Govt steps in to help importers in distress

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FHM Humayan Kabir
The commerce ministry will request the central bank next week to take steps so that the commercial banks can continue their support to the importers to augment essential items' import that declined in recent months, a top official said Friday.
"We always want to encourage the private sector to do business. The government does not have any business in business. So, we have decided to facilitate the import of essential items by the businessmen," Commerce Secretary Feroz Ahmed told the FE.
"We've had heard problems of the importers last week. They informed us of their losses due to falling prices of essentials in global market. This created problems for them in repaying the bank loans," he said adding, they had sought backing from the government to take necessary steps so that the banks' support continue.
"Now we shall request the Bangladesh Bank to take measures to continue the support of the commercial banks and not to harass the businessmen who are failing to repay loans timely due to their losses", the secretary said.
Following the declining commodity prices in the global market, the worried commerce ministry last week sat with country's leading importers and wholesalers to find out ways of keeping the supply chain of essential products smooth.
The letters of credit (LCs) cancellation rates against import of essential items, particularly rice, wheat and edible oils, were relatively high in recent weeks.
Bangladesh Bank data showed, LCs for edible oil worth US$26.21 million were cancelled during the first quarter of the current fiscal. Such cancellation was only worth $2.42 million during the corresponding period of the previous fiscal.
The edible oil is now being traded at around $600 per tonne in the international market, against its record high trading of $1280 per tonne three months back.
Currently, wheat is traded at $180 per tonne in the global market as against $455 per tonne in the month of July last.
The LCs for rice worth US$39.63 million were cancelled during July-September period of the current fiscal (2008-09) as against the LCs worth $22.44 million during the corresponding period of the previous fiscal, the BB statistics showed.
Not a single LC was opened to import rice during the first 23 days of last month because of seasonal impact as well as the falling trend in prices of cereals in the global market, a central bank official said.
Rice price climbed to as high as $1000 per tonne in the last quarter of the last fiscal, which came down to $310-$350 per tonne at present in the global market.
Mr. Feroz Ahmed said "the businessmen in the last week's meeting told us that if the commercial banks continued their support and did not harass them for failing to repay loans in time, they would be able to keep the supply chain of essentials smooth through regular imports."
Most of the businessmen take loans from the commercial banks for continuing their businesses.
Mr. Ahmed said: "I hope the central bank will take necessary measures to assist the businessmen, analysing the prevailing situation."
"Import of soyabean oil has fallen in recent months. So, we shall encourage the edible oil importers to import more oil to overt any possible crisis in the local market," he said when asked about the higher domestic price of edible oil.
"If the import situation does not improve the commodity supply chain might break down. So, we always encourage the private sector to continue their businesses as the government do not want to intervene in the market," he said.
Though there is a remarkable price fall of different essential commodities like edible oil, wheat, rice and lentil in the world market, their prices in the domestic market are still high.