Cotton import surge raises capital flight suspicion

Staff Correspondent | Published: 21:56, Jan 13,2018 | Updated: 00:43, Jan 14,2018

 
 

A surge in cotton import growth in recent months has raised suspicion of capital flight from the country.
Imports of cotton grew by 75 per cent in the first four months (July-October) of the current fiscal year of 2017-2018, which was not consistent with the growth of readymade garment exports, the Centre for Policy Dialogue said at a press briefing on Saturday.
The price of cotton has remained stable in the global market and there has not been any fall in import of yarn and fabrics as well as there has been no sudden spurt in investment in spinning, the think tank said at the briefing arranged at the CIRDAP auditorium to release its first reading on the state of the Bangladesh economy in FY18.
National Board of Revenue and Bangladesh Bank should increase scrutiny to identify whether there was any case of over-invoicing and capital flight through import of cotton, the CPD said.
‘The growth cannot be explained with any of the economic indicators in the sector as the RMG exports grew only at the rate of 7 per cent during the period,’ said CPD distinguished fellow Mustafizur Rahman.
He said that suspicion of capital flight became strong in line with the previous studies and global statistics which said that more than 80 per cent of capital flight from Bangladesh took place through trade misinvoicing.
Trade misinvoicing including over-invoicing happens for products like cotton which enjoy zero tariff in import, he said.
Bangladesh imported cotton worth $1.09 billion in July-October of FY18 against $613 million in the same period of FY17, according to CPD analysis.
According to an earlier CPD study, capital flight increases in pre- and post-election years.
The next general elections in the country will be held at the end of 2018.

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