The CPD’s flagship report ‘State of the Bangladesh Economy in FY 2017-18’ stated that 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 an investigation into the matter.
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. 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 USD 8 billion to USD 9 billion of capital flight takes place from Bangladesh every year and 80 percent of it happens through misinvoicing.
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, echoing unprecedented growth.
Bangladesh Cotton Association dismissed CPD’s observations saying that the capacity of the spinning mills has increased over the years so the higher cotton imports happened. Growth in import payments of other intermediate goods such as textile and yarn and dyeing and tanning materials was also high, which suggests there would be the potential positive impact on exports over the subsequent two quarters of fiscal 2017-18.
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. Corruption and capital flight go hand in hand. It will be very difficult to arrest illegal outflows without success in anti-corruption efforts. The people who laundered money may be perhaps blessed by the ruling regime, so the political decision to stop capital flight should upward rule of law and transparency.
