Cenbank asks for short shipment info to fix export data mismatch

As unrepatriated export money keeps growing, the Bangladesh Bank has asked banks and exporters for data on short shipment of goods to calculate the actual amount of unrealised and overdue export proceeds.

Short shipment occurs when the quantity and/or value of goods actually exported are lesser than what is declared in export shipping documents.

Reports suggest that incidents of delayed arrival of export proceeds have increased in recent months, with $3 billion of export proceeds out of the total value of goods exported from Bangladesh between July and February of the current fiscal year 2022-23 not yet arriving in the country.

However, the central bank's spokesperson yesterday said the amount would be $1.4 billion. 

Exporters have attributed delayed repatriation to non-payment of outstanding dues by foreign buyers and selling products on credit. Allegations have it that some traders are intentionally delaying bringing in export proceeds to benefit from increased exchange rates.

During its meeting with Senior Commerce Secretary Tapan Kanti Ghosh on 25 April, a visiting delegation from the International Monetary Fund raised concerns about the unpaid export proceeds. 

The widening difference between shipments and the realisation of export proceeds has raised concerns for the Bangladesh Bank, which made timely repatriation of export money conditional for exporters to avail of low-cost loans from Export Development Fund (EDF) and Pre-shipment Export Financing Fund. 

Additionally, the central bank has issued instructions that the exchange rate on export proceeds will be given according to the rate at the time of their arrival.

It also issued a letter on 30 April to all banks and exporters' associations, requesting information on short shipments by 6 July. 

This is not the first time the Bangladesh Bank has requested information on non-repatriated export earnings, as a similar request was made in a letter on 17 January. 

Mejbaul Haque, spokesperson of the Bangladesh Bank, clarified yesterday that the country's unrealised export currently stands at $1.4 billion, refuting recent news reports that claimed $3 billion of export proceeds were unrepatriated.

He made this statement following the closing meeting of the visiting IMF delegation visit with the central bank governor in Dhaka on Sunday. 

Selim RF Hussain, chairman of the Association of Bankers, Bangladesh (ABB) and managing director of Brac Bank, said some exporters are taking some extra time to bring in their export proceeds of late, but banks are also working with the Bangladesh Bank to curb this trend.

Speaking on the issue, Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TBS that short shipments happen for various practical reasons, but its amount is definitely between 1% and 2% of total exports. 

Exporters take short shipment certificates from the customs authorities and submit it to the bank concerned, which takes some time, he mentioned, adding that the BKMEA has directed member institutions to expedite the process and update the information.

"Sometimes, it is not possible to bring in some of the export proceeds to the country at the scheduled time due to various reasons including selling products on credit and problems with importers," Hatem explained.

He also observed that the conditions set by the Bangladesh Bank with regard to export proceed repatriation are not realistic. 

Syed Nazrul Islam, vice president of the Bangladesh Garment Manufacturer and Exporters Association (BGMEA), has stated that incidents of short shipments have increased during the Covid pandemic and in the initial months of the Russia-Ukraine war. However, the central bank lacks information about that period, making the calculation of export proceeds repatriation difficult. 

He added that even though exporters have submitted information to the customs, the customs authorities are unable to upload them to the Asycuda server – a computerized system designed by the United Nations Conference on Trade and Development to administer a country's customs –due to a lack of manpower.

According to BGMEA sources, there were cases of short shipment against more than 22,000 LCs till August 2018 – before the automation of customs. This is because many off-docks are closed or many documents are not saved. Again records are not available due to a change of clearing and forwarding (C&F) agents. Some exporters have lost information.

Syed Nazrul Islam told TBS that the BGMEA has been requested to give an updated report to the customs taking into consideration these obstacles. The customs authorities are sincere but it is not possible due to legal reasons. As a result, the law should be amended to solve this problem, he concluded.