Bangladesh has made significant achievements in attaining the Millennium Development Goals (MDGs). The focus is now on meeting the Sustainable Development Goals (SDGs). The 17 SDGs are: overcoming poverty (Goal 1), overcoming hunger (Goal 2), healthy life (Goal 3), quality education (Goal 4), gender equality (Goal 5), access to clean water and sanitation (Goal 6), access to clean energy in affordable cost (Goal 7), economic growth through decent work (Goal 8), industrialisation along with innovation and required infrastructure (Goal 9), reducing inequalities (Goal 10), inclusive and resilient cities (Goal 11), sustainable production and consumption (Goal 12), controlling climate change (Goal 13), proper management of under-water resources (Goal 14), sustainable use of land resources (Goal 15), peace through justice and effective institutional setup (Goal 16), and global partnership to achieve the goals (Goal 17).
Some goals of SDG are the continuation of the goals of MDG and others are new ones. The additional targets include decent work and economic growth, industry innovation and infrastructure, reduced inequalities, inclusive and sustainable cities, responsive consumption and production, climate action, life below water, life on land, peace, justice and strong institutional setup, etc.
New goals of SDG mainly focus on two major themes - a) economic growth as a catalyst for poverty reduction and b) sustainable development which is environment-friendly.
One of the mainstays of Bangladesh economy is export earning, majority of which comes from the readymade garments sector (RMG). If this sector succeeds in materialising its target of increasing annual export earnings to $50b by 2021, this will, no doubt, give a big boost to the economy and also help achieve the SDGs. The apparel industry is moving towards the areas of green growth and sophisticated clean technology to achieve the SDGs.
The RMG sector contributes to approximately 80 per cent of country's total export earnings. Bangladesh is the second largest apparel exporter in the world, next to China. The country's textile & garment industry holds the record for having a continuous and steady export growth.
In the FY 2015-2016, Bangladesh earned more than $28 billion from RMG sector. In 2014-15, the amount was $24.49 billion and in 2013-14, it was $21.51billion. This shows that despite the negative campaign by the vested quarters abroad, the country's RMG industry has maintained a positive growth.
The RMG sector is also playing an important role in socio-economic progress of Bangladesh. Particularly, in empowerment of women, this sector has emerged as one of the driving forces. Currently, more than 44 million workers are working in garment country, and 80 per cent of them are women. In view of this, all possible assistance should be extended to this sector so that it can reach the target of exporting $50b by 2021.
As per Customs Act, 1969, 100 per cent export-oriented businesses are eligible to get bond facilities. These facilities have existed since the enactment of the Act. Initially, bond benefits were monitored by the concerned customs houses. A company had to go to the Customs House, through which it imported or exported, and complete the required processes. It was a very complex work for the reconciliation of import and export quantities.
CUSTOMS BOND COMMISSIONERATE: To remove the difficulties and encourage export business, the Customs Bond Commissionerate was established in November 2000.
As per Customs Act, 1969, and Value Added Tax Act, 1991, almost all exports are tax-free with very few exceptions. Exporters also get tax-free benefit in import or in local purchase of raw materials to be used in manufacturing of exporting goods.
But imports of raw materials are taxable in regular tax regime. The exporting industries have to pay tax during import of raw materials if they work in normal tax regime.
After exporting their finish goods, they have to claim Duty Drawback from Duty Exemption and Drawback Office (DEDO) or respective VAT commissionerate. But under the special tax system like bonded warehouse system, they do not need to pay tax during import of raw materials.
OBJECTIVES OF THE CUSTOMS BOND COMMISSIONERATE: The Customs Bond Commissionerate started its journey in 2000. Sections 13, and 84 to 119 of the Customs Act, 1969 deal with bonded warehouse management. Besides, bonded warehouse management for Export Processing Zones, Home Consumption Bond and Diplomatic Bond are guided by specific rules, statutory regulatory orders (SROs) and office orders.
The main objectives of the Customs Bond Commissionerate are to:
* Help and facilitate the export business
* Ensure proper collection of revenue
* Control misuse of bond facilities through risk management
* Curb misuse of bond facilities.
