Recovering 15% negative growth of previous fiscal year, capital machinery import rose by 17% in the fiscal year 2013-14, despite sluggish investment climate.
Growing demand for readymade garment export and power sector expansion mainly contributed to increase capital machinery import, which also led the country’s overall import growth to a higher level, said a senior executive of Bangladesh Bank.
The value of LCs (letter of credits) settlement against capital machinery import stood at US$2.4bn in the last fiscal year compared to $2.1bn in the previous fiscal year 2012-13, according to the central bank data.
However, LCs opened for import of capital machinery increased by 33% to $3.8bn in the fiscal year 2013-14 compared to $2.8bn in the previous fiscal year. The country’s overall import expenditures rose by 14% during the last fiscal year compared to 15% growth in the previous fiscal year.
Business activities of the country got stuck in the last fiscal year amid political unrest over 5 January national polls, but the garment export and energy sector expansion continued to grow amid foreign fund inflow, said a senior executive of private bank.
As a result, capital machinery import in garment industry and energy sector increased significantly, which pushed the total capital machinery import to a higher growth, he added.
Capital machinery import witnessed a significant rise despite sluggish investment climate mainly due to growing demand for garment exports and power plant projects, said Bangladesh Bank Executive Director Ahsan Ullah.
“We did not find any clue of money laundering cases although there had been such a rumor against the capital machinery import.”
The central bank had earlier sent some documents on capital machinery import a few months ago to the Anti Corruption Commission (ACC) to inquire about money laundering allegations against the import, but it is yet to inform us about any progress of the investigation, he added.
The value of LCs settlement against garment machinery import rose by 8% in July-May of the fiscal year 2013-14 while opening value rose by 31% compared to the growth of 3% and 29% respectively in the same period of the previous fiscal year, according to the latest data of the central bank.
The LCs value of settlement and opening of garment industrial machinery import stood at $357m and $511m respectively during July to May period in the last fiscal year compared to $331m and $390m in the same period of the previous year.
The value of LCs settlement against power plant machinery import increased by 46% to $477m during the same period compared to the growth of 2.7% to $327m.
Textile and wearing sector received highest foreign direct investment (FDI) worth $412.43m in the fiscal year 2012-13, out of the last four fiscal years.
The amount of FDI in the power sector stood at around $71m during the year compared to $64m in the previous fiscal year, according to the central bank data.
Anti Corruption Commission (ACC) had undertaken a move in the last year to investigate into the causes behind the significant rise in LC opening.
ACC officials are skeptical about the money laundering through import as a huge amount of money was reportedly smuggled out abroad in the name of capital machinery import.
Bangladesh Bank sent suspicious information about five banks on capital machinery import to ACC in January this year to check whether there was any attempt to siphon off money abroad through over-invoicing.
The central bank had provided information of 10 months from July 2012 to April 2013 as per the ACC requirement when LCs (letter of credits) opened against capital machinery import increased 31.57% amidst sluggish investment climate and political turmoil.