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After a sharp decline in the two consecutive years, the import of goods in the country registered a modest growth last fiscal year (FY25). Though to all appearances it looks positive, a deeper look into the overall import trend would reveal that it is a disturbing development.
Imports, in terms of clearing and forwarding (C&F) value, stood at US$68.35 billion last fiscal year, which was $66.72 billion in FY24. In terms of free on board (FOB), the value of imports was $64.34 billion and $63.24 billion, respectively in FY25 and FY 24. On average, the FOB value of imports is around $4 billion less than the C&F value.
Under the C&F arrangement, the exporter bears the cost and freight from the port of shipment to the port of destination, and the importer bears the cost of insurance and all other shipping charges from the port of destination to the final destination. If the exporter also bears insurance cost, it becomes a CIF arrangement. Again, under the FoB (Free on Board) arrangement, the exporter bears the cost of delivering items to the nearest port, but then the importer is responsible for the shipping and all the other charges.
For imports valuation, the United Nations (UN) International Merchandise Trade Statistics (ITMS) use a CIF-type valuation. The Balance of Payments and International Investment Position Manual, sixth edition (BPM6) of the International Monetary Fund (IMF) opts for an FOB-type valuation for both imports and exports. That's why in the balance of payment table, values of both the exports and imports of goods are calculated in FoB terms.
The World Trade Organization (WTO) uses CIF valuation for imports, which means transaction value plus the cost of transportation and insurance to the frontier of the importing country or territory. For export, it follows FOB valuation, meaning transaction value, including the cost of transportation and insurance to bring the merchandise to the frontier of the exporting country or territory.
So, Bangladesh customs applies the CIF valuation for goods imported from abroad, whereas Bangladesh Bank uses FoB for the BoP table. Nevertheless, the value of imports of goods is generally expressed in CIF or C&F terms.
During the last fiscal year, the exchange rate of the Bangladesh Taka against the US dollar depreciated by 3.89 per cent, compared to the depreciation of 8.17 per cent in FY24. The moderate depreciation of local currency against the greenback made imports less costly in comparison to FY24, when sharp depreciation made exports more attractive and imports more expensive.
Though imports registered a modest growth in the last fiscal year, statistics recorded by the customs authority showed that the imports of food grains and consumer goods posted double-digit growth.
Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), in its 'Review of Economic Situation in Bangladesh: Q4 of FY25' said: "The increase in imports could mostly be attributed to a significant rise in intermediate goods import, especially goods related to readymade garments (RMG), and a rise in food grains import."
The rise in food grain imports was due to a manifold jump in the import of rice in the last fiscal year. The total value of rice imports reached $682.4 million in FY25, which was only $25.4 million in FY24, and the second highest since FY18 when the country had paid $1746 million for importing the staple food. Import of wheat, however, declined by 20 per cent last fiscal year. Food ministry statistics showed that the combined output of food grains (rice and wheat) fell short of the target by 1.26 million tonnes and reached 42.96 million tonnes last fiscal year, marking a 2.60 per cent increase over FY24. Of this, rice production stood at 41.92 million tonnes, which was only 3 per cent higher than the previous fiscal year. The lower output of rice drove the surge in imports last fiscal year when the total volume of imports of food grains stood at 1.04 million tonnes, recording around 16 per cent growth in imports.
However, there is a significant discrepancy in the rice output data. The agriculture ministry has consistently reported a higher rice output, a practice that gained momentum during the now-ousted Hasina regime. This was part of an effort to manufacture various economic performance indicators and establish a more positive picture of development.
A rise in imports of consumer goods by 15 per cent last year was mainly due to a surge in imports of edible oil by 24 per cent and pulses by 34 per cent, driven by increased demand and a price hike in the international market.
Imports of overall intermediate goods increased last fiscal year, recording a modest growth of 2.80 per cent over FY24. As intermediate goods cover around 60 per cent of the total imports of goods, they are the dominant factor in setting the direction of imports in the country. Though imports of RMG-related intermediate goods increased significantly, there was a decline in imports of petroleum goods and other intermediate goods, including chemicals, fertilisers, iron, steel and other base metals. The decline indicates lower demand due to a slowdown in the production activities of these industries. Bangladesh Bank, in its monthly update of the major economic indicators, asserted: "The upward move, especially in imports of intermediate goods, highlights a rejuvenation of economic activities across key industries during the comparative timeframe."
However, the decline in imports of capital goods by 10 per cent last fiscal year clearly showed the sluggishness in the overall industrial activities in the country. Capital goods, having a 14 per cent share of total imports of goods, generally reflect investments in infrastructure and machinery to bolster long-term productive capacity.
In other words, the fall in imports of capital goods indicates that there is a slowdown in the country's investment situation. It is also reflected in the provisional statistics of the gross domestic product (GDP), released by the Bangladesh Bureau of Statistics (BBS), which showed that the investment-GDP ratio declined slightly to 30.70 per cent last fiscal year from 30.90 per cent in FY24. So, rebounding of investment in the current fiscal year is a big challenge and progress in this regard will also be reflected gradually in the rise in imports of intermediate and capital goods.