National Board of Revenue (NBR) is preparing to remove restrictions that prevent non-bonded garment exporters from sourcing raw materials locally through back-to-back letters of credit (LCs), a move expected to benefit more than 1,100 ready-made garment factories.
NBR Chairman Abdur Rahman Khan said the revenue authority is working to eliminate existing barriers that stop non-bonded exporters from purchasing inputs from bonded “deemed exporters.” Once approved by the finance ministry, the VAT Policy Division and the Customs Bond Wing will issue formal guidelines for implementing the facility.
Industry sources say the change will allow non-bonded factories to open back-to-back LCs against export orders and procure yarn, fabrics and accessories from bonded suppliers—an option currently available only to bonded exporters.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the factories likely to benefit from the policy export garments worth around $6.5 billion annually and employ nearly 700,000 workers.
At present, many non-bonded exporters must purchase raw materials from the local market in cash at higher prices, as banks are reluctant to open back-to-back LCs without regulatory approval. Exporters also face complications during customs clearance and VAT audits due to documentation requirements.
To prevent misuse once the facility is introduced, the NBR said it plans to strengthen automation and data integration among relevant institutions, enabling better monitoring of transactions.
Industry leaders believe the policy shift could significantly improve the ease of doing business and support smaller garment exporters that have struggled with rising costs and operational challenges.
