The import of industrial raw materials and capital machinery in the first ten months of financial year 2011-12 declined sharply compared with that of the same period in the last financial year due to the slow growth of investment in the industrial sector, said Bangladesh Bank officials.
The BB’s data showed that growth in the settlement of letters of credit for industrial raw materials dropped to 11.97 per cent and for capital machinery to 21.05 per cent in July-April of the current fiscal year compared to that of 57.89 per cent and 60.39 per cent growth respectively in the same period of FY2010-11.
Settlement of LCs for the items totalled $11.34 billion in July-April against that of $10.13 billion in the first ten months of FY2010-11.
LC opening for industrial raw materials in July-April posted a negative growth of 8.05 per cent and for capital machinery 25.82 per cent compared to 57.89 per cent and 60.39 per cent growth respectively in the same period of the previous financial year, according to the latest data of the BB.
LCs for $ 11.83 billion were opened for industrial import of raw material in July-April against $12.87 billion posted in the corresponding period of the last financial year.
LCs of $1.79 billion were opened for capital machinery while LC settlement was $2.03 billion in the first ten months of FY2011-12 against $2.42 billion and $1.68 billion respectively in July-April of FY2010-11.
Former BB governor Salehuddin Ahmed told New Age on Thursday that decrease in the opening and settlement of LCs for industrial raw materials and capital machinery was not a good sign for as it would affect on the growth of country’s gross domestic products.
‘Import of the two products is showing a declining trend in the last few months, mainly due to slow growth of both local and foreign investments,’ he said.
The businessmen are too discouraged to invest in the industrial sector because of the high rate of interest on banks’ loans, he said.
On the other hand, the commercial banks are facing a severe liquidity crisis due to the high government borrowing from them, he said.
The BB’s data, however, showed that growth in LC settlement for petroleum had increased by 56.94 per cent in July-April compared to that of 41.48 per cent in the same period of FY2010-11, due mainly to the operation of the quick rental power plants.
The payment of import bills for petroleum in the first ten months was worth $4.01 billion against $2.55 billion in the same period of the previous year.
The overall settlement of letters of credit for import in July-April stood at $29.59 billion, growing by 12.73 per cent from that in the same period of FY2010-11.
LC settlement in July-April of FY2010-11 was $26.22 billion, or 40.46 per cent higher than the figure of same period of FY2009-10.
The BB’s data showed that the overall opening of LCs had also registered a negative growth of 6.97 per cent in July-April compared to that of 43.26 per cent growth in July-April of FY2010-11.
LC opening in July-April stood at $30.36 billion against that of $32.64 billion in the corresponding period of FY2010-11.