650 cars stranded at ports as importers cannot open LCs for dollar crunch 

Reconditioned vehicle importers are now in trouble over getting their 650 cars released from the Chattogram and Mongla ports as they have failed to open letters of credit after the shipments, which is allowed for reconditioned cars, due to dollar crisis. 

The Tk200 crore cars sourced from Japan in lots early this year were scheduled to ship to Bangladesh under several LCs, according to the Bangladesh Reconditioned Vehicles Importers and Dealers Association.

Although some consignments reached between January and June accordingly, traders could not open LCs for the rest of the cars afterwards due to dollar crisis. They, however, were forced to bring the vehicles to the country under the agreements they did with the exporters during the procurements. Otherwise, the cars would be scrapped in the source country.

Talking to The Business Standard, traders said opening LCs after shipment is also possible in the case of reconditioned car imports but they could not do so due to the dollar crisis, resulting in an unprecedented problem.

"We have been importing reconditioned cars for the last 40 years. However, we never saw such a critical situation earlier," Bangladesh Reconditioned Vehicles Importers and Dealers Association President Md Habib Ullah Dawn said.

"We deposited PIs [proforma invoices] to the banks concerned about one and a half months ago against the car imports. We have been ready to open LCs even with 100% margin but banks have failed to supply dollars,"

"As a result, our cars arrived at ports but we are yet to open LCs," he told The Business Standard and added that they informed the matter to the Bangladesh Bank governor on 12 December and sought his cooperation.

Meanwhile, the association, in a letter early this month, requested the customs authorities of two seaports to release the cars with nominal fines.

"Since the last two months, banks have been delaying opening LCs even after getting proforma invoices and 100% margin. In the meantime, some of our vehicles reached ports," reads the letter, a copy of which The Business Standard obtained. "We also agree that importing cars without LCs is a violation of import policies. However, the violation is unintentional," it adds.

Traders said they have to pay additional store rents as the cars have been kept at the ports. Moreover, they fear that the vehicles can be auctioned if they cannot be released within a month. There is another option that the cars can be re-exported but it will bring huge losses for them, they added.

Bankers said they are still unable to supply dollars for the car imports amid the depleting foreign currency reserves. "We know importers can be losers but we have no way to break the central bank rules [regarding opening the LCs]," said Md Jahangir Alam, executive vice-president of Bank Asia.

What customs say?

According to the National Board of Revenue, several importers, including HNS Automobile, GM Trading, MSRA Enterprise and Nagoya Corporation, brought a total of 934 cars to the country by the two ships –Vessel Lotus Leader and the Malaysia Star on 10 November and 22 November respectively.

The authorities did not find letters of credit against 650 of the cars. Hence, they are kept in the sheds of the two ports.

The customs authorities said traders imported the cars in the crisis moment to make higher profits.

"If the reconditioned cars can be imported within five years of manufacturing, they can be sold at higher prices. With this calculation, traders hurriedly imported the cars at the end of the year," a senior official of Chattogram Custom House, wishing to remain unnamed, told The Business Standard.