Saturday, February 23, 2019 | ePaper
Currency flight in name of imports
Financing by banks needs to be probed : FBCCI Advisor
Currency outflow has been continuing from Bangladesh in guise of imports of capital machinery and various other essential commodities.
Official statistics showed that the value of opening of letters of credit (LCs) for import of capital machinery and various essential commodities are higher than the cost of entering of goods into the country.
In the Financial Year (FY) 2018, the country's import settlement cost was US$ 5.1 billion against LC opening cost of $6.4 billion for capital machinery. For miscellaneous industrial machinery, LC settlement cost was $4.9 billion against the value of opening of LCs worth $5.8 billion, according to Bangladesh Bank (BB) data released recently.
In the Country's total import, the share of capital machinery was 9.32 percent and that of consumer goods 11.76 percent. In these two categories,Â a large gap of $2.1 billion found between the cost of settlement and opening of LCs. Meanwhile, the value of outstanding LCs for import of capital machinery and miscellaneous industrial machinery was $9.8 billion, the BB data reveals.
In the same fiscal, consumer goods worth $7.5 billion have also been imported.
On this backdrop, a trade analyst of the country's apex trade body said the consequence of the high import spending surely is wide range of capital outflows.
"It is open to all that import of the high-cost machinery and huge quantity of commodities are meant for capital flight proportionately. Because, the amount spent on imports in these two categories does not match to the growth of industrialization, industrial outputs and job creations," said Manzur Ahmed, Advisor to the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI), on Saturday.Â Â Â Â Â
Talking to The New Nation from Perth in Australia over cell phone, Manzur said a certain level of import cost rises at the government level due to procurements for nuclear power plant, Padma Bridge and LPG plants but the private sector's import does not reflect industrial growth and employment.
"Shady imports must be checked. And, banks financing for such imports can be investigated by their regulator properly to dig out information about illicit capital flight," he added.
On May 13, 2017, in its latest Annual Report, the Washington-based research outfit Global Financial Integrity (GFI) estimated that a sum of $6.0 to $9.0 billion was siphoned off from Bangladesh in 2014 alone.
It said unrecorded capital flow away from Bangladesh stood $61.63 billion between 2005 and 2014, riding mostly on trade miss invoicing.
The GFI report also revealed that illicit capital flight from Bangladesh was on a higher trend from 2007 following political turmoil of the time.
"Of the total $61.63 billion illicit capital flow, $56.83 billion was through trade miss invoicing while the rest $4.8 billion could not be traced in the balance of payments data," the report added. On January 13, 2018, the Centre for Policy Dialogue (CPD) advised the government to investigate whether capital flight has taken place by way of sugar, edible oil and cotton imports.
"There is no resemblance between export and import growth of garment and cotton," said Mustafizur Rahman, distinguished fellow of the CPD, while unveiling the private think-tank's latest study at an event at the CIRDAP auditorium.