Import of luxury cars triples in a year

Luxury-car imports tripled year on year in 2023 by official count, notwithstanding foreign-exchange crunch facing Bangladesh and resultant curbs imposed on import of non-essential items to navigate financial crisis.
Country's gross forex reserves dipped to around US$ 27 billion as on the last business day (December 28) of 2023, gradually sliding from the highest $48 billion in August 2021, according to Bangladesh Bank figures.
Economists and trade experts say the income of some in affluent section of the people bloated in the year of global and local crises as a vested quarter was involved in the price manipulation and market syndication of essential commodities, throwing multitudes of consumers in woes.
And those affluent sections least bothered paying 500-percent duty taxes on import of luxury cars.
By a sharp contrast, the import of reconditioned cars used by less-fortunate ones dropped while the new and expensive vehicles found a bonanza in Bangladesh in the bygone calendar year, troubled with wars and geopolitical conflicts and trade disruptions.
According to customs count, some 610 high-end cars of the size measuring 2000 to 4000cc were imported through the Chattogram seaport in the past year, up from 230 in the previous year.
Of the luxury cars, 109 were imported under duty-free privilege, mostly enjoyed by lawmakers and diplomats.
The customs data showed more than 20 per cent or 122 luxury cars were imported by Members of Parliament (MPs) while the rest by diplomats. In July-November period, 30 duty-free luxury cars had been imported through the Chattogram port, all by diplomats and development partners.
Each car in this range usually costs above Tk 10 million after duty-tax payment.
Economist Professor Dr Mustafizur Rahman finds the data on luxury-car imports really 'surprising' at the time when the country is struggling to import its essentials, including raw materials for pharmaceuticals.
It's a reflection that when economy faces any threat, a vested quarter gets active to take its advantage," says Dr Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD).
The scenario shows how income inequality surged exorbitantly in Bangladesh and also aggravating in the current economic crisis, he observes about the boon for some and bane for others in a crunch time.
"It's a major weakness of economic management in Bangladesh if some people can afford luxury cars paying high duty- taxes," the CPD senior concludes on how any macroeconomic-management lacuna may result in social-status disarray.
Overall car imports, both new and reconditioned, had declined in recent years, mostly in case of those used by middle-class and upper-middle-class groups of people.
Overall import of cars contracted by 6730 units in 2023 against the previous year.
Though customs data showed higher import of luxury cars, its duty collection did not increase accordingly, raising doubt over duty-free import of those cars by lawmakers and diplomats.
Centering the national election scheduled for January 7, 2024, some of the Members of Parliament may have availed the benefit before expiry of their tenure, customs officials hinted.
The controversial benefit on import of duty-free cars was first introduced in the regime of Hussain Mohammad Ershad on May 24, 1987. However, the caretaker government in 2007 scrapped the privilege following its alleged abuse by some lawmakers who had reportedly sold out the duty-free cars on the local market at higher prices. The benefit has been restored in April 2010 allowing MPs to import duty-free cars again.
On January 6, 2022, customs authorities also allowed MPs the import of electric cars under the tax-free benefit.
An MP can import one vehicle during their tenure without having to pay customs duty, sales tax, development surcharge and import-permit fee.
The data on how many duty-free cars were imported in 2023 and names of the owners could not be collected from the customs yet.
However, a single-digit, 9.0-percent, growth in customs-duty collection over the corresponding period of previous year made experts doubtful over the data mismatch.
Customs-duty collection could have bloated if the majority of those luxury cars were imported by paying duty-taxes.
Dr Iftekharuzzaman, Executive Director of Transparency International, Bangladesh (TIB), has said though it is difficult to comment without having data as to who imported the duty-free cars, but there are many evidences of abusing the facility by lawmakers.
"It's logical to think that such huge volume of cars has been imported under duty-free benefits. But we have no objection if lawmakers availed the benefit under legitimate way," he added.
Many of the MPs were found to have sold the duty-free cars and purchased land or apartment with the money, he said.
The ED of the local chapter of the Berlin-based anti-graft watchdog suggests introducing separate nameplates, akin to diplomats, in the duty-free cars to make it identifiable and check its abuse.
There should be strict monitoring so that no MPs can sell their imported cars here, he adds.
Imports of reconditioned cars dropped slightly to 10,541 units in the July-December period of the current fiscal year against the corresponding period in FY 2022-23, according to BARVIDA data.
Mohammed Shahidul Islam, Secretary- General of Bangladesh Reconditioned Vehicle Dealers and Importers Association (BARVIDA), said used cars were imported this year as there are customers for the product following hike in purchasing power of people.
"Though car importers have faced some difficulties to open letter of credit (LC), reconditioned-car imports have not declined significantly," he adds.
Former president of Dhaka Chamber of Commerce and Industry (DCCI) Abul Kasem Khan says it's responsibility of banks to prioritize LC opening to keep production sector alive.
The businessman acknowledges growing income inequality which he feels could be brought down by devising prudent policies.
Mr Kasem, Managing Director of AK Khan Telecom Limited and Director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), points out that "showrooms in the city have many luxury cars in recent times which have been imported in the country spending huge foreign currencies".
A recent finding by Bangladesh Bureau of Statistics (BBS) shows income inequality in Bangladesh spiked in 2022 where upper 5.0 per cent of the population amassed 30.4 per cent of national wealth. In a stark contrast, it has found some 21.11-percent people reeling from food insecurity.

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