Agro-Processing: Embracing the Next Export Frontier with Bonded Warehouse Facility

Dr. F H Ansarey:Bonded Warehousing is a facility that has been provided exclusively to the export-oriented industries by the National Board of Revenue (NBR). These specialized warehouses facilitate the import of inputs or raw materials as well as packaging items without paying any duty or taxes for a wide range of industries.

Now, with a recent recommendation of the Bangladesh Trade and Tariff Commission, partial exporters are likely to get the Bonded Warehouse benefits as well (Source: The Business Standard, 8 July 2021). Thus, partial exporters will enjoy not only international competitiveness but also reduced cost and lead time related to export. The proposed facility is supposed to be backed by a 100% Bank Guarantee as an alternative to the existing duty drawback. The current system forces partial exporters to pay taxes/duty ahead only to reclaim proportional refund for exported items later through a 4-5 year-long and exhausting process.

In the last fiscal year 2020-21, our agricultural products’ export marked USD 1 billion for the first time (Source: Export Promotion Bureau-EPB). Complemented with a growing domestic market, the export of agricultural products can grow further with an increased number of partial exporters. The proposed Bonded Warehouse facility can help our partial agro exporters to diversify our export basket. Currently, we are exporting several processed foods like juice, ready-mix spices, biscuits, puffed rice, flattened rice, chanachur, nuts, tea, coffee etc.

However, many of the ingredients are imported including aseptic packaging materials by paying duty. It directly increases the cost of export resulting in a loss of competitiveness in the global markets. With a simplified Bonded Warehousing process, these problems will be resolved and local as well as foreign investors will be attracted to invest in the agro-processing industry. Besides, these warehouses can be licensed to agro-processing sector for catering to the export market (enjoying duty-free) as well as local market (enjoying lower duty). In case of Bonded Warehouse situated in EPZ, the duty can be paid at EPZ gate before being supplied to the local market as raw materials. By leveraging Bonded Warehouse facility for agro-processing industry in Bangladesh we can become a regional hub for agricultural value addition and an export leader like the Netherlands in Europe.

-Writer:Managing Director & CEO, ACI Agribusiness