Bangladesh plans bonded warehouse reforms to enhance export diversification

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Bangladesh planned reforms to its bonded warehouse system, customs procedures and export incentives to reduce business costs and diversify exports beyond readymade garments (RMG), according to the budget document.

The measures aimed to extend duty-free import facilities to more export-oriented industries, ease compliance requirements, speed up customs clearance and encourage investment in new export sectors.

The bonded warehouse system allows export-oriented industries to import raw materials duty-free for manufacturing goods for export. The facility has played a major role in the growth of Bangladesh’s RMG sector.

Under the proposed reforms, all export-oriented sectors would be allowed to import raw materials under bond facilities and export finished products.

The government planned to withdraw annual bond audits for compliant, fully export-oriented RMG enterprises and extend the validity of general bonds for fully export-oriented leather goods, footwear, towel, linen and home textile businesses from one year to three years.

Units located within 60 kilometres of their principal establishments would be eligible for the Continuous Bond facility, regardless of commissionerate jurisdiction. The government also planned to remove limits on the quantity of raw materials that bonded warehouses could store at a time.

Other measures included simplifying bond licence transfers by removing the requirement for outgoing and incoming owners to appear in person before customs officials for interviews.

The deadline for bonded enterprises to obtain Utilisation Permission (UP) before a shipment period expired would be reduced from 48 hours to 24 hours.

Fully export-oriented enterprises without bond licences would also be allowed to procure raw materials duty-free against back-to-back letters of credit.

To promote export diversification, a proposed notification would allow duty-free imports of raw materials for jewellery production and the export of finished jewellery under transparent and compliant procedures.

Ten additional sectors would be allowed to import raw materials without bond licences, subject to bank guarantees. These are motorcycles, speedboats, fish processing, handicrafts, diversified jute products, diapers and sanitary napkins, crockery, tents, recycled cotton bags and terry towels.

The government also planned to abolish the legal requirement for a minimum 30% value addition on goods produced using duty-free raw materials imported against bank guarantees without bond licences.

To expand participation in the Authorised Economic Operator (AEO) programme, the rate of goods clearance under the system-based self-assessment method was proposed to be doubled. Compliant businesses would no longer need to submit updated audit reports when applying for AEO benefits.

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

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

The government also planned to abolish the minimum Tk 50,000 fine for inadvertent general deviations involving small, low-value consignments arriving by post or courier.

The measures aimed to simplify trade procedures, improve the business environment and help more domestic industries compete in export markets.

Source: UNB