Dollar crisis ignored to import luxury cars

In a bid to save foreign currency reserve from depletion, the Bangladesh Bank (BB), in May 2022 increased the cash margin for importing non-essential items by 50 per cent at the minimum from the previous rate of 25 per cent. But seeing that the measure did not work as expected to restrict import of expensive foreign products, the BB in July that year further tightened the restriction by requiring the importers of such items to make 100 per cent advance payment before opening the Letters of Credit (LCs) with the commercial banks. Obviously, the well-meaning initiative was to ease the pressure on the economy caused by rocketing import payment.
However, from a recent report carried by this paper in its January 3 issue, which says import of luxury cars increased markedly last year (2023), it appears that the BB's import restrictions, to all intents and purposes, have again fallen short of achieving its main objective. Because going by the report, year on year, the import of expensive luxury cars increased three times in 2023. No wonder the forex reserve stood at US$27 billion at the end of the last calendar year (2023).The first question that comes to mind is how such import could take place despite the existing prohibitive bank credit margins for such imports? According to some economists, such rise in the import of high-end cars has to do with more people joining the very high income bracket of the population.
These rich people are ready to even pay 500 per cent duty to import luxury cars. But question remains as to how some, if not all, of those rich people amass so much wealth legally at a time when the business and economy have been going through no end of crises of both external and domestic origins. In this connection, it would be worthwhile to recall that in August last year there were reports on import of some 200 luxury cars over the period of a year till that time through illegal means. Confirming the report, the head of custom intelligence and investigation department (CIID) at that time further told the media that those high-end cars were brought into the country either by foreign tourists, or by VIPs including lawmakers, or get those cars released from the port through false declaration.
Notably, foreign tourists could import cars without paying tax for a limited period of time using a facility under the international customs facility, namely, carnet de passages, on condition that foreign tourists would take back their vehicles after completing their visit in the host country. However, in practice, many of those cars were left behind. Also, some unscrupulous importers were using the facility to evade the required import tax. Similarly, VIPs and lawmakers supposed to fulfil certain terms and conditions have often misused those. For instance, customs sources informed, of the 610 high-end cars of capacities between 2,000cc and 4,000 cc imported last year, 109 were duty-free and mostly used by Members of Parliament (MPs). Consider that such categories of cars cost around BDT 10 million apiece after paying duty and tax. Such brazen display of pomp and splendour is taking place when majority of people are struggling to make ends meet amid skyrocketing prices of essentials compounded by the continued erosion of their real income, thanks to falling value of taka against US dollar. So, it is quite plain that a section of people has become superrich at the expense of the rest of the population. It is time to stop the rot.