Small garment factories in Bangladesh without bonded warehouse licenses are facing severe challenges in sustaining operations due to difficulties in securing back-to-back letters of credit and sourcing raw materials and accessories affordably. The lack of bonded licenses prevents these factories from benefiting from existing regulations, as some banks hesitate to open back-to-back LCs, and customs policies restrict credit purchases from bonded license holders. Cash purchases increase costs, straining working capital and reducing profitability.
There are approximately 1,150 such factories employing around 700,000 workers, with a combined annual export value of $6.5 billion. However, over 100 factories have already closed, and many others are on the brink of collapse due to these obstacles.
BGMEA has called for government support, arguing that punishing thousands of small entrepreneurs for the actions of a few violators is unjust. They propose identifying and penalizing the guilty parties while supporting compliant businesses.
National Board of Revenue has taken a strict stance to prevent irregularities in transactions between bonded and non-bonded entities. However, during recent discussions with BGMEA, NBR officials expressed optimism about finding a resolution that balances trade facilitation with misuse prevention. A positive outcome is anticipated as stakeholders work to address these pressing challenges.
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