Al Amin :
Simply for opening letters of credit (LCs), the entrepreneurs are crowding the offices of the top executives even in some cases the bank directors and chairman, thanks to the persisting dollar crisis in the country.
Rushing to the bank’s executives has become a routine task of the manufacturers for maintaining production to a certain level, the businesses said.
The leading entrepreneurs see the ongoing LC opening complexity as the biggest challengefor the industrial sector, they added.
They said production in the industrial sector has already fallen due to the local and internal factors as well as the sales of the consuming goods have also declined significantly for higher inflation.
In addition to this, the foreign exporters are now losing confidence in the country’s importers regarding the LC payment timely, they said.
“The scenario has never been seen before. But the situation has changed.
Rushing to the offices of the bank’s top executives for opening LC has become a major task for us,” TK Group Director Mostafa Haider told The New Nation.
“Along with this, the banks are giving various conditions to open LCs. Sometimes, they are asking us to collect dollars from outside. In my business career, I have never seen such a LC opening complexity before,” he added.
He further said, “Another big problemis that the foreign exporters are not trusting the Bangladeshi importers due to delay in making LC payment and they (exporters) are asking various questions.”
“Naturally, the businesses are suffering from this and maintaining the production to a certain level by importing raw materials has become a big cause of concern now, even by reducing demand,” he added.
Import rebound still remains elusive as a double-digit contraction was
recorded in five months (July-November) of the current fiscal year with consumer goods accounting for the deepest dip by nearly 27 per cent.
Economists feel such import fall, evidently following belt-tightening amid dollar dearth, casts further impacts on market and economic situations.
Such import contraction creates a double bind–it stokes consumer-price inflation and may lead to industrial-production deflation for want of raw material and machinery.
Official statistics showed the country’s import volume fell over 14 per cent during the five-month period year on year to $27.5 billion in terms of the opening of letter of credits, which was $32 billion in the corresponding period of last year.
Economists and manufacturers find two main reasons behind the sharp fall in imports.
Dollar shortage is one as the banks are unwilling to open LCs. They also identified higher inflation, which helps trim imports of some luxury goods, and upcoming general election as the reasons.
Dr Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh (PRI), attributes dollar shortage to the downturn in capital-machinery imports.
“Foreign-exchange reserves remained under pressure. The dollar-market volatility is the key reason as many banks are not willing to open LCs against imports,” Dr Mansur said.
Abul Bashar Chowdhury, Chairman of consumer goods importing company BSM Group, said that Bangladesh economy is dependent on imports and most of the food items and capital machinery have to be imported.
Following this, the importers are the biggest sufferer of the current reality.”
“Most of the banks are reluctant to open LC. Due to the unusual rise of the dollar, we are able to import 30 per cent less than before in terms of value of local currency,” he added.
