Supply Chain Law in Bangladesh (2025): A TRW Law Firm Playbook

Prepared by TRW — Tahmidur Rahman Remura Wahid. Use this as a practical field guide to structure deals, move goods, pay and get paid, and stay compliant end-to-end in Bangladesh.

Executive snapshot

Bangladesh doesn’t have a single “Supply Chain Act.” Instead, your supply chain sits on a stack of laws and regulators: commercial contracts and agency/distribution rules; customs and trade rules at the border; VAT on the movement of goods and services; foreign-exchange controls for cross-border payments; competition, consumer, standards, labour, environment, transport, and public procurement rules; plus data/cyber expectations for digitalised chains. The upshot: your contract is not just commercial paperwork—it’s the operating system tying all of those rules together.

This playbook maps the core regimes, the contracts you actually need, how to structure risk, and the checklists TRW teams use to launch or de-risk supply chains in Bangladesh.

1) What “supply chain law” covers in Bangladesh

Think of it in layers:

1. Contracts — sale & purchase, distribution/agency, toll manufacturing, OEM/ODM, logistics (3PL/4PL), warehousing, cold chain, QC/inspection, framework orders, SLAs.
2. Border & trade — Customs Act 2023, tariff classification & valuation, rules of origin, bonded facilities, duty drawback, import/export permissions. (National Board of Revenue)
3. Tax & VAT — VAT & SD Act 2012 (invoicing, input tax credit, VDS), customs VAT at import, excise/SD where applicable. (National Board of Revenue)
4. Foreign exchange — Bangladesh Bank’s Guidelines for Foreign Exchange Transactions (GFET) for L/Cs, documentary collections, and remitting royalties/fees/dividends through Authorized Dealer (AD) banks. (BB)
5. Sectoral overlays — product standards (BSTI), food safety, pharmaceuticals, telecom equipment, chemicals/hazmat, energy, garments.
6. Operations — transport & carriage, warehousing liens, insurance, EHS (environment, health & safety), labour and human rights, cyber/data, sanctions screening.
7. Disputes & enforcement — arbitration and courts, admiralty for maritime issues, interim relief to protect cargo or IP, customs appeals.

2) The core contracts—and what to put in them

2.1 Sale & Purchase (B2B)

• Scope & specs: Conformity to national standards (BSTI) or agreed international standards; sampling plans; pre-shipment inspection (PSI) if used.
• Incoterms® 2020: Choose terms that match your logistics reality (FOB/CFR/CIF for sea; FCA/CPT/CIP for multimodal/air). Tie risk and title clearly to the Incoterm and delivery point.
• Quality/acceptance: AQL levels, acceptance tests, cure rights, and destruction/return protocols for non-conforming goods.
• Pricing & adjustments: Indexation (FX, freight, inputs), pass-through for statutory tax or SRO changes, and re-opener triggers.
• Security: Retention of title, pledge/hypothecation of inventory or receivables, parent guarantees, and bank guarantees/standby LCs.
• Payment: L/C, documentary collection, or open account + credit insurance; interest on late payments; set-off rules; withholding tax handling.
• Force majeure & hardship: Port closures, regulatory bans, supply shocks; negotiated hardship mechanisms.
• Compliance: anti-bribery, sanctions screening, export controls, EPR (packaging/waste where relevant), data/cyber clauses for EDI links.

2.2 Distribution & Agency

• Territory & channels: Offline/online split, marketplaces, dark stores, cross-border delivery limits.
• Performance: Minimum purchases, stock turns, service levels (install/after-sales), and periodic capex.
• Competition-safe drafting: Use recommended (not fixed) resale prices; justify exclusive supply by quality/safety; avoid sharing competitively sensitive data between distributors.
• IP & brand: Trademark use rules, marketing approvals, social handles, and de-branding on exit.
• Termination: With/without cause, buy-back of stock, and customer transition plans.

2.3 Toll manufacturing / OEM / ODM

• BOM & formulations: Approved inputs, change control, yield norms.
• GMP/QMS: Audits, corrective action plans, recall/withdrawal costs.
• Ownership: Clear split of IP (brand, design, tooling); tooling registers and insurance; mould custody rules.
• Confidentiality & data: No “naked” access; role-based access; secure return/erasure on termination.

2.4 Logistics (3PL/4PL), Freight, Warehousing, Cold chain

• Care, custody & control: Bailment language; standard of care; exceptions (Act of God/inherent vice); limitation of liability vs declared value options.
• Liens: Warehouse/freight lien for unpaid charges; notice and sale procedures.
• Temperature control: Data-loggers, thresholds, deviations, and salvage rules.
• Demurrage/detention: Who bears container/yard costs; free-time assumptions in quotes; dispute resolution for congestion events.
• Data flows: EDI/API reliability, timestamping, audit trails; cyber obligations if the 3PL runs your TMS/WMS.

