Revenue may take a hit as customs activity halves amid pen-down strike

Ongoing protests by revenue officials opposing the dissolution of the National Board of Revenue (NBR) have severely disrupted operations at customs houses, raising concerns among stakeholders who fear the disruption could have an adverse impact on revenue collection, especially as the fiscal year draws to a close.

According to sources, the number of processed bills of entry at customs houses has reportedly dropped by around 50%.

At the same time, import and export activities are also facing disruption due to delays in obtaining utility permissions from the Customs Bond Commissionerate, said Md Shahriar, president of the Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association.

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), warned that the garment sector could face raw material shortages. "If we can't secure accessories on time, production may be affected. We urge the government to resolve the issue immediately," he told TBS.

Bangladesh's revenue performance had already been sluggish from July to November last year due to political unrest but collections started to see improvements since December.

However, according to Syed Md Aminul Karim, former member of the NBR, the new wave of protests is once again creating uncertainty.

Experts have warned that if the situation is not resolved quickly, the losses could deepen further. The movement is taking place at a time when revenue collection is usually higher compared to previous months.

Stressing the need for a prompt resolution to the ongoing crisis, they further pointed out the slow revenue collection because of the protests. They fear that due to the unrest, not only is the current month's target unlikely to be met, but collections may fall below the level recorded during the same period last year.

In a bid to resolve the ongoing crisis, the finance adviser along with several members of the advisory council is set to meet the protesting officials today.

Ahead of the meeting, the pen-down strike will be temporarily suspended for the day. However, the officials have made it clear that their movement will continue if the recently issued ordinance is not withdrawn.

Customs officials began observing daily pen-down strikes last Wednesday, initially for four hours, now extended to six hours. Although essential services such as import-export operations, passenger services, and budget-related tasks are exempt, traders report significant disruption nonetheless.

A senior income tax official, speaking on condition of anonymity, told TBS, "This is usually the peak period for advance income tax monitoring and arrear collection – but these activities have nearly halted."

"Appeal hearings and case resolutions at the Appellate Tribunal have come to a standstill. Such delays will inevitably impact revenue collection," he added.

Another customs official said essential services such as appeal hearings and case settlements have dropped sharply amid the ongoing unrest. Services related to correcting VAT return information are also being provided on a very limited scale.

"New VAT registrations are barely taking place, and officials are not going out for enforcement," he said.

However, he clarified that there are no issues with the submission of bills of entry at customs. "But assessment, examination, goods release, bank deposits, and case hearings are being disrupted," he added.

Chattogram port gridlocked

The impact is most visible at Chattogram port, the country's key trade gateway. More than 4,000 containers have piled up, with the number of processed bills of entry halving in recent days, severely affecting customs activity.

On average, 2,000 bills of entry are submitted daily at the Chattogram Custom House. But the ongoing strike has slashed that number, leading to significant delays.

Businesses are already feeling the pinch. Traders report rising costs from prolonged delays in customs clearance, including mounting container storage fees and warehouse rent, as imported goods remain stuck at the port without assessment or release.

According to Chattogram Port data, the number of twenty-foot equivalent units (TEUs) in the port yard rose from 40,078 on 12 May to 44,211 by yesterday morning – an increase of 4,133 TEUs in just one week.

Md Obaidul Hoque Alamgir, first joint general secretary of the Chattogram C&F Agents Association, told The Business Standard that importers are bearing the brunt of the delays.

"Each file is taking longer to process due to the strike. Storage and warehouse charges are increasing, making business costlier," he said.

Port authorities are worried the bottleneck could affect both imports and exports, especially of perishable goods and critical industrial raw materials.

Md Omar Faruk, secretary of the Chattogram Port Authority, said, "The pen-down strike has affected container deliveries. The number of undelivered containers has increased, and it will take a few more days for operations to return to normal."

Despite the crisis, Chattogram Customs claims that clearances are ongoing, albeit slowly.

Deputy Commissioner Saidul Islam said, "Even with the pen-down strike continuing until 3pm, our officers are working until 8pm to ensure clearance. So far, revenue collection hasn't been significantly affected."

Yesterday afternoon, the customs clearance hall was nearly empty, with clearing and forwarding (C&F) agents waiting outside with paperwork.

One C&F agent, requesting anonymity, said he submitted a file on 15 May for the release of two tonnes of garment raw materials. As of yesterday, there was no progress. "The delay is costing us extra freight and storage fees," he said.