Partial exporters to soon get bank-backed bond facility

To boost export diversification and earnings, the National Board of Revenue (NBR) is set to introduce a temporary duty-free bond facility for partial exporters against bank guarantees.

At the same time, the revenue board is moving towards full automation of bond services, which will permanently replace manual procedures.

These decisions came at the second monthly coordination meeting today (9 September) between the NBR and investment promotion agencies, chaired by Bangladesh Investment Development Authority (Bida) Executive Chairman Chowdhury Ashik Mahmud Bin Harun, with NBR Chairman Md Abdur Rahman Khan in attendance.

Senior officials from Beza, Hi-Tech Park Authority, PPP Authority, Moheshkhali Integrated Development Authority, and Chittagong Port Authority also joined the meeting held at Bida's headquarters, reads a press release.

A bond facility lets exporters bring in raw materials or goods duty-free under a government-backed guarantee.

Key decisions taken in the meeting

Bond facility for partial exporters: A gazette notification will soon allow partial export-oriented industries to avail bonded warehouse benefits against 100% bank guarantee, limited to raw materials and components used only for export production.

Automation of bond services: Manual bond services will be fully discontinued once automation is completed.

Relaxed UD requirement: Utilisation Declaration (UD) has been conditionally relaxed for delivery of goods/services from licensed warehouses to EPZ or EZ enterprises where payments are made via internal foreign currency LCs.

HS Code flexibility: Customs will now release consignments even if there is a mismatch between declared HS Codes and physical inspection results, as long as the first four digits match. Importers must update their bond license or UD within 30 days through an undertaking.

Additional reforms: Decisions on another 31 issues were taken to ease the investment climate and facilitate trade.

Policy support for export diversification

"We are working on policy support mechanisms based on genuine investor demands that include bond facilities for partial exporters. This reform will allow domestic industries dependent on imported raw materials to remain competitive in exports," said Bida Executive Chairman Ashik Chowdhury.

"We expect this to accelerate non-RMG export diversification and attract both local and foreign investment," he added.

NBR Chairman Md Abdur Rahman Khan underscored the importance of rational, investment-friendly reforms. He highlighted the need for self-assessment and post-clearance audits to ensure faster clearance of goods and assured direct intervention to implement necessary policy changes.

A long-standing demand by businesses

Selim H Rahman, chairman of the Bangladesh Furniture Industry Owners Association and HATIL, told TBS, "We have been requesting such a facility [bank-backed bond] for the past few years. We hope it will be implemented quickly. Many sectors, including furniture, sell products in the domestic market while also exporting. Now these sectors will benefit from the facility."

"The furniture industry needs to import various raw materials such as hardware, lacquer, and fabrics. In many cases, the combined duties, taxes, and VAT exceed 100%. When we import raw materials and then export the products, we fall behind in competition because our production costs are higher. If we can use bonded warehouse facilities, Bangladesh's furniture exports will increase and gain advantages in the export market," he added.