United News of Bangladesh

The National Board of Revenue (NBR) has been grappling with delays in automating its bonded warehouse system, a long-anticipated reform aimed at boosting efficiency, curbing misuse, and enhancing revenue collection. Despite taking several initiatives and setting multiple deadlines over the years, NBR’s progress toward full automation remains sluggish and incomplete. “We are still struggling with the bond automation, we are yet to implement this fully,” NBR Chairman Md Abdur Rahman Khan told in a recent pre-budget meeting. NBR lifts 5pc advance import tax on crude soybean and palm oil In February 2022, then NBR Chairman Abu Hena Md Rahmatul Muneem announced plans to fully automate the bonded warehouse facility by 2023.   The objective was to prevent the abuse of the system, which had been a longstanding issue affecting revenue generation and industry competitiveness. To achieve goal, the NBR initiated the National Single Window project in 2017, aiming to integrate 39 agencies involved in customs-related activities into a unified electronic system. This system was designed to streamline procedures, reduce paperwork, and expedite trade operations. Initially slated for completion by 2019, the project faced significant delays, with authorities aiming for a 2023 completion. These setbacks raised concerns among stakeholders about the efficacy and timeliness of such automation efforts. NBR clears Joint Tax Commissioner Mesbah of misconduct charges One notable challenge in the automation drive has been resistance from stakeholders accustomed to manual processes. For instance, in December 2021, the NBR mandated the use of specific software for diplomatic bonded warehouses dealing with liquor imports to monitor and prevent illegal market activities. This move led to a strike by six private diplomatic bonded warehouses, resulting in a liquor shortage in the market. The warehouses resisted the software implementation, citing operational challenges, which highlighted the difficulties in transitioning from entrenched manual systems to automated ones. Moreover, the automation projects was hampered by external factors such as the COVID-19 pandemic, which disrupted timelines and resource allocations. A lack of coordination among various agencies and occasional indecisiveness further impeded progress. NBR officials said that inconsistencies and coordination lapses among agencies contribute to delays in implementing automation initiatives. The business community, particularly exporters, has expressed concerns over delays and harassment in availing bond facilities. In response, the NBR issued directives in November 2021 to expedite bond-related services, setting specific deadlines for processing applications and specifying required documents. While these measures aimed to reduce delays and enhance transparency, their effectiveness at the field level remains a subject of debate among industry stakeholders. In August 2024, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) met with the NBR to address ongoing issues related to customs and bonds. The BGMEA emphasised the need for simplified and expedited customs services to maintain competitiveness, especially in the face of global economic challenges. The NBR assured support and acknowledged the importance of creating a business-friendly environment to boost trade and investment. As of February 2023, the NBR planned to extend bonded warehouse privileges to more export-oriented sectors, contingent upon the completion of the bond automation project. Despite these efforts, the pace of automation has been slower than anticipated. Projects like the National Single Window and customs bond system automation have faced repeated delays, raising concerns about Bangladesh’s position in global logistics and ease of doing business rankings. The business community continues to advocate for expedited and transparent automation processes to enhance operational efficiency and competitiveness. NBR Chairman Abdur Rahman Khan said  his organisation is continuously trying to implement the bond automation. “While the system will be user friendly completely, then we will roll it out for all,” he said. While the NBR’s commitment to automating the bonded warehouse system is evident through various initiatives and projects, the journey has been fraught with challenges. NBR officials mentioned that Overcoming resistance to change, ensuring inter-agency coordination, and adhering to project timelines are critical to achieving the desired outcomes. “Successful automation is expected to not only streamline operations but also significantly reduce misuse, thereby enhancing revenue collection and supporting the growth of legitimate businesses in Bangladesh,” a senior NBR official told UNB over telephone.  

The National Board of Revenue (NBR) is set to fully operationalise its Bond Automation system this month, aiming to enhance efficiency, transparency, and accountability in Bangladesh’s trade operations. NBR sources confirm that the revenue authority was prepared to roll out the system last month but postponed due to a lack of readiness among businesses. “Due to insufficient preparation from the business community, we have deferred the process by a month,” NBR Chairman Md Abdur Rahman Khan said at a recent event marking World Customs Day. NBR Commissioner Mahbubur suspended for misconduct He noted that one of the most frequent complaints he receives is regarding the bond management system. The NBR’s Bond Automation initiative is a key part of its efforts to curb misuse, which has been causing significant revenue losses to the national exchequer in the form of unpaid duties and taxes, officials said. Under the bonded warehouse system, export-oriented industries are allowed to import duty-free raw materials, such as fabrics, against a commitment to export the finished goods. This system helps keep Bangladesh’s exports competitive by reducing production costs and shortening lead times. The garment sector, which accounts for a major portion of Bangladesh’s exports, benefits significantly from this facility. According to the Dhaka Customs Bond Commissionerate, 90% of woven fabric, 45% of garment accessories, and 35% of knit fabric for the readymade garment (RMG) sector are imported under the bond system, while the rest is sourced locally. NBR moves to simplify clearance system for smooth business However, some unscrupulous traders abuse the facility by selling duty-free imports in the local market instead of using them for export production. “We want to curb duty and tax evasion,” a senior NBR official told UNB. “We are at the final stage of setting up the automation system, but additional research is being conducted to ensure effectiveness.” The automation system will enable authorities to track materials imported under bond facilities, reducing opportunities for misuse. The initiative is designed to streamline key processes, including the issuance of Utility Permission (UP) for garment accessories exporters and Utility Declaration (UD) for garment exporters. This will facilitate faster processing and improve accountability in the system. NBR extends income tax return submission deadline NBR had announced that all customs bond services are ready for implementation, with bond license holders required to complete their transition by December 31, 2024. The Bond Automation project was initially launched in 2017, with a completion target of June 2021. However, delays in implementation led to an extension until June 2023. Now, with the final phase underway, the NBR is confident that the system will soon be fully functional. The automation of bonded warehouse services is expected to bring several advantages: Enhanced Efficiency: By reducing paperwork and manual processing, the system will accelerate bond-related activities, benefiting exporters. Improved Transparency: Digital monitoring will minimize opportunities for misuse and ensure greater accountability among stakeholders. Cost Reduction: Streamlining procedures will lower business costs, making exports more competitive. Trade Facilitation: Faster and more efficient processing of bond-related services will create a smoother trade environment, boosting exports. Local traders and industry leaders have long demanded stricter enforcement against those who exploit the bond system. The automation project is expected to address these concerns by strengthening oversight and ensuring compliance. NBR’s commitment to automating the bond system aligns with Bangladesh’s broader strategy to modernize trade facilitation and expand its export base. By implementing digital solutions, the government aims to reduce foreign exchange losses and enhance competitiveness in global markets. As the implementation progresses, stakeholders remain optimistic that the new system will bring much-needed reform, improving efficiency and accountability in the country’s bonded warehouse operations.