LC opening for oil, sugar drops

People buy essentials at capital’s Karwan Bazar on 3 April 2021.
Zahidul Karim

Opening of letters of credit (LC) for six products including soybean oil, palm oil and sugar fell due to dollar crisis.

Bangladesh Bank issued several circulars over the past couple of months to keep the opening of LCs normal to import essentials, but opening of LCs dropped.

According to data from Bangladesh Bank, opening of LCs to import unrefined sugar fell by 28 per cent in October-December of 2022, comparing to the same period of the preceding year.

Unrefined soybean oil saw a drop in opening of LCs by 47 per cent, soybean seed 83 per cent, unrefined palm oil 99 per cent, gram by 47 per cent, and date by 30 per cent.

Drop in opening LCs indicates a potential crisis of goods in the country and impact has already been visible in the market. There has been a crisis of sugar in the market for several months. Traders said they could not open LCs for import on time due to dollar crisis.

About import of essentials, TK Group’s director Md Shafiul Athar Taslim said it takes two months to import goods after opening an LC and it prolongs more than three months when a crisis of ship appears.

Meghna Group of Industries senior general manager SM Mujibur Rahman said, “Recently, situation improves a little after Bangladesh Bank repeatedly urged to open LCs to import essentials. We are trying our best and banks should step forward.”

Speaking to Prothom Alo, Dhaka City Fruit Importer-Exporter and Hoarder Multipurpose Association general sectary Sheikh Abdul Karim told Prothom Alo, “Import of foreign fruits slows. Traders are able to open LCs against import of date and that is less than previous times and banks are talking about dollar crisis while opening LCs. Import of date may fall by 20-30 per cent in this Ramadan.”

Last December, Bangladesh Bank allowed traders to open LCs on the import of eight products with less amount of money ahead of Ramadan. Yet, traders are struggling to open LCs.

Replying to a query on how many LCs on import of essentials had been opened over the past couple of months, Bangladesh Bank spokesperson Mezbaul Haque declined to disclose the data.

“This information cannot be revolved and it may volatile market. Opening of more LCs will decrease price and opening of less LCs will increase price,” he said.

The commerce ministry has laid an emphasis on keeping import normal so that no crisis of essentials hits the market ahead of Ramadan.

Meanwhile, settlement of LCs on import of unrefined sugar and palm oil, gram and date also decreased in addition to a drop in LC opening.

According to data from Bangladesh Bank, import of unrefined sugar fell by more than 200,000 tonnes in July-December of 2022, comparing to same period of the preceding year while import of unrefined soybean oil dropped by more