Rampant over-invoicing in import of a large number of goods is affecting domestic manufacturing industry, Centre for Policy Dialogue (CPD) said yesterday.
It said the declared prices of imported items such as base metal and articles of metal, electrical equipment parts, vehicles, aircraft, vessels and associated transport equipment are shown much higher than their actual value.
The situation is worst in case of imports of base metal and articles of base metal that saw a growth of 595% in July-November 2014 as compared to the same period a year earlier, according to the CPD.
During the period, the import of electrical equipment parts rose by 134.89% and vehicles, aircraft, vessels and associated transport equipment increased 44.38%.
The analysis of National Board of Revenue (NBR) data on import of capital machineries reveals suspicious growth in import during July-November period, said CPD Executive Director Mustafizur Rahman while presenting on the state of Bangladesh’s economy in FY15 at the CIRDAP auditorium.
“Higher growth of industrial term loan and high imports of capital machineries and intermediate inputs do not fully correspond with real investment on the ground,” he said.
He said the imports for a large number of items are exceptionally high, and do not tally with off-take of term loan.
Whether this is an issue of “misdeclaration” or mispricing or whether flight of capital is taking place through this is something that needs to be examined thoroughly by competent authorities, he added.
Mustafizur Rahman maintained that analysis of capital machinery import payments raises concerns about reliability of the data in view of growing questions as regards trade mispircing or deceleration leading to capital flight.
CPD distinguished fellow Debapriya Bhattacharya said investable assets have been going out of the country in the form of capital flight and on the other hand, investment remains sluggish, which is a matter of concern for the country’s manufacturing industry.
As per GFI, some $1.8bn was taken out of the country in 2012, he said, adding that the amount is larger than the foreign aid received by Bangladesh annually.
He said money was laundered in the name of capital machinery import by showing factitious price.
Even some might look for scope of capital account convertibility facility to conduct transaction of local financial assets into foreign financial assets freely, Debapriya observed.
According to a recent report of Global Financial Integrity (GFI), a Washington-based research and advocacy organisation, the amount of money has been flown out of the country through illicit means stood at $1.78bn in 2012 while it was $593m in 2011.
The annual average money laundering through manipulation of commercial invoices hit $1.31bn during a period between 2003 and 2012 in Bangladesh.
Trade misinvoicing involves deliberate manipulation of commercial invoices in order to misreport the value of a transaction, thereby illegally shifting money across international borders without detection.
According to the report, Bangladesh was ranked 51st among 145 developing countries that lost huge amount of money through siphoning.