Importers and exporters frequently use bonded warehouses to store goods because they improve supply chain management and cash flow. This article discusses what a bonded warehouse is, the advantages of utilising one, and the restrictions of using one.

 

What Is a Bonded Warehouse?

 

A bonded warehouse is one where duty on goods housed there is not due until the products are withdrawn. A bonded warehouse is a specified space authorised by the Royal Malaysian Customs (RMC) under Section 65 of the Malaysian Customs Act 1967 for keeping dutiable goods until they are removed from the warehouse.

As a result, a bonded warehouse, like a port, is a duty-free zone. It is normally gated and well-protected. The warehouse operator often offers customs a 'bond,' or more commonly nowadays, a bank guarantee (rather than a cash deposit as in the past) to ensure that customs will not lose income if any of the products held therein are unintentionally released from the bonded area.

This method provided substantial advantages for cross-jurisdictional corporate trade. Bonded warehouses can be utilised to eliminate the need to pay duties for an organisation that imports and exports commodities, resulting in even more efficiency. Bonded warehouses are used and structured differently. 

 

A Bonded Warehouse is Typically Known by the Terms Below:

 

• "Gudang Berlesen Awam," or Public Bonded Warehouse 

A Public Bonded Warehouse serves as a customs bonded warehousing and central storage facility for the distribution of bonded commodities that are the products on which customs duties and taxes have not been paid around the country as well as international trade. 

• "Gudang Berlesen Persendirian" or "Private Bonded Warehouse" 

A Private Bonded Warehouse is a company's and its affiliated firms' central storage and distribution centre for bonded goods that the products on which Customs duties and taxes have not been paid.

• Warehouse of PEKEMA (Association of Malay Importers and Traders of Malaysian Motor Vehicles). 

The importer and the bonded warehouse operator both become liable for the items once they enter the bonded warehouse. In most cases, this responsibility is discharged when the products are: 

Exported; or believed to have been exported; 

Withdrawn to provide supplies to a ship or plane in international travel; 

Destroyed under the supervision of Customs; or 

Following the payment of duty, the item was withdrawn for domestic consumption.

 

What Are Its Benefits?

 

• Restricted Items and Storage 

Sensitive and restricted goods can be safely stored in bonded warehouses. Basically, anything from little goods to big items and freight with unusual shapes can be stored here. 

• Tax Savings

Businesses can save money on taxes by holding their products in a bonded warehouse since duties are only paid when the items are shipped out for delivery. This implies that unsold items can be re-exported without incurring any tariffs. 

• Capable of dealing with many forms of storage 

Bonded warehouses provide a variety of specialized storage services for a wide range of items. Perishable goods are stored in deep-freeze containers, while electronics and automotive components are kept in temperature-controlled chambers.

• Modifications Made on-Site 

A bonded warehouse can do on-site alterations to your stored shipment. This implies you may do whatever you want with your items in terms of maintenance, testing, labelling, packing, inspection, and grading. 

• Secure Warehousing

Because they pay security professionals and have security cameras for 24/7 supervision, bonded warehousing is far more secure than storage services from non-bonded warehouses.

 

The Types of Activities That Allowed in a Bonded Warehouse

 

The Malaysian Customs bonded warehouses are administratively regulated by providing Customs with information that enables them to conduct more extensive checks on clearances and inventory activities. Random physical checks are conducted, and each logistics service provider running a bonded warehouse is thoroughly inspected to guarantee compliance. 

In all bonded warehouses save the PEKEMA warehouse, the following value-added activities can be done on held goods:

• Storing goods liable to duty in a warehouse
• Break bulking - when commodities are distributed in lesser amounts from a warehouse 
• Repacking - the packaging of homogenous commodities in smaller or greater numbers, or the packaging of different types of goods into a set
• Re-labeling - when items are re-labeled, for example, with the name of the importer or distributor before being distributed domestically 
• De-vending – where items may be sold straight to a customer at a warehouse, whether or not tariffs and/or taxes have been paid on the commodities
• Consolidation - the process of combining commodities (dutiable and locally supplied) for export 
• Import-export commerce – where items are imported and then re-exported 
• Internal transportation (forklift, for example) and handling fees

While foreign manufacturing enterprises can seek for a Licensed Manufacturing Warehouse licence to run their own customs bonded warehouse, many companies choose to outsource this sort of storage to a logistics service provider.

 

The Restrictions on Using a Bonded Warehouse

 

A licenced warehouse is a structure or secure location where imported dutiable commodities are kept and customs duties are postponed until the products are shipped or sold locally. Before beginning operations, operators of permitted warehouses must acquire a licence from the Royal Malaysian Customs Department (RMCD) under Section 65 of the Customs Act 1967. The usage of licenced warehouses as a storage and distribution centre for international and local trade has been extended. Warehousing dutiable products, break bulking, repackaging, re-labelling, buying and selling, consolidation/merger, and entrepot trading are all permissible operations in a licenced warehouse (that is importing goods to be processed or stored and re exported). RM3.922 billion in revenue was received by RMCD through public and private licensed warehouses. A total of 64 (18.1%) of the 353 public and private licenced warehouses were involved in the storing restricted goods which are liquors and cigarettes as of December 31, 2015. However, some of the restriction of bonded warehouse are as follows:

• No licensee may receive or transfer intoxicating liquor into or out of a bonded warehouse in a province unless the licensee has obtained written approval from the board, commission, or agency authorised by the laws of that province to sell or authorise the sale of intoxicating liquor in that province. 

• The following domestic items may not be received into a bonded warehouse by a licensee: 

Cigars

Raw leaf tobacco in a packet

Tobacco that hasn't been stamped

Packaged or bulk spirits that have not been subjected to duty 

Packaged or bulk wine that has not been subjected to duty 

Specifically denatured alcohol that is not subject to duty.

• The following imported goods may not be received into a bonded warehouse by any licensee: 

bulk spirits

bulk wine

specially denatured alcohol.

 

How Businesses Can Find the Perfect Bonded Warehouse Through Industrial Malaysia

 

When it comes to offering the best service and having access to the necessary infrastructure, the right location may make all the difference, while also increasing accessibility and lowering overall expenses. Working with knowledgeable industrial property agents will help you expand more quickly than if you manage your warehouse operations on your own. If you want to enhance your revenues and cut down on wait times, consider Industrial Malaysia. 

We provide a list of bonded warehouses where you may outsource the management of your goods and benefit from the benefits of utilising bonded warehouses without the trouble of putting one up yourself. Check out our bonded warehouse listing here.

 

Get in touch with us right now to learn more!