What is a Bonded Warehouse?

A warehouse authorized by Customs authorities for storage of goods on which payment of duties is
deferred until the goods are removed.

A Bonded warehouse is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. It may be managed by the state or by private enterprise. In the latter case a customs bond must be posted with the government. This system exists in all developed countries of the world.

Upon entry of goods into the warehouse, the importer and warehouse proprietor incur liability under a bond. This liability is generally cancelled when the goods are:

Exported; or deemed exported;
Withdrawn for supplies to a vessel or aircraft in international traffic;
Destroyed under Customs supervision; or
Withdrawn for consumption domestically after payment of duty.

A bonded warehouse is a duty free zone, akin to a port. It is usually fenced and has high security. The warehouse operator normally gives a ‘bond’ or more usually nowadays a bank guarantee (instead of a cash deposit in the old days) to customs to guarantee that there will be no loss of revenue to customs should any of the goods stored within be inadvertently released from the bonded area. In Malaysia, a license from customs is required before a public bonded warehouse can begin operations.
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Binding Tariff Information (BTI)