Car imports see uptick ahead of budget

Car imports through Chattogram and Mongla ports have surged in the last few months of the current fiscal year.

Consumer goods importers criticised the development, saying the rise in imports of cars, a luxury item, is concerning as the country is still struggling to meet the import bills of daily necessities amid a dollar crisis.

In May, 2,641 cars were imported from Japan in two ships – the highest number of cars imported in a month this fiscal year.

Of these cars, 1,009 were imported through the Chattogram port and 1,632 through the Mongla port, according to Customs data.

According to the Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida), more than 800 cars will be imported in the last fiscal month June.

In July last year, the Bangladesh Bank imposed restrictions on the import of luxury goods to save foreign currency.

Mohammed Shahidul Islam, the secretary general of Barvida, told The Business Standard, "We support the government restriction on importing luxury goods. But, there is a huge demand for cars in the country and we cannot import as per the demand."

Car imports usually rise in the months before a new budget as importers fear that the government might hike import duty.

Normally, an average of 2,000 cars are imported every month, Barvida data shows.

About 75% of the cars imported into Bangladesh are reconditioned or used cars while the rest are brand new. The import of the reconditioned cars generates about Tk5,000 crore in revenue for the government.

According to the National Board of Revenue (NBR), some 17,509 cars were imported in the 11 months from July 2022 to May 2023 of the current fiscal year at a cost of $170.5 million. About 23,000 cars were imported last fiscal year.

A matter of concern

Though gradually easing, the dollar crisis is still persisting in the country, said traders.

Chittagong Chamber of Commerce and Industry (CCCI) President Mahbubul Alam told TBS that importing luxury goods in times of crisis is by no means appropriate.

Meanwhile, several importers of consumer goods told TBS that they are still facing complications in clearing the goods from the ships due to complications related to the letter of credit (LC). Ships are arriving at the port with goods but banks are unable to pay the import bills in due time.

This seems to be the case for almost all importers of consumer goods. As a result, the cost of goods is increasing with the increase in ship fares. The burden of this additional cost is being borne by the average consumer.

Aziz Chowdhury, a senior official of Abdul Monem Ltd, a major importer of consumer goods, told TBS, "We have to face various issues in importing consumer goods. First of all, due to the dollar crisis, we are not able to open LCs with banks in Bangladesh on time and as per demand. Secondly, many global banks refuse to finance the LCs of Bangladesh, which complicates things further."

Mongla port sees more imported cars

At present, around 60% of the country's imported cars enter through Mongla Port.

In the fiscal 2021-22, some 34,783 cars were imported through the two main sea ports of the country. Out of this, 20,808 came through Mongla port and 13,913 through Chattogram port.

About 52% of the total revenue of Mongla Customs House in FY22 came from car import duties. 

Mongla Customs House Joint Commissioner Mahfuz Ahmed told TBS, "Due to the decrease in car imports, Mongla Customs' revenue decreased by Tk400 crore in this fiscal year."

Ahsanur Rahman Arju, chairman of the Standing Committee of Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida) at Mongla Port, said LC opening for car import remains difficult yet. 

"Banks are still making various arrangements to open LC for car imports. The official dollar rate is Tk108 but we [traders] have to open LCs at the rate of Tk120," he said. 

The car business has not fully recovered yet, he said. "In other years, three to four ships loaded with cars used to dock at Mongla Port every month. In this fiscal year, no more than one-two ships are docking at the port a month. We will need some more time to overcome this situation."

Barvida President Habibullah Don said due to fewer car imports, the customs' revenue income has been hit hard. 

"The government used to get about Tk5,000 crore annually from imported cars. However, customs received 50% less revenue this year," Habibullah added.

Mongla port auctioning off 147 cars

The Mongla port is set to auction 147 reconditioned cars as these vehicles were not redeemed by the importers within the specified period after import.

The auction process will begin on 5 June, said port authorities

Earlier, tenders were sold to participants of the auction on 23, 24 and 25 May. The participants will have to submit their tenders along with a 10% security deposit by May 31.

Potential buyers will have the opportunity to visit the cars at Mongla Port till 30 May. One can participate in the auction online as well.