Setting Up a Bonded Warehouse in Bangladesh: What Exporters Need to Know

Setting Up a Bonded Warehouse in Bangladesh: Complete Guide

The bonded warehouse facility is the most important fiscal incentive for export-oriented manufacturers in Bangladesh. It allows duty-free import of raw materials, packaging, and machinery, provided the finished goods are exported within 12 months. This guide explains the complete process for suppliers and what it means for international buyers.

What is a Bonded Warehouse?

A bonded warehouse is a secured facility licensed by NBR where imported raw materials can be stored and used without paying customs duties. The duties are "suspended" — if the finished goods are exported, the duties are waived. If the goods are sold domestically, the duties must be paid. This system is critical for Bangladesh's RMG competitiveness, as it allows factories to import fabric, yarn, and accessories at world-market prices.

Eligibility

Bonded warehouse licenses are available to: RMG manufacturers (BGMEA/BKMEA members), textile mills, leather goods manufacturers, electronics assemblers, pharmaceutical companies, frozen food processors, jute product manufacturers, and agro-processing units. The applicant must have: EPB registration (ERC), factory inspection by NBR, bank guarantee equal to the duty amount, and export order or LC.

Application Process

Step 1: Obtain ERC from EPB. Step 2: Apply to NBR's Bonded Warehouse Commissioner with: ERC copy, trade license, TIN, factory layout, bank guarantee, and export order/LC. Step 3: NBR inspects the factory for security, storage, and record-keeping. Step 4: License issued (BW-12 form) within 30-60 days. Step 5: Quarterly utilization reports must be submitted.

Benefits for International Buyers

Buyers sourcing from bonded warehouse license holders benefit from: (1) lower input costs (no duty on imported fabrics, accessories); (2) competitive export prices (suppliers pass through savings); (3) faster customs clearance (bonded warehouse shipments are expedited); (4) quality assurance (NBR monitors input-output ratios). Always ask your supplier if they have a bonded warehouse license — if not, their input costs are 15-25% higher.

Compliance Requirements

Bonded warehouse license holders must: maintain detailed input-output records, submit quarterly utilization reports, undergo annual NBR audits, renew the bank guarantee annually, and export finished goods within 12 months. Non-compliance can result in license suspension and duty recovery.

Bonded Warehouse vs Duty Drawback

Exporters must choose one: bonded warehouse (duty-free upfront, quarterly reporting) or duty drawback (pay duty, claim refund). Bonded warehouse is preferred by large regular exporters; duty drawback suits smaller or occasional exporters. Both ensure export products aren't burdened with import duties.