BUILD organised a high-level dialogue today titled “Duty-Free Import of Raw Materials beyond Bonded Warehouse Facility” to address implementation challenges and propose critical reforms for the recently announced Statutory Regulatory Order (SRO) 384/2025. The event, held at the BUILD conference room, brought together policy experts, government officials, and private-sector leaders to identify strategies to enhance the export competitiveness of non-bonded and small-scale exporters.
In the keynote presentation, Md Nooruzzaman, Senior Research Associate, highlighted that non-bonded exporters will be able to import raw materials duty-free against a 100% bank guarantee. He informed the session that this would be difficult for them to afford, as the guarantee will be encashed after the export proceeds are realised, limiting their cash flow. To qualify for this facility, exporters must ensure a minimum of 30% value addition and maintain mandatory Value Added Tax (VAT) compliance through regular online submissions. However, the facility is currently restricted to only eight sectors, including furniture, electronics, and light engineering, which limits significant export potential.
By comparing Bangladesh’s regime with international best practices, such as the duty-suspension model in Vietnam and the deferred-duty model in India, the study advocates adopting more flexible financial instruments to reduce exporters’ burdens. Key recommendations include aligning SRO 384 with the upcoming Import Policy Order 2025–28, replacing bank guarantees with alternative instruments, such as sponsor guarantees, and removing sectoral restrictions to encourage broader export diversification. Furthermore, the study emphasises the urgent need for full automation and the integration of the Automated System for Customs Data (ASYCUDA) and the Integrated VAT Administration System (iVAS) systems to streamline the export process and enhance global competitiveness.
The working session was moderated by Dr Wasel Bin Shadat, Research Director, BUILD. Mohammad Naziur Rahman Miah, First Secretary, NBR, lauded the dialogue organised by BUILD and stated that formulating SRO 384 was a challenging task; he noted it is not a fixed document and will be updated as requirements evolve. He added that eight sectors have been listed due to their interest, and the list will be extended if other sectors show interest. Referring to the abolition of the need for coefficients for bonded warehouse (BWH) exporters and for utilisation declaration (UD) and utilisation permission (UP), he informed that NBR has opted to automate these services. About 83% of the UP is presently automated, and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Customs, and other relevant organisations are now integrated, which will gradually improve the situation.
Md Shahidulla, senior deputy secretary, Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), noted that the local VAT authority is the controlling point, and those willing to benefit from this system must be Import Registration Certificate (IRC) and Export Registration Certificate (ERC) holders, distinct from Customs Bond Commissionerate (CBC) licence holders. He referred to the full operationalisation of the Duty Exemption and Drawback Office (DEDO) to provide support to exporters; however, exporters countered that, through DEDO, 100% duty drawback has never occurred.
Several industry leaders proposed alternatives to the current system. Saifur Rahman, Vice President of the Bangladesh Stainless Steel Pipe Manufacturers Association, emphasised the need to ensure ease of doing business for export diversification and highlighted that the government needs to focus on dynamic decision-making. He recommended that Bangladesh follow the Chinese model, in which warehouses are built through a public–private partnership (PPP). In view of this, a committee is working at NBR, and BUILD could be included to work on this. Similarly, M. S. Siddiqui, CEO of Bangla Chemical, recommended that revenue policies be adopted by independent bodies rather than concentrating all power within NBR. Criticising the 100% bank guarantee, he said it is not a global practice, emphasising that the market should decide which products are exported and warning against forcibly adding products to the negative list.
Sector-specific recommendations were also raised. Md Abdur Rauf, CEO of the Bangladesh Furniture Exporters Association, urged the government to place greater emphasis on value-addition criteria rather than UP, UD, and bank guarantees for export facilitation. Shoaib Hasan, former Vice President of the Bangladesh Agroprocessors Association (BAPA), urged the government to allow a 30% duty-free import of raw materials based on export performance, noting that if this incentive is granted, export volume could be doubled. Shankar Kumar Roy, Executive Director of the Bangladesh Cement Manufacturers Association, urged the inclusion of the cement sector in the SRO’s positive list due to its significant domestic use.
Regarding financial and time constraints, Mainul Islam, Deputy Manager at the Small and Medium Enterprise (SME) Foundation, urged NBR to align with the Ministry of Industries in formulating policies. He recommended including the priority sectors of the National Industrial Policy 2022 and the Product of the Year, as declared annually by the Ministry of Commerce, in the positive list, adding that the SME Foundation could create a fund for sponsor guarantees for SME exporters, if legally permitted. Sharif Nawrin Akter, Assistant General Manager, Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), recommended that bank guarantee realisation be carried out in phases. She argued that the current nine-month time limit for export (extendable by three months) is too short and should be at least two tax periods, given the possibility of order cancellations or delays in proceeds realisation.
Summing up, Ferdaus Ara Begum, CEO of BUILD, informed that BUILD has taken full notes of the discussion and will prepare a report to share with NBR for necessary reforms to the SRO, so that SMEs can benefit from the policy, reduce dependence on a single product, and promote export diversification.