Anxiety grips Jashore’s motor parts traders as LC restraint threatens business

After barely weathering the Covid-19 pandemic shock, Jashore's motor parts traders are facing a fresh blow as letter of credit (LC) opening restrictions continue to batter their businesses to uncertainty.

Home to thousands of motor parts businesses, Jashore's RN Road is often dubbed the "auto parts capital" of Bangladesh. Traders of this south-western district import motor components from neighbouring India and sell them to the rest of the country. 

Now, with LC opening restrictions, their stock is dwindling with little to no import opportunities. These traders are failing to meet demands from Dhaka and other parts of the country. Some are finding it hard to pay employee salaries while others are faced with the risk of dealership cancellations. 

Rozwan Ahmad Murad, an importer and proprietor of Faria Motors in Jashore, said his business barely survived the pandemic. "Now, I am facing uncertainty as I cannot import due to the LC opening restrictions." 

On top of that, banks are not providing him with any loans, he said, fearing the worst for his business.

Md Rana, owner of Nirjan Enterprise and importer of three- and four-wheeler auto parts, said he has not been able to import parts for six months due to the LC issue. 

With loan instalments, employee salaries and family expenditures to maintain, Rana worries that his business may not survive more than two more months.

Raju Akhter, a motorcycle parts importer and owner of Shopno Autos, said his Indian suppliers have been pressing him to buy products and threatening to cancel dealerships if he fails to buy from them soon.

Shahinur Hossain, president of the Jashore branch of Bangladesh Motor Parts & Tyre Tube Merchants Association, said there are about 2,000 motor and motorcycle parts shops in Jashore with an estimated investment of at least Tk10,000 crore, most of which are bank loans. 

Moreover, about 20,000 employees work in these stores. Their salaries range from Tk7,000 to Tk15,000, Shahinur said.

"Most traders face uncertainty due to not being able to open LCs. Even if some big traders have some stocks, they will run out in a month," the trade leader said. 

All traders are at risk as bank instalments are an added burden for most of them, he added. 

The bulk of the revenue of Benapole Customs House comes from the import of high-duty car parts and motor parts. But the LC issue has drastically reduced imports, thus leading to a shrinking of revenue generation.

In the first six months (July-December) of the current fiscal, the target of customs revenue in the land port was Tk2,939 crore. However, Tk2,631 crore was collected, falling short by Tk309 crore.  

According to Benapole Custom House sources, in the last five years, motor parts worth Tk2,000 crore have been imported through the land port. 

Benapole Customs House Joint Commissioner Abdul Rashid Miah acknowledged that the import of motor parts has declined due to LC restrictions which have also shrunk their revenue collection.

Benapole C&F Agent Association President Shamsur Rahman said motor parts are not being imported through the port for the last 5 to 6 months. "It is natural that revenue will decrease if only goods with low duty are imported." 

Shahidul Islam, assistant general manager of Rupali Bank Jashore, said LCs are not being opened mainly due to the dollar crisis. "Therefore, banks are not able to conduct their businesses properly."

The former president of the Jessore Chamber of Commerce and Industry, Mizanur Rahman Khan, said the city's motor parts business is one of the hardest hit by LC opening restrictions. 

"This is causing traders to default on their loans, and uncertainty looms over their livelihoods," he said. 

Jashore's RN Road is known for its motor and motorcycle parts businesses. Thousands of crores of taka are transacted in the area every year.