Imports hit record $44b in FY17 despite sluggish exports

Staff Correspondent | Published: 23:35, Jul 30,2017

 
 

Country’s import payments hit an all-time high in the recently concluded fiscal year (2016-17) due to large payments for capital machinery imports, arousing suspicion that money were laundered in the process as the growth came against the backdrop of a dull investment situation in the country.
The settlement of letters of credit, or actual import payments, increased by 10.47 per cent in FY17 against the 4.22-per cent rise registered in FY16.
According to the provisional data of the Bangladesh Bank, the import payments stood at $44.27 billion in FY17 compared with that of $40.07 billion in FY16.
The central bank prepared the latest import statement on the basis of freight on board (FoB) data, so the amount of payments may increase when it would calculate the figure considering information related to the cost and freight (C&F), a BB official told New Age on Sunday.
The import payments in FY16 stood at $42.92 billion in accordance with the C&F data.
The import payments stood at $38.45 billion in FY15, $37.18 billion in FY14, $32.35 billion in FY13, $34.81 billion in FY12 and $31.95 billion in FY11, according to the statements prepared by the BB using the FoB data.
The import figures, however, changed when it made the statements through using the C&F information as the payments stood at $40.70 billion in FY15, $40.73 billion in FY14, $34.08 billion in FY13, $35.51 billion in FY12 and $33.65 billion in FY11.
The BB official said that the import payments had increased significantly in last fiscal year while the export earnings’ growth hit a 15-year low at 1.69 per cent.
Export earnings in FY17 stood at $34.83 billion with a shortfall of more than $2 billion from the government-set target of $37 billion, according to the provisional data of the Export Promotion Bureau.
The BB data showed that import payments for capital machinery in FY17 increased by 37.39 per cent to $4.85 billion from $3.53 billion in FY16.
Former interim government adviser AB Mirza Azizul Islam told New Age on
Sunday that the import of capital machinery increased in recent times that aroused suspicion that money might have been laundered by some businesses through over-invoicing in their LCs as the overall business situation in the country remained dull in the period.
‘A huge volume of capital machinery was imported in the period in line with the commercial banks’ statements, but apparently there was no investment in the country’s private sector,’ he said.
The businesspeople usually pay zero per cent tariff to import capital machinery, he said, adding that they might take the opportunity to launder capital from the country using the system.
The BB, customs department and finance ministry should investigate the matter jointly, he said.
Former BB governor Salehuddin Ahmed told New Age that in recent times the import of capital machinery increased significantly that aroused suspicion that money laundering might have occurred behind such activities.
He feared that some businesspeople were laundering money through over-invoicing in their LCs.
The BB should strengthen its monitoring system to see whether the businesspeople are importing goods in accordance with LCs’ invoice, he said.
According to a Bangladesh Institute of Bank Management research report released in June, a large amount of money is being laundered abroad from Bangladesh through export and import business or trade financing as a section of unscrupulous businessmen is playing four tricks for the purpose.
The four tricks being used are over- and under-invoicing, over- and under-shipment, false description of the products and showing multiple invoicing in the LC authorisation forms submitted in the banks by the businessmen, the report said.
In FY17, the import of industrial raw materials also posted a growth of 3.52 per cent against the 3.15-per cent growth in FY16.
Settlement of LCs for the industrial raw materials amounted to $16.22 billion in FY17 against $15.66 billion in FY16.
The BB data showed that settlement of LCs for petroleum products in FY17 registered a 3.30-per cent growth against a negative growth of 29.48 per cent in FY16.
The import payments for the petroleum products stood at $2.52 billion in FY17 against $2.44 billion in FY16.
The BB official said the import of petroleum products showed a lower growth due to lower petroleum prices on the global market during the period.
The BB data showed that opening of LCs posted an 11.05-per cent growth in FY17, while it had witnessed a 0.62-per cent growth in FY16.
The data showed that the total value of the LCs opened in FY17 was $48.12 billion, which was $43.33 billion in FY16. 

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