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World Bank for complete overhaul of warehouses act

FE Report | Published: May 14, 2018 00:37:42


The country's age-old warehouses act has become totally outdated, and the government should move for its complete overhaul, according to a recent study, commissioned by the World Bank (WB) Group.

The prevailing act provides regulations for storage of farm goods only, while important areas like retail, manufacturing or export-import etc are not covered by the act, the research added.

The findings of the study were presented at a workshop, organised by Dhaka Chamber of Commerce and Industry (DCCI) in the capital on Sunday.

"It is time for complete overhauling of the Warehouses Ordinance or creating a fresh policy framework," said Sugata Sarkar of Knight Frank, a global consultancy firm that  conducted the study on behalf of the WB.

"The present act, which was formulated in 1959, does not provide any operational guideline or criteria, and it provides regulations for storage of agro commodities only."

While noting that various new areas, like -- retail or manufacturing, are not covered by the act, Sarkar also pointed out that the act does not provide any guideline on construction, operation or market linkage either.

In this context, the experts at the workshop called for complete overhauling of the act, covering all segments of storage and warehousing.

At the same time, the act should also provide clear policy guideline on development, storage and supporting facilities as well as on provisioning adequate land under zoning for storage.

While the current size of the warehousing market in the country in terms of space is 43.7 million square feet (sft), the demand is likely to reach 68.24 million sft by 2022, the WB study projected.

Much of the growth of this demand would be generated by consumption-led demand, which is estimated to grow twice in next four years, said the experts at the workshop. 

Identifying the major areas for reform in the sector against this backdrop, they also called for allocation of dedicated and adequate land for warehousing in the country.  The experts also emphasised formulating exclusive policy for logistics and warehousing as well as separate policy for setting up logistics parks.

Researchers also opined that the government should look into formulating regulations to allow common bonded warehousing. This would lead to adequate inventory of raw materials to address seasonal demands, and would also increase competitiveness with reduction in order cycle time, they noted. 

At the same time, exclusive lands should be allocated for warehousing within industrial parks to promote integrated warehouse service offerings, the experts said.  Speaking on the occasion, Shipping Secretary Md Abdus Samad said slow pace of customs clearance remains a major problem for boosting international trade in the country.

"I have already written to the National Board of Revenue (NBR) chairman, drawing his attention in this regard."

The shipping secretary also focused on boosting efficiency of the sea-ports. "In the recent years, there has been a demand for increasing the port charges. But first of all, we have to make our ports efficient."

Citing the example of Singapore, he said more scanning machines should be installed at the ports, while the system of physical verification for cargoes should be eliminated through automation.

DCCI President Abul Kashem Khan, in his speech, said the government should declare logistics as a thrust sector.

Wendy Werner, Country Manager of International Finance Corporation (IFC), said: "Logistics is one of the highly potential areas for garnering investment for Bangladesh."

"Inefficient logistics and warehousing would not only decrease the competitiveness of Bangladeshi exports, but will also result in higher commodity prices for domestic consumers," she opined.

Speakers at the workshop also called for promoting bonded warehouse facilities, vertical warehouse setup, and construction of separate warehouses within the special economic zones.

Senior Economist of IFC M Masrur Reaz and Lead Private Sector Specialist of WB Charles Kunaka also spoke at the workshop. 

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