Dhaka Times Report. It has been reported that the opening rate of LCs has decreased. Due to which the supply of daily necessities may decrease and the price of goods may rise, economists have expressed concern.
Importers have recently reduced the rate of opening letters of credit (LC) for commodities, a trader source said. This may have an adverse effect in the coming month of Ramadan. At that time, the supply of daily necessities in the local market may decrease. The Ministry of Commerce is expressing fear that the price may increase as a result. For this reason, the Ministry of Commerce wants to encourage traders to import essential products including edible oil, sugar, chickpeas, pulses, onions and dates. A letter has been sent to the Ministry of Finance, Bangladesh Bank and National Revenue Board to take necessary measures for this purpose.
Sources in the Ministry of Commerce said that in a separate letter, there is a request to withdraw the existing 5 percent Advance Income Tax (AIT) at the import stage of edible oil and shipbreaking industry, to bring down the interest rate of bank loans to 12 percent as before in the case of importing all commodities. The commerce ministry has written to the finance ministry and the industries ministry to recommend withdrawal of 5 per cent advance income tax or AIT on edible oil and shipbreaking industries. The decision of the Standing Committee on Commerce Ministry was given on April 30.
Almost the entire demand of edible oil in the country is dependent on imports. There is currently a 5 percent advance income tax or AIT on import of edible oil. As a result, the cost of import increases and its price increases in the domestic market. In the 32nd meeting of the Standing Committee on Commerce Ministry of the Ninth National Parliament held on February 26, the Ministry of Commerce was instructed to discuss the issue in detail and to take the necessary steps to withdraw the existing 5 percent AIT at the import level of edible oil. According to that directive, a recommendation has been sent to the Secretary of the Ministry of Finance, National Board of Revenue to withdraw the import tax on this product to keep the price stable by reducing the import cost of edible oil and increasing its supply in the domestic market. Besides, shipbreaking being a labor intensive industry and an emerging and rapidly expanding potential industry, there are huge investment and employment opportunities in this sector. After discussion on the issue in the 32nd meeting of the Standing Committee on Commerce Ministry, it was recommended to withdraw the existing 5 percent AIT at import level from this industry as well. Based on the recommendations of the Parliamentary Committee, with the aim of creating investment and employment through the development of the shipbreaking industry, it has been recommended from the Ministry of Commerce to the Ministry of Industry to take the necessary steps to withdraw the prevailing advance income tax on this industry at the import level.
In another letter sent to the Governor of Bangladesh Bank on April 26, the Ministry of Commerce said that TCB opened an LC for the import of daily necessities with LTR against the counter guarantee of the Ministry of Finance. The highest interest rate for these LTRs was 12 percent and the LC commission was 10.04 percent. Now banks are charging 14 to 16 percent interest on LTR. This is increasing the price of TCB's imported products. There is a fear of its negative impact on the market as well. Therefore, the Ministry of Commerce has requested to maintain the maximum interest rate of TCB's LTR at 12 percent as before.
Earlier, in another letter sent to the Governor of Bangladesh Bank on April 12, the Ministry of Commerce requested to bring down the interest rate of bank loans to 12 percent for the import of daily necessities. It has been said in that letter that the government has taken various measures including reducing the duty on the import of edible oil, withdrawing all types of duty on the import of sugar.
Holy Ramadan is starting from 21st of July. In the month of Ramadan, the demand for daily necessities, especially edible oil, sugar, pulses, chickpeas, onions, dates, etc. increases, so there is a fear that the prices will also increase. Because of that, they try to keep the price stable by increasing the import of these products. Until now, the maximum interest rate of bank loans for importing these products was maintained at 12 percent. But after withdrawing the maximum interest rate of bank loans at the import level through a notification of Bangladesh Bank on January 4, commercial banks are charging 15 to 18 percent interest.
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