Bangladesh Plans Bonded Warehouse Reforms to Diversify Exports

According to the budget document, the measures aimed to extend bond facilities to more export-oriented industries, reduce regulatory hurdles for compliant businesses, speed up customs clearance and encourage investment in new export sectors.

The bonded warehouse system, which allows export-oriented industries to import raw materials duty-free for producing goods for export, has played a major role in the growth of the RMG sector.

The government now wants other promising industries to benefit from similar facilities.

Under the reforms, existing bond-related rules will be amended to allow all export-oriented sectors to import raw materials under bond facilities and export finished products.

To ease compliance requirements, the government has taken initiatives of withdrawing the annual bond audit requirement for fully export-oriented compliant RMG enterprises.

It has also taken moves for extending the validity of general bonds for fully export-oriented leather goods, footwear, towel, linen and home textile enterprises from one year to three years.

The changes would allow units located within 60 kilometres of their principal establishments to come under the Continuous Bond facility, irrespective of commissionerate jurisdiction.

The government also plans to remove the limit on the quantity of raw materials that can be stored at bonded warehouses at a time.

Another initiative seeks to simplify the transfer of bond licences by abolishing the requirement for both the outgoing and incoming owners to appear in person before customs officials for interviews.

The deadline for bonded enterprises to obtain Utilisation Permission (UP) before the expiry of a shipment period would be relaxed from 48 hours to 24 hours.

The government has also moved for allowing fully export-oriented enterprises without bond licences to procure raw materials duty-free against back-to-back letters of credit.

To promote export diversification, a new notification is proposed under the bonded warehouse system to allow duty-free imports of raw materials for jewellery production and the export of jewellery manufactured from those materials under transparent and compliant procedures.

In another major step, 10 new sectors would be allowed to import raw materials without bond licences, subject to bank guarantees.

The sectors are motorcycles, speedboats, fish processing, handicrafts, diversified jute products, diapers and sanitary napkins, crockery, tents, recycled cotton bags and terry towels.

The government has also taken steps for abolishing the legal requirement for a minimum 30 per cent value addition on goods produced using duty-free raw materials imported against bank guarantees without bond licences.

To encourage more businesses to benefit from the Authorised Economic Operator (AEO) programme, the rate of goods clearance under the system-based self-assessment method is proposed to be doubled.

The requirement for compliant businesses to submit updated audit reports when applying for AEO benefits would also be withdrawn.

The measures further seek to reduce delays in customs clearance by allowing imported goods to be tested at private laboratories recognised by the Bangladesh Accreditation Board and meeting ISO standards, alongside government laboratories.

For local pesticide and agrochemical manufacturers, annual entitlement-based certification from the Ministry of Agriculture would replace the existing invoice-based certification requirement for importing raw materials under concessional facilities.

The government has also taken measurers for abolishing the minimum fine of Tk 50,000 for inadvertent general deviations involving small, low-value consignments arriving through postal or courier services.

The reforms are intended to reduce procedural complexity, improve the ease of doing business and create opportunities for a wider range of domestic industries to compete in export markets, reports UNB.