Declined imports hit revenue collection

Infographic: TBS

Declined imports due to the dollar crisis-induced import curbs has reflected in the government's revenue collection as import duty dropped year-on-year this January.

A slight decrease in the price of goods in the world market is another reason behind the drop in revenue collection, which businessmen say will have a negative impact on the country's industries and employment.

According to the National Board of Revenue (NBR), year-on-year import duty collection growth declined to negative 0.53% in January which was 23% in the previous fiscal year.

The growth in import duty collection from July to January –­ the first seven months of the current fiscal 2022-23 – is less than 8% despite the rise in prices of imported goods. The figure was over 22% in the same period of the last fiscal year.

"The main reason behind the decrease in import duty collection is the decrease in imports due to the dollar crisis. The government moved to control imports to keep the reserves stable," Mostafa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told The Business Standard.

"I myself was forced to reduce production of a factory by 60%. I had to lay off some workers too," said the vice-president of the country's apex trade body.

According to NBR sources, apart from duty collection, income tax collection in January also lacked the expected pace – less than 3%.
Overall, the YoY growth in revenue collection stood below 5% in January – total revenue collection was Tk26,877 crore against the target of Tk31,500 crore. In contrast the growth in January of the last fiscal year was 18%.

In the first seven months of the current fiscal year, revenue collection fell short of the target by Tk17,266 crore – the target was around Tk1,90,000 crore.

Last February, when the country faced a dollar crisis in the wake of the Russia-Ukraine war, the government took several steps to discourage imports, including the increase of regulatory duties on imports of luxury goods in four sectors to control imports in May last year.

One month prior to that, in April, the cash margin for LCs was initially widened to 25%, which was expanded in phases to 100% for 27 items. Besides, the central bank asked the banks to notify in advance for LCs worth more than $3 million.

Central bank data also says that the rate of credit opening for imports has decreased by 25% from last July to January.

The latest Bangladesh Bank data shows imports of capital machinery, consumer goods, intermediate goods and industrial raw materials except petroleum have fallen substantially in July-January.

LC opening for capital machinery was $1.41 billion in the first seven months of the current fiscal year, down from $4.25 billion during the corresponding period last year.

Besides, imports of consumer and intermediate goods decreased by 18.22% and 33.30% respectively in the seven months of FY23. Imports in these two sectors during the period were $4.7 billion and $3 billion.

Imports of top 20 import goods through the Chattogram Custom House, which accounts for more than 90% customs duty collection, dropped by 31.88% in January year-on-year ­­– equivalent to Tk637.63 crore less collection of revenue.    

A senior official of Chittagong Customs House told Business Standard on the condition of anonymity, "We hope the import will be normal in the coming months and customs duty collection will increase as well. Besides, prices of some imported goods are likely to increase."

Meanwhile, NBR chairman Abu Hena Md Rahmatul Muneem held a day-long meeting with the field level officials last Sunday (26 February) to analyse the revenue collection situation.

According to sources, he expressed his displeasure at the meeting because of the slow pace in revenue collection.

The NBR Chairman has directed the field level officials to strengthen monitoring, give extra effort and pay attention to increase dues collection, they added.