3) Border & trade: moving goods in and out

3.1 Customs Act 2023 — what changed for operators

Bangladesh overhauled customs with the Customs Act 2023, modernizing procedures, valuation references, appeals, and digitalization. Handoffs now hinge more on electronic submissions, risk management, and alignment with international practices; operators should update broker SOPs and internal controls accordingly. Check the current text and amendments on the National Board of Revenue (NBR) for operative provisions and timelines. (National Board of Revenue)

Operational tips

• Classification & valuation: Lock HS codes and valuation method; maintain binding rulings if available; keep robust technical literature.
• Origin & preferences: Preserve supplier declarations, mill test certificates, and processing records for rules of origin.
• Special regimes: Bond, back-to-back LCs, export subsidies/duty drawback—verify scheme conditions before pricing deals.
• Appeals: Calendar appeal deadlines; some disputes can be de-risked upfront with clarificatory rulings or AEO-style engagements.

3.2 Documentary flows

• Import side: Pro forma invoice, L/C or other payment instrument, commercial invoice, packing list, insurance, Goods Declaration, permits/clearances (sectoral), and transport documents (BL/AWB/CMR-equivalent).
• Export side: EXP form compliance, inspection results where required, certificate of origin (general or FTA-specific), shipping docs, and post-export proceeds realization.

4) VAT inside the supply chain

The Value Added Tax & Supplementary Duty Act 2012 drives most supply-chain tax mechanics:

• Registration & invoicing: Use Mushak 6.3 tax invoices; maintain statutory purchase/sales registers; align ERP invoice data.
• Input Tax Credit (ITC): Claim ITC for taxable inputs/imports tied to taxable supplies, subject to documentation and timing rules; reconcile with VDS (VAT deducted at source) certificates and returns.
• Imports & local supplies: Import VAT is creditable if linked to taxable outputs; SD applies to specified goods/services.
• Zero-rating: Exports are typically zero-rated; preserve proof of export and bank realization to support claims.

Review your pricing models and credit terms against these VAT flows to avoid cash-flow squeezes (especially in VDS-heavy sectors). For black-and-white rules and ITC conditions, rely on the statute and current rules/notifications. (National Board of Revenue)

5) Foreign exchange & trade payments

Cross-border payments, L/Cs, and remittances must comply with Bangladesh Bank’s Guidelines for Foreign Exchange Transactions (GFET) and circulars:

• Imports/exports: Use the appropriate authorized dealer (AD) bank channel; respect documentation (L/C terms, invoice, BL/AWB, insurance, inspection, EXP/IMP forms).
• Commercial remittances: Royalties, technical service fees, franchise/management fees, and support services are remittable through AD banks if the agreement is compliant and you provide the required evidence (invoice, proof of service, tax payment, bank forms).
• Proceeds realization: Monitor export proceeds realization timeframes and reconciling entries with AD bank returns.
• Record-keeping: Expect periodic scrutiny; build an evidence pack that matches GFET chapter headings for faster review and fewer remittance delays. (BB)

6) Domestic movement & transport

• Road & multimodal: Align consignment notes, e-waybills (if used in your ERP), and gate-pass controls with VAT documentation.
• Inland waterways/rail: Factor seasonal constraints, draft depth, and yard congestion into demurrage/detention clauses.
• Insurance: Cargo policies (ICC A/B/C), warehouse legal liability, carrier liability, and business interruption where bottlenecks are frequent.

7) Standards, safety, and product compliance

• BSTI mandatory certification: Certain goods require BSTI marks—plan certification and periodic testing or factory audits.
• Food & pharma: Food Safety Act compliance (labels, allergens, shelf-life, traceability); DGDA rules for pharma/cosmetics; halal where marketed as such.
• Electronics & telecom: BTRC type approvals; SAR/EMC safety; energy-efficiency labels where applicable.
• Chemicals & hazmat: Import licences, storage rules, MSDS handling, trained personnel, and emergency response planning.

Non-compliance can block clearance, trigger recalls, or void insurance—build compliance calendars and maintain test records.

8) Labour & human rights in the chain

• Bangladesh Labour Act & Rules: Working hours, overtime, minimum wages (by board/sector), OSH, maternity, PF/gratuity where applicable, and worker participation/representation.
• RMG and allied sectors: Expect customer audits referencing building safety, fire compliance, and worker welfare; align legal compliance with buyer codes.
• Contractor oversight: If you rely on labour contractors, ensure contracts push down statutory obligations (PPE, payroll transparency, ESI/medical, grievance channels).