* Preserve and record various data
The bond commissionerate manages bond-related activities in traditional ways. Present system lacks transparency and there is scope for avoiding responsibilities. Major disadvantages of present system are as follows:
* Week legitimate control over the system
* Excessive use of paper
* Lots of physical file handling with maximum risk
* License-related work and other day-to-day processes (renewal, audit, intra-bond transfer, etc.) are very clumsy and have lots of steps to complete
* Correspondence with lien banks takes long time
* No proper controlling of Utilisation Declaration (UD)
* Complex passbook management system
* No proper justification for Utilisation Permission (UP)
* No proper justification for Import Entitlement/Quota
* Little synchronisation in audit function
* Unaligned monitoring system over updated DEDO co-efficient
* Claim of duty and taxes for expired bonding goods takes a long time and prone to error
* Error in demand adjustment occurs frequently
Such problems cripple the bonded warehouse system. So, the National Board of Revenue (NBR) has undertaken a programme to upgrade bond management through automation. Objectives of the Bonded Warehouse Automation Project are as follows:
* Automating all activities of the Bond Commissionerates
* Getting online application and approval of all types of matters like license, UP and UD
* Reducing the use of paper (at present daily 300kg paper, equivalent to 24 trees, is needed to perform bond activities under Dhaka Bond);
* Reducing disposal period to provide faster service;
* Reducing cost of doing business;
* Minimising the misuse of bond facilities;
* Providing 24x7 customer service.
The proposed automated system will bring the following advantages in day-to-day operations and data management systems of Customs Bond Commissionerate:
* The automated bond network will enable officers to supervise and monitor all bond related activities electronically. After implementation of the automated system, the efficiencies and cost savings will greatly improve and service delivery time will be reduced sharply.
* The automation will save time and ensure accountability.
* Successful implementation of the automation process would change the mindset of all stakeholders and voluntary compliance of law will be increased.
* Import-export process will be simplified for the export-oriented organisations and cost of trade will be reduced.
* The clearance procedure will be short compared with the existing lengthy one.
* Companies can be benefited by using automated filing, reducing paperwork, saving personnel and administrative costs, and voluntarily filing all data at a central filing point from their offices.
* Tax evasion will be reduced resulting a surge in revenue collection.
* Most of the activities will be performed online and thus the office management will be improved.
* Taxpayers will get improved services that will lead to better stakeholder relationship.
* ICT (information and communication technology will work as an enabler for better administration.
* Finally, integrity and efficiency in providing service will be established.
UD MODULE: At present, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) or the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA_ does all activities related to Utilisation Declaration (UD) for 100 per cent export-oriented woven and knit garments. The current system is clumsy, time-consuming and there are scopes for malpractice and misappropriation. Because, bonders submit documents for UD manually at BGMEA/BKMEA.
After manual checking, BGMEA/ BKMEA approves UD and sends it manually to related stakeholders, i.e., customs houses, customs stations, banks and bond commissionerates, etc.
Each stakeholder again checks the UD manually. As there is no control over UD except manual checking, errors may occur. After the implementation of the automated programme, all stakeholders would be able to complete their UD processes on-line.
CHALLENGES: Following are the challenges in implementing the automated bonded warehouse management system:
* Developing an IT strategy.
* Having a full-scale project with adequate maintenance and support service
The truth about any IT initiative is " Change ". It is the change in management strategy that will determine the true success of the project.
CURRENT STATUS AUTOMATION PROGRAMME: In 2017, the Executive Committee of National Economic Council (ECNEC) approved the automation project for the bonded warehouse system. After that, the National Board of Revenue took all necessary initiatives to start the work. Already a Project Director (PD) has been appointed and work on implementation has been started. Following is the current status of the website of the Customs Bond Commissionerate:
* The website is live now and the web address is: www.cbc.gov.bd
* Bond-related SROs, Orders, Resolution, Office memos are uploaded
* Following databases are uploaded and being updated regularly:
* Bond License Status
* Audit Status
* General Bond Expiry date
* Entitlement
* A book on Bonded Warehouse Management System has been published with website contents.
According to experts, approximately Tk 100 billion of tax evasion can be prevented per year if the automation of bonded warehouse system can be implemented successfully.
In the new era of automated revenue management system adopted by the NBR, automation of bonded warehouse management system is a must to expedite customs operations which are related to bond management.
The writer is Commissioner of Large Taxpayer's Unit, VAT.
