Rising import and its consequences

When a country's imports rise, the immediate reaction may be disquieting unless it is complemented by corresponding rise in export. But import of not all items is likely to be alarming for a country embarking on modest and select industrialisation. In that case import of capital machinery shows that the country is on its right course. However, for Bangladesh, the overall increase in imports by 8.0 per cent in the first quarter of the current fiscal year (FY), 2018-19 has greatly been influenced by rising fuel oil import estimated at 78.62 per cent. Even this would be considered a highly positive development had this source of energy been used rationally. True, the increased import of oil has been necessitated for production of electricity. Since its gas reserve is depleting fast, the country has to look for alternative sources. As long as technology for production of renewable energy does not become cost-effective, the country has to depend on imported gasoline. Meanwhile, the quick rental power plants have been in operation for far too long. Those are guzzling the lion's share of petroleum and so should by now have been phased out. Clearly, the country is losing on the indiscrete use of oil.

But then the import in terms of settlement of letters of credit (LCs) rose to US$ 12.83 billion during the July-September period of the current fiscal - up from $11.83 billion in the corresponding previous period. Letters of credit have now turned to be a grey area with the instruments' dubious use by a section of businesspeople. When containers arrive full of sands or other trashes, it is clear that there is something wrong. In league with some dishonest parties abroad, money launderers take recourse to this malpractice for siphoning off money from the country.

It is only natural that at a time of uncertainty just before election, businesspeople adopt a 'wait and see' policy. So there is nothing unusual if import of capital machinery marks a declining trend. This certainly is linked with the propensity of investment. Both local and foreign investors keep watch over the political developments and devise their strategy in order to secure their investment. The prediction is that the decline in such industrial equipment's import recorded at 3.39 per cent in the first three months of the fiscal year may further dip in the coming months. There is nothing to be worried about this.

A real positive development, though, has taken place in the areas of consumer items. Such items' import has recorded a drop as high as 28.16 per cent. Since the country has not gone for any austerity measure, this may demonstrate several things separately or in combination. Has the country started producing quality supplementary goods so much so that the reliance on foreign items has reduced to this extent? In that case, the country should have achieved enough agro-industrial power. There is no such indication, though. Its opposite logic may be compulsive abstinence by a section of the population which no longer can afford consumer goods produced abroad. This, too, sounds unconvincing. In an economy yet to stabilise, jitteriness like this is not uncommon.