H1 capital machinery imports post 70pc growth

Economists suspect rise in money laundering

AKM Zamir Uddin | Published: 22:04, Feb 15,2017

 
 

A file photo shows men looking at machines at a textile machinery fair in Dhaka. The country’s importers of capital machinery will now get 30 months to settle payment against their imported items after filling up the letters of credit authorisation form instead of the previous duration of 18 months. — New Age photo

The imports of capital machinery increased by 69.91 per cent in the first half of the current financial year 2016-17 compared with 14.75 per cent growth during the same period a year ago.
Bangladesh Bank officials and an expert said there was no logical reason for increase in the capital machinery imports in the first six months of the FY17 considering the dull business situation.
The huge import payments for capital machinery raised a suspicion that money might have been laundered abroad, they said.
On the other hand, the import of industrial raw materials slightly increased by 4.92 per cent in the July-December period of FY17 compared with that of 0.52 per cent growth in the corresponding period of FY16, according to the latest BB data.
The imports of capital machinery increased to $2.86 billion in the July-December period of the FY17 from $1.68 billion in the same period of the FY16.
Former interim government adviser AB Mirza Azizul Islam told New Age on Wednesday that import of capital machinery increased significantly in recent time which prompted suspicion that money laundering might have occurred behind such activities.
He feared that some businesspeople were laundering money through over-invoicing in their letters of credit.
‘The businesspeople usually pay zero per cent tariff to import the capital machineries. They may take the scope to launder the capital from the country.
The investment-GDP ratio did not increase much in recent years, but import of capital machineries continued to maintain an upward trend during the period, he said.
He said the overall business situation was dull and rise in capital machinery import payment was not a good sign.
‘There is no apparent sign to use the capital machineries in the industrial sector. Some people may launder capital in the name of import of capital machineries,’ he said.
Mirza Aziz said that the import of industrial raw materials had not increased much in the period considering the import volume of capital machineries.
Policy Research Institute executive director Ahsan H Mansur told New Age that some persons might launder capital from the country through the import of capital machinery as the duty of imported item was very low.
He said, ‘The import payment for capital machineries was huge in the first half of the FY17. I suspect that a portion of the import payment for the products is being laundered.’
Besides, capital flight from Bangladesh has increased in the recent years.
The import of industrial raw materials increased to $8.04 billion in July-December of the FY17 against $7.66 billion in the same period of the FY16, the BB data showed.
The import of petroleum and petroleum products decreased by 19.63-per cent to $1.15 billion in the first half of the FY17 against $1.43 billion during the corresponding period of the FY16.
Lower price of petroleum products in the global market is the main cause of the declining import payment for the item, the BB official said.

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