The
Centre for Policy Dialogue yesterday 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 held at the
capital''s Cirdap auditorium.
In
the first four months of the fiscal year, the apparel export growth was
recorded at 7 percent while the import growth of cotton was recorded at 75
percent, he said.“Despite global price stability of raw cotton and an upturn in the growth of
garment exports, the high growth of over 75 percent in import payments for this
item appears to be suspicious,” the CPD said in its State of the Bangladesh
Economy in FY2017-18.There has not been any fall in yarn and fabrics import,
neither has there been a sudden spurt in investment in spinning.
Given the fall in prices of raw cotton, the high imports would allude to very
high volumes, which reinforces the need for investigation into the matter, the
CPD said.In a similar vein, the import bill for edible oil and sugar soared
29.3 percent and 50.8 percent respectively during the period.Given the
declining global price of sugar, this high growth suggests large increases in
volume, the CPD said in the report. It is the same case for edible oil. These
trends call for appropriate checking of the market by the commerce ministry for
overstocking of edible oil and sugar. Some $8 billion to $9 billion of capital
flight takes place from Bangladesh every year and 80 percent of it happens
through misinvoicing.
But Mehdi Ali, president of the Bangladesh Cotton Association, dismissed CPD''s
observations. “I am surprised with the CPD''s findings as there is no chance for
capital flight through cotton imports.”The reason for the higher cotton imports
is that the capacity of the spinning mills has increased over the years.In
fiscal 2016-17, Bangladesh imported 6.5 million bales of cotton, up from 5.5
million bales a year earlier. At the end of the current fiscal year, Bangladesh
may import 7.1 million bales of cotton, he said.
The
demand for the natural fibre is on the rise in Bangladesh as it is the only
country that is still mainly dependent on raw cotton for making yarns and
fabrics.Growth
in import payments of other intermediate goods such as textile and yarn and
dyeing and tanning materials was high, which suggests there would be potential
positive impact on exports over the subsequent two quarters of fiscal 2017-18.The
import of chemicals (18 percent), plastic and rubber (21.3 percent), iron and
steel (16.2 percent) and clinker (12.6 percent) showed particularly high
growth.In general, the import figures for certain items do not tally well with
the global price movement, letter of credit settlement figures, domestic
production and credit uptake and investment trends.Subsequently, the CPD called
for closer scrutiny by the National Board of Revenue and the Bangladesh Bank to
identify cases of over-invoicing and capital flight.
The
policymakers should also keep in mind that the country may face additional
burden of import payments in the second half of the fiscal year as the price of
some key imported commodities such as crude oil evinced signs of rise.In
general, import payments recorded significant growth to the tune of 28.7
percent during the first four months of fiscal 2017-18, according to the CPD
report.
Source: Prothom Alo, Bangladesh Tuesday, 16 January 2018