Bangladesh Bank has launched an inquiry into the recent substantial increase in garments machinery import despite ongoing political turmoil to see whether there is any attempt to siphon off money abroad through over-invoicing.
The opening of LCs for import of capital machinery increased by 23% in July-August period of the current fiscal year over the same period of the last fiscal year, according to the central bank figure.
The value of LC opened against capital machinery stood at $428m and settlement stood at $380m during the period as compared to $348.31m and $334m respectively in the corresponding period of the last year.
In the first 10 months period of 2012-13 fiscal, the amount of LC opening increased by almost 32% which was 26% lower during 2011-12 fiscal, as per Bangladesh Bank’s statistics.
“We have marked the significant rise in capital machinery import despite this sluggish business environment,” Deputy Governor Nazneen Sultana told the Dhaka Tribune, expressing concern over the excessive import expenditure, particularly against machinery for readymade garments.
“We’ve taken steps to inquiry as we think there may have ill motive,” she said.
They country’s apparel sector is passing through a crisis period after the collapse of Rana Plaza in April that killed over 1,100 people and the Tazreen Fashions Ltd factory fire in November last year that killed more than 110.
The new issue of workers’ wage added fuel to the unrest in the industry.
Bangladesh Bank senior executives suspected the money laundering activities as opening of import letter of credit (LC) increased substantially during the fag end of the present government tenure. Generally, the trend is witnessed at the end of every government.
They said the ill attempts are being made through over-invoicing as the imported machinery are reported as new and at higher price, but actually those would be second hand ones at lower price.
Of the capital machineries, central bank marked significant increase of garment and textile machineries, said one of them.
The executives said the rising trend is illogical as the entrepreneurs remain shy of making fresh investment in this situation of political instability ahead of the upcoming general election.
Earlier, Anti Corruption Commission of Bangladesh had moved to investigate the cause of significant increase in LC opening.
A confusion raised among them about the money laundering through import as huge amount of money was smuggled out abroad in the name of capital machinery import.
Import of garment machinery increased suddenly in July, despite having the continuous unrest situation, including issues like Rana Plaza collapse.
The LC settlement of capital machineries of garment industry increased 31% to US$40m in July as compared to $30.26m in the same month previous year, according to the Bangladesh Bank data. Textile machinery import increased by 25.56% in July this year as compared to same month previous year.
