Abuse of bonded warehouse facilities worries local businesses, government

Doulot Akter Mala Local businesses are facing uneven competition due to abuse of bonded warehouse facilities, especially in plastic grains and fabric import. Recently Finance Minister AMA Muhith expressed concern over the matter and instructed the National Board of Revenue (NBR) to take necessary measures in this regard. Through the bonded warehouse, the government offers benefit to the tune of Tk 300 billion annually to the businesses by way of duty-free facilities, customs officials said. Md Nasir Uddin, head of the customs and bond wing of the NBR has directed its two bond offices to intensify their efforts to check the irregularities. NBR chairman Ghulam Hussain last week suspended bond licence of a company in Chittagong after he found abuse of the facilities, following an investigation. The NBR offers bonded warehouse facilities to the exporters who import duty-free raw materials for exporting finished products. Commercial importers have to pay duty for importing those products and sell those in the local market. Imported products under bonded warehouse facilities are not allowed to be sold in local market. Dr Shahidul Islam, commissioner of Dhaka customs bond commissionarate, said the customs officials have taken some steps to check the abuse of 'bonded' facilities. "Our inspection team visits different factories thrice a week to monitor proper utilization of bonded warehouse facilities," he added. In some cases, customs officials have nothing to do after the association having given its approval of Utilisation Declaration to the respective exporter, upon his application. "Some exporters claim higher level of imports of clothes or plastic grains than their requirement for actual exports and sell those in local market," he added. The bond commissionarate needs logistics and adequate manpower to launch massive crackdown on abuse of bonded warehouse facilities, he added. Last year, the NBR streamlined the abuse of diplomatic bonded warehouse facility through an intensive investigation. A senior customs official said the government will receive Tk 22 billion extra revenue this year due to change in rules of the diplomatic bonded warehouse facilities. The official said the NBR suspended bond licences of exporters at different times, but rarely cancelled it. "The punitive measure is also not so strong to restrict its abuse. NBR can impose penalty of Tk 50,000 or a maximum of ten-time tax of the evaded amount in case of abuse of bonded warehouse facilities," he added. In the budget proposal for the current fiscal, the finance minister had pledged to digitalise the operation of bonded warehouses. "The bonders will soon be able to submit Utilization Declaration (UD) and Utilization Permission (UP) applications online and receive approval without visiting Customs Bond Commissionerate," Mr Muhith said on June 9 last year. He also said Customs Bond Commissionerate, Dhaka, has been working to develop a Bond Management Information System (BMIS). For the extended use of this system and to expand it to all the bond sectors, initiatives have been taken to follow Public-Private Partnership mode. He expected that the bond system will be completely automated at the end of this fiscal year. It will boost export and reduce the cost of doing business. But progress so far to this effect is inadequate, the sources said.