The National Board of Revenue (NBR) is set to amend the country’s bonded warehouse law to curb widespread misuse that has been impacting government revenue and the overall economy.
A senior NBR official, speaking on condition of anonymity, confirmed that stricter penalties are being introduced, including increased monetary fines and an extension of the maximum jail term for violations from three to five years. “The goal is to significantly curb the misuse of bond facilities,” the official said.
The bonded warehouse system allows export-oriented industries, especially in the ready-made garment (RMG) sector, to import raw materials duty-free, on the condition that finished goods are exported. While this system helps local exporters stay competitive, authorities say it is frequently abused — with duty-free imports often being sold in local markets, resulting in massive tax and duty losses.
In response, the NBR has initiated a comprehensive reform process. A team is currently finalising amendments to the existing bond law, and new measures will include not just harsher penalties, but reforms to improve services for compliant businesses.
One key initiative is the implementation of the Authorised Economic Operator (AEO) system. AEO-certified businesses will be allowed to transport goods directly from ports to factories or warehouses via a "green channel," bypassing time-consuming physical inspections. This is expected to enhance trade efficiency by reducing customs clearance time and costs.
NBR Chairman Md Abdur Rahman Khan, during a recent pre-budget discussion, stressed the urgency of introducing criminal penalties and stronger enforcement mechanisms to deter abuse. “The misuse of bonded warehouse facilities is widespread, and we must take stern actions,” he said.
According to NBR statistics, 90% of woven materials, 45% of garment accessories, and 35% of knit items used in Bangladesh’s RMG sector are imported under the bond system. However, many businesses reportedly exploit loopholes, providing fake addresses or incomplete records to avoid detection and taxation.
To combat this, the NBR currently deploys monitoring teams under various Bond Commissionerates across the country. These teams are tasked with overseeing the use of bonded warehouse privileges and cracking down on irregularities.
Despite several attempts, the NBR’s long-planned automation of the bonded warehouse system — intended to reduce manual processes, enhance monitoring, and increase revenue — remains incomplete. The initiative, part of the National Single Window project launched in 2017, aims to unify 39 government agencies under a single digital platform.
Originally scheduled for completion in 2019, the project has faced repeated delays due to resistance from stakeholders and poor inter-agency coordination. Although former NBR Chairman Abu Hena Md Rahmatul Muneem announced in early 2022 that automation would be completed by 2023, the process remains ongoing.
Exporters have voiced growing frustration over bureaucratic delays and alleged harassment in accessing bond-related services. In November 2021, the NBR issued directives to streamline the process, including fixed timelines for application processing, but these measures have had limited impact.
In August 2024, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) met with NBR officials to raise concerns about customs and bond management inefficiencies. The NBR assured the industry group of continued support and reiterated its commitment to creating a more business-friendly regulatory environment.
The NBR has also indicated plans to extend bonded warehouse benefits to more export-oriented sectors, though this expansion hinges on the completion of automation reforms.
Chairman Abdur Rahman Khan affirmed that the NBR is working actively to bring the bonded warehouse system into a fully automated framework, promising greater efficiency, transparency, and support for compliant businesses.
