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No visible step from BB to ease importers’ woes
AKM ZAMIR UDDIN, MOHAMMAD SUMAN and SUKANTA HALDER
The Bangladesh Bank is yet to take any visible measure in line with a commerce ministry directive aimed at asking banks to earmark a portion of their foreign currency holdings to open letters of credit to import essentials ahead of Ramadan.
On January 5, the commerce ministry sent a letter to the central bank to facilitate the imports of edible oil, refined sugar, lentil, onion, gram and dates in its bid to ensure their supply and contain prices during the fasting month when demand surges.
Two weeks have passed and importers face a new problem: several top importers are finding it difficult in clearing payments after bringing in goods on the shores of Bangladesh.
About 54,000 tonnes of sugar and edible oil, which were brought aimed at Ramadan, have been stuck at the Chattogram port for 10 to 55 days for the importers’ inability to pay import bills as banks are slow in settling the payments in the face of a dollar crisis the country has been facing for the last six months.
Importers say the delay in the release of goods has forced them to pay additional fares to the shipping lines, which will eventually increase the prices of the commodities once they hit the market.
The dismal scenario surfaced at a time when the arrival and the LC opening of a number of highly import-dependent commodities have dropped amid the shortage of the American greenback.
In its letter to the central bank, the commerce ministry cited the reduced imports of sugar and edible oil in the July-December period of the current financial year compared to the identical half a year ago.
For example, the BB said, raw sugar import fell 22 per cent, or 207,945 tonnes, in the first half of FY23.
And importers feared that if the LC opening and settlement situation does not improve by this month, it will be tough for them to guarantee an adequate supply of essential commodities ahead of Ramadan, which is expected to start in the third week of March.
“The overall situation is alarming. If LC opening and settlement situation does not improve, a crisis is likely during Ramadan,” said Taslim Shahriar, senior assistant general manager at Meghna Group of Industries, one of the biggest commodity importers and processors.
Two ships carrying 38,000 tonnes of sugar and 5,000 tonnes of edible oil imported by MGI have been stuck at the Chattogram port for eight to 12 days.
“We have not been able to secure the goods,” Shahriar said.
The situation compelled the commodity importer to pay an additional charge -- about $40,000 per day— to the shipping lines.
MGI is not alone.
MT Super Forty, a ship of S Alam Group that is carrying about 12,000 tonnes of palm oil, has been lying idle at the port for 55 days, port data showed. The company will have to pay $16,000 per day as an additional fee for keeping the ship waiting.
Shahriar said the central bank needs to resolve LC settlement-related complexities on an urgent basis.
TK Group has so far been able to open half of the LCs that it usually opens to cater to the demand during Ramadan.
“If we can’t do the rest by January, we will face a big challenge,” said Shafiul Ather Taslim, director for finance and operations of the commodity importer and processor.
The imports of edible oil, sugar, chickpeas, peas, ginger and onions fell between 10 per cent and 47 per cent year-on-year in July-December, data from the National Board of Revenue and the commerce ministry showed.
According to a commerce ministry paper, the import of crude soybean oil declined 47 per cent, gram fell 21 per cent and dates were down 3 per cent in the first half of FY23.
The opening of LCs for the import of raw sugar slumped 28 per cent year-on-year to 3.75 lakh tonnes in October-December of 2022. It dropped 47 per cent to 75,319 tonnes for chickpeas and 30 per cent to 21,980 tonnes for dates.
Citing the decline in LC opening, the commerce ministry, in its letter to the BB, said it is important to increase the opening of LCs for the six commodities for proper market management and suggested taking steps so that banks set aside foreign currencies to allow their imports.