NBR aims to fully implement bond automation this month to enhance trade efficiency

The National Board of Revenue (NBR) is set to fully activate its Bond Automation system this month, with the goal of improving efficiency, transparency, and accountability in Bangladesh's trade operations.

NBR sources confirm that the launch was initially scheduled for last month but was delayed due to insufficient preparedness among businesses.

"Due to the lack of readiness from the business community, we postponed the launch by a month," said NBR Chairman Md Abdur Rahman Khan during a recent World Customs Day event.

He pointed out that one of the most common complaints he receives pertains to the bond management system.

The Bond Automation initiative is part of the NBR’s efforts to prevent misuse, which has been leading to substantial revenue losses due to unpaid duties and taxes, according to officials.

Under the bonded warehouse system, export-oriented industries are permitted to import raw materials, such as fabrics, duty-free, with the 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 constitutes a major share of Bangladesh's exports, benefits significantly from this arrangement.

According to the Dhaka Customs Bond Commissionerate, 90% of woven fabric, 45% of garment accessories, and 35% of knit fabric for the ready-made garment (RMG) sector are imported under the bond system, with the remainder sourced locally.

However, some dishonest traders misuse the facility by selling duty-free imports in the local market instead of using them in export production.

"We aim to curb duty and tax evasion," a senior NBR official told UNB. "We are in the final stages of setting up the automation system, but additional research is being conducted to ensure its effectiveness."

The new automation system will allow authorities to track materials imported under bond facilities, thereby reducing opportunities for misuse.

This initiative is designed to streamline processes, such as issuing Utility Permission (UP) for garment accessory exporters and Utility Declaration (UD) for garment exporters, leading to faster processing and enhanced accountability.

NBR announced that all customs bond services are now ready for implementation, and bond license holders must complete the transition by December 31, 2024.

The Bond Automation project was initially launched in 2017, with an original completion target of June 2021. However, delays in implementation extended the timeline until June 2023. With the final phase underway, NBR is confident that the system will soon be fully operational.

The automation of bonded warehouse services is expected to bring multiple benefits:

• Enhanced Efficiency: By reducing paperwork and manual processing, the system will speed up bond-related activities, benefiting exporters.
• Improved Transparency: Digital monitoring will reduce the potential for misuse and ensure greater accountability among stakeholders.
• Cost Reduction: Streamlining procedures will lower business costs, improving export competitiveness.
• Trade Facilitation: Faster processing of bond-related services will create a smoother trade environment, boosting exports.

Local traders and industry leaders have long called for 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 are optimistic that the new system will bring much-needed reforms, improving efficiency and accountability in the country's bonded warehouse operations.