After eight years of efforts to automate the customs bond system aimed at benefiting exporters, only 70 out of 4,000 institutions have successfully transitioned to the new online framework. The Customs Bond Automation project, initially scheduled for completion in 2021, has faced significant delays due to unprepared stakeholders, software limitations, and ongoing manual approvals, despite a deadline extension until December 2024.
The automation initiative was designed to enhance efficiency and transparency in bond-related processing, allowing exporters to import raw materials duty-free under the condition that these materials are stored in bonded warehouses and subsequently exported. However, as of mid-March, most bond licence-holding exporters continued to rely on manual approvals for Utility Permission (UP), the import entitlement approval needed for raw materials.
The National Board of Revenue (NBR) had previously announced that manual approvals would cease from March, but due to a lack of readiness among customs authorities and businesses, the transition has not occurred. A senior NBR official acknowledged ongoing manual approvals and expressed uncertainty about the full implementation of automation by the fiscal year’s end.
The slow adoption of the automated system can be attributed to several factors, including deficiencies in the software developed primarily for the ready-made garments and accessories sectors, which has caused complications for the leather industry. Stakeholders have reported that the software struggles to process multiple files and lacks essential features necessary for effective operation.
Resistance from customs officials, who fear losing extra income, and reluctance from some businesses to adapt to the new system have further hampered progress. Allegations of obstruction from commercial officers, who liaise between customs and businesses, have also emerged.
Md Shahriar, president of the Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association, criticised the NBR’s software for its inability to handle multiple submissions and claimed that certain customs officers are actively working against the automation.
Despite the setbacks, NBR officials remain optimistic about achieving full automation within the current fiscal year. NBR member Md Moazzem Hossain noted that while progress has been slow, nearly 60 per cent of institutions have completed their preparations to onboard the system, suggesting that full implementation is still within reach.
The Government’s Bond Management Automation Project was initiated to curb misuse and enhance transparency in raw material imports and exports. Stakeholders believe successful implementation will reduce opportunities for irregularities and bribery, ultimately improving the ease of doing business in Bangladesh.
However, the persistent issues of harassment and corruption in customs bond activities continue to plague the industry. Exporters have reported that the lack of automation has enabled irregularities, leading to significant annual revenue losses for the Government. Former NBR Chairman Md Nojibur Rahman estimated that misuse of bond facilities costs the government approximately Taka 50,000 crore each year.
As the deadline for full automation looms, stakeholders are urging the NBR to prioritise resolving software issues and addressing the concerns of customs officials to ensure a smooth transition to the automated system.