9) Environment & EHS

• Environmental clearance: Initial/renewal ECA certificates; category-based EIA/IEE where required.
• ETP/air emissions: ETP operation and logbooks for wet processes; air/noise limits for generators/boilers; hazardous waste manifests.
• Packaging & waste: Manage plastic packaging compliance, reverse logistics for returns/waste, and safe disposal procedures.

Bake EHS compliance into supplier onboarding and audit checklists—don’t leave it to last-mile factories only.

10) Competition & consumer law touchpoints

• Competition: Vertical restraints (exclusivity, selective distribution, tying) should be justified by quality/safety or investment needs; avoid resale price maintenance—use RRP/MRP guidance and incentives, not mandates. Document a pro-competitive rationale in your files.
• Consumer protection: Transparent pricing, truthful claims, safety warnings, and responsive grievance handling. E-commerce models should match digital-commerce guidance on refunds and delivery timelines.

These aren’t red-lines for growth; they’re design constraints for robust networks.

11) Government procurement

If you supply the public sector, your chain must work within the Public Procurement Act/Rules framework: eligibility (tax, VAT, trade licence), bid securities, framework agreements, delivery & inspection regimes, post-award variations, and performance securities. Expect strict documentation and inspections; align pass-throughs to your sub-vendors.

12) Sanctions, export controls, and KYC

• Sanctions screening: Banks and multinationals expect screening of customers, vessels, and ports. Embed sanction checks in onboarding/booking flows.
• Dual-use/restricted goods: Use the Import Policy and sector notices to confirm licence needs; keep end-use/end-user statements where required.
• AML/KYC: Map ultimate beneficial ownership (UBO) for high-risk accounts in distribution or procurement.

13) Digital supply chains: data, cyber, and signatures

• e-Docs & signatures: Use legally recognized digital signatures or robust e-signature frameworks for contracts, plus internal authority matrices.
• Data flows: If your TMS/WMS/ERP syncs with vendors, constrain data to what’s necessary; secure APIs; include breach notification and cyber-hygiene requirements for 3PLs.
• Records: Retention schedules covering invoices (Mushak), shipping documents, customs papers, test reports, and audit evidence.

14) Insurance and risk management

• Inventory & transit: Stock-throughput policies covering goods from vendor to warehouse to customer; ensure valuation basis (invoice + freight + duty) matches claims.
• Liability: Product, public, and employer’s liability; warehouse legal liability for 3PLs.
• Parametric covers: Where floods or port congestion are recurring, consider bespoke riders or BI coverage.

15) Disputes & enforcement

• Arbitration vs courts: Many cross-border supply agreements pick arbitration (e.g., Singapore) for speed and enforceability, with a local-court carve-out for interim relief (preserve goods, stop IP misuse).
• Admiralty & carriage: Maritime claims (freight, demurrage, general average, cargo damage) can be pursued in admiralty; for road/air, rely on carriage contracts, airway bills, and insurance.
• Customs disputes: Preserve timelines for reviews/appeals; maintain technical dossiers to support classification or valuation positions.

16) Clause bank (Bangladesh-tuned drafting prompts)

• Change in law: Triggers for SROs, tariff/VAT rate shifts, customs valuation rules, or FX remittance conditions; price/lead-time adjustments or termination rights.
• Incoterms + title: Express when title passes (often on full payment) even if risk passes earlier under Incoterms—avoid mismatch.
• Retention & security: ROT clauses + registration of charges (if applicable); pledge over goods in warehouse; assignment of receivables to financiers.
• Set-off & netting: Allow netting of mutual claims (subject to VAT accounting rules).
• Audit rights: Limited, scheduled audits of quality, safety, wage compliance, and data/cyber—tie to corrective action plans and termination for cause.
• Recall/withdrawal: Responsibility split, communications protocol, costs, and stock treatment.
• Demurrage/detention: Free-time assumptions, congestion carve-outs, shared mitigation duties, and evidence standards (terminal notices, EDI logs).
• FX & remittances: Identify fee buckets consistent with GFET (e.g., royalties, technical service fees) and list the evidence pack required by AD banks for remittance. (BB)

17) Launch timeline (illustrative)

Weeks 0–2 — Contract architecture: S\&P frameworks, 3PL/warehouse terms, distributor terms; FX/remittance routes pre-cleared with AD bank. (BB)
Weeks 3–6 — VAT & customs setup: BIN/VAT flows, Mushak invoice/testing in ERP; HS classification notes; origin/valuation dossiers; broker SOPs matching Customs Act 2023 processes. (National Board of Revenue)
Weeks 7–10 — Supplier & product compliance: BSTI/sector approvals, label artwork, sampling plans; insurance placed; performance bonds/standby LCs in place.
Weeks 11–14 — Pilot shipments; reconcile VAT ITC/VDS; review demurrage/detention with 3PLs; adjust SLAs. (National Board of Revenue)
Go-live — Scale volumes; monthly variance reviews; quarterly legal/audit sweep.

18) Common pitfalls (and how to avoid them)

1. VAT trip-ups: Missing Mushak data, delayed VDS certificates, or poor linking of import VAT to taxable outputs—ITC gets stuck, cash flow suffers. Build VAT logic into your ERP from day one. (National Board of Revenue)
2. Customs surprises: Wrong HS codes or weak valuation files trigger delays and duty shock. Keep a classification dossier and pre-agree positions where possible under the 2023 regime. (National Board of Revenue)
3. Blocked remittances: Vague fee labels (“platform support”, “brand fee”) don’t map to GFET. Use GFET terminology, attach the evidence pack, and pre-clear with your AD bank. (BB)
4. RPM clauses: Trying to fix resale prices for distributors/retailers invites competition scrutiny. Use RRP/MRP guidance with non-coercive incentives instead.
5. Naked licensing: Letting distributors use your marks without real quality control weakens your brand and enforcement; audit and document.
6. Cold-chain ambiguity: Contracts without temperature logs/deviation rules leave you holding the bag on spoilage disputes.
7. Weak de-branding: If exit steps aren’t timed (signage, domains, social, catalogs), ex-partners linger and confuse customers.

19) Supply-chain compliance checklist (tear-out)

Legal & regulatory

• ☐ HS classification & valuation memos for key SKUs. (National Board of Revenue)
• ☐ VAT mapping: Mushak 6.3 invoicing, ITC rules, VDS workflow. (National Board of Revenue)
• ☐ FX plan: L/C terms, GFET-aligned fee taxonomy, AD bank comfort letter. (BB)
• ☐ Sector approvals (BSTI/food/pharma/telecom).
• ☐ Labour/EHS permits and logs (ETP/boiler/fire).

Contracts & operations

• ☐ Incoterms & title/risk alignment.
• ☐ Quality specs, AQL, sampling, acceptance/rejection SOPs.
• ☐ 3PL/warehouse liability & lien clauses; demurrage/detention matrix.
• ☐ Insurance: stock-throughput; product/liability.
• ☐ Audit & corrective action plan; recall protocol.

Governance & data

• ☐ Sanctions/KYC screening in onboarding.
• ☐ EDI/API security, data minimization, breach notifications.
• ☐ Document retention (customs/VAT/shipping/test records).

20) FAQs

Q1: Is there a single permit I can obtain for “the supply chain”?
No. You’ll need company TIN/VAT BIN, sector permits (BSTI/food/pharma etc.), and customs and bank readiness tailored to the goods. Customs and VAT are the two big pillars to get right. (National Board of Revenue)

Q2: Can I rely on Incoterms alone to control risk?
Incoterms allocate delivery, cost, and risk—not title or payment or compliance duties. Your contract must still set title transfer, security, taxes, compliance warranties, and dispute forum.

Q3: What’s the fastest way to keep royalties or service fees flowing offshore?
Write a Remittance Annex using GFET fee labels (royalty, technical service fee, management fee), set the evidence pack for each remittance, and pre-clear with your AD bank. (BB)

Q4: Do I have to change anything because of the Customs Act 2023?
Most operators should update broker SOPs, classification/valuation files, and appeal calendars, and verify digital handoffs match the current Act and any amendments listed on NBR. (National Board of Revenue)

Q5: How does VAT impact pricing strategy?
VAT is multi-stage. If you can’t recover ITC (e.g., because of documentation gaps or exempt outputs), it becomes a real cost that should be priced in. Tie your discount and credit policies to VDS and ITC timings. (National Board of Revenue)

21) How TRW helps

• Design your contract stack (S\&P, distribution, 3PL/warehouse, OEM/ODM, QC, data sharing).
• Set up customs & VAT flows (HS/valuation/origin memos; Mushak alignment; VDS & ITC cadences).
• Bank-ready FX: GFET-aligned fee taxonomy, remittance checklists, AD bank coordination.
• Product compliance: BSTI/sector approvals and label reviews.
• Risk & disputes: Insurance mapping, sanctions/KYC playbooks, and fast relief strategies for cargo or IP.

If you want a tailored Supply-Chain Compliance Map (one page, ready for your board and finance ops), we’ll build it to your product list and routes. Explore more insights at tahmidurrahman.com.

References (max 3)

1. National Board of Revenue (NBR) — Customs Acts (incl. Customs Act 2023 & amendments). (National Board of Revenue)
2. NBR — Value Added Tax & Supplementary Duty Act, 2012 (official text). (National Board of Revenue)
3. Bangladesh Bank — Guidelines for Foreign Exchange Transactions (GFET), Vol. 1 (overview and chapter access). (BB)

Disclaimer: This playbook is general information, not legal advice. Laws and bank practices change; always obtain tailored advice for your products, routes, and contracts.