaning that redeeming the letter of credit pays an exporter. Letters of credit are used primarily in international trade transactions of significant value, for

Proforma Invoice

Letter of Credit

Export Process of Handicraft

deals between a supplier in one country and a customer in another applies. Copy of origin Copy of origin is a document, required by foreign government, declaring the goods in a particular shipment are of a certain origin. A Certificate of Origin is a signed statement as to the country of origin of the exported products for a particular shipment.

The following certificates are also be prepared for especial condition: Trade License Trade License is a certificate/document which permit to carry on the particular trade or business for which it is issued. The trade license is a means to ensure that the manner in which the business is being carried on is according to the relevant rules, standards and safety guidelines. Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS. GSP certificate of origin is the developed countries to developing countries export manufactured goods and semi-manufactures a universal non-discriminatory nonreciprocal tariff preferences certificate. In a word, if one get GSP certificate of origin and export the goods to the developed countries, ones goods will get the lower tax rate from the developed country entering the developed country market.

Taxpayer Identification Number

GSP Certificate

Quality Control Certificate

Inspection certificate

Membership certificate recognized organization

from

Export Process of Handicraft Documents for Custom Authority (Sea, Air, Inland) to clearance the goods / products:
1. Copy of Trade Licence 2. Copy of VAT (Value Added Tax Certificate) 3. Copy of TIN (Tax Identification Certificate) 4. Original Pro-forma Invoice (Attested by concern bank) 5. Original Commercial Invoice (Attested by concern bank) 6. Original Packing List(Attested by concern bank) 7. Original Bill of lading / Airway Bill of Lading (Attested by concern bank) 8. Original Certificate of Country of Origin (Attested by concern bank) 9. Original CRF Copy (Clean Report of findings) (Issued by Pre-shipment Inspection Company) 10. Original Insurance Cover Note with Original Money Receipt 11. Radioactivity-Test Report / Sanitary Certification (From Exporting country) 12. Phyto-sanitary Certificate (From Export ingcountry) 13. Authorization Letter to C & F (Clearing and Forwarding Agent)

Export Process of Handicraft

Export Control: A liberal trade policy is followed by Bangladesh with regard to Import and Export. Obviously, export is a leading sector of Bangladesh. There is a handsome incentive package for the exporter, taken by the government. The Following measures have established necessary control over the export trade in Bangladesh: Licensing the exporters. Product quality inspection. Strong observation before shipment. Checking Security by using scanning machine at ports. Constant Intelligence and monitoring by the concerned Government agencies. Monitoring ISPS code by port authority. Application of penal provisions for violation of Rules and Regulations. Setting up heavy-duty scanners in the ports.

Weakness and threats: It is a matter of great regrets that, though we have sufficient labor and standard traditional handicraft product to export, we cannot expose ourselves from the general poor image. We are facing some unfriendly situation in handicrafts business, which are given below; Marketing constraints and unavailable market information. Insufficient support mechanism for product development. Power interruptions and other poor infrastructural development. Lack of raw material at appropriate prices. Lack of mechanism for dispersal technology for enhancing productivity and final finishing. Inadequate investment for fulfilling international requirements. A normal poor image of the country as a supplier of quality goods with consistency. Competitors controlling market price on strengths of volume and price. Competitors aging out in Bangladesh exports on strength of quality. Increasing environment awareness in Bangladesh, affecting supply of raw materials. International campaign against child labor and social standards. Lack of harmonization between affecting production and exports. Facing high transportation cost, price wars that increased competition among suppliers.

Export Process of Handicraft

Recommendation Followings are some proposal on how we could overcome the limitations faced by our country in enforcing effective control over exports. Maintain standard Profile of the Exporters to generate a good image. Maintain rules and regulations accurately and systematic certification process. Introduction of Effective Risk Management techniques and effective use of scanner for Physical Inspection. Increase enforcement capacity. Impart different training programs to develop the efficiency. Build up teamwork among the trading countries through some Mutual Customs Cooperation. Penalize and charge fine on the exporter for Breaching Rules and Regulation. Creation of International consensus and consciousness about our traditional product and to ensure the quality in export. Reduction in export and import control and gradual decrease in import tariff and not tariff barriers. Environmental problem need to be justified and addressed because of sensitivity nature of many European countries. Maintain strict regulations about child labor that is, no doubt, another controversial issue. Hygienic condition and environmental friendly packaging are other aspects that should be maintained for enhancing the acceptability of Bangladeshi products.

Export Process of Handicraft References

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Jahanara Cottage, Aziz Super Market, Shahbagh, Dhaka. Shape and Form, Aziz, Super Market, Shahbagh, Dhaka. Karika, opposite of Rupashi Bangla, Bangla Motor, Dhaka Bangla Craft, Karwan Bazar, Dhaka Export Promotion Bureau, Karwan Bazar, Dhaka Facilitating Trade through Simplification of Trade Processes and Procedures in Bangladesh, Asia-Pacific Research and Training Network on Trade, Working Paper

Series, No. 93, January 2011 7. Bangladesh Export Guidelines 8. Various Websites