Why punish genuine businesses for bonded warehouse misuses by a few

Top woven and knitwear exporters have told the revenue board that a handful of unscrupulous traders are exploiting the bonded warehouse facility and walking away unchallenged, while genuine firms are left to face the consequences.

Presidents of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), which together represent more than 80 percent of national exports, said none of their members are involved in the malpractice.

At a "Meet the Business" event organised by the National Board of Revenue (NBR) at its headquarters in Dhaka's Agargaon yesterday, the two presidents urged the revenue authority to name the offenders and take action against them.

The bonded warehouse facility allows fully export-oriented firms to import raw materials and intermediate goods without duties. Allegations regularly surface that some of these materials are diverted to the domestic market.

Even so, BKMEA President Mohammad Hatem said abusers rarely face consequences.

"They know exactly whom to manage before their goods arrive. They clear everything instantly. There is no record of them ever facing action," he said at the programme, chaired by NBR Chairman Md Abdur Rahman Khan.

But businesses which pay taxes, employ workers, and export properly end up shouldering the burden, he added.

Hatem called for visible and exemplary action against at least a few offenders. "Publish their names. Take social and legal action so they can never run businesses again. Only then will misuse decline. We will also get relief."

BGMEA President Mahmud Hasan Khan also asked the revenue board to take stern action against those who misuse the bonded warehouse facility.

"Please specify clearly the names of our members who are misusing the facility," he told the NBR. "We are very serious about this. If any of our members misuse the system, we will terminate their membership."

"Please specify clearly the names of our members who are misusing the facility," BGMEA President Mahmud Hasan Khan told the NBR

Khan, however, argued that the abuse is not as widespread as often claimed.

Still, the BGMEA president said the association has already issued warnings to 22 member factories regarding non-compliance.

'LIKE EXEMPTIONS, LET PARLIAMENT DECIDE ON REVOKING FACILITIES'

At the event, Khan criticised "policy inconsistency" by the NBR. He welcomed the decision to place authority for granting exemptions with parliament instead of the chairman or the finance ministry.

At the same time, he said any move to withdraw existing facilities should also go through parliament. "Too often, ongoing facilities are suddenly withdrawn through an SRO [statutory regulatory order]," he told the programme.

He pointed to recent reductions in benefits for economic zones. "This should not happen. It becomes like inviting someone to climb a tree and then removing the ladder."

Meanwhile, BKMEA President Hatem expressed frustration about longstanding disputes over HS codes -- the international product classification system used for customs.

"Even after solving the four-digit issue, the confusion continues. If the foreign supplier makes a mistake, we get accused of false declaration. Why would we give false declarations when we pay duty under bond anyway?"

He also criticised the frequent transfer of revenue officers. "Due to the frequent transfer, files remain stuck for two to three months. Meanwhile, our goods sit in the port, and we suffer demurrage."

Hatem recounted several incidents at Chattogram Custom House in which consignments of legitimate exporters were held up for months because officers failed to exercise "basic consideration and judgment".

In one case, an exporter had three containers returned from Singapore after discovering a fraudulent buyer. The goods then remained stuck for four months because of port demurrage of Tk 96 lakh. "Is this how you support exporters?" he asked.

He also described a case in which a woman entrepreneur saw 12 consignments blocked and her business identification number (BIN) locked despite no evidence of wrongdoing. "For months, her factory was shut. Workers would have come out on the streets. Who is responsible for that?"

He thanked a few "good officers" who intervened in exceptional situations but commented that exports as a whole would suffer unless honest businesses are protected.

AUTOMATED BOND MANAGEMENT MANDATORY FROM DEC 1

NBR Chairman Md Abdur Rahman Khan told the event that the Customs Bond Management System will become compulsory from December 1. The automated platform is designed to streamline the duty-free import of raw materials under the bonded warehouse regime.

"From now on, no paper-based work will be accepted, everything must be 100 percent automatic," he said.

He added that the system would ensure punishment for those who misuse facilities or evade taxes, while protecting compliant taxpayers. "Automation will eliminate such issues."

On bond misuse, the NBR chairman said, "Not everything can be publicly disclosed. Everyone has friends, allies, and business competitors."

"Even if a few abusers are known, we cannot publicly name them because they are operationally active. Nonetheless, we have begun addressing these issues, and many will be resolved."

He also said revenue officers would face consequences if they fail to meet standards.

Revenue officers (ROs) and assistant revenue officers (AROs) will undergo one week of training followed by an examination. "Anyone who fails will be deemed incompetent and terminated. There will be no exceptions," he said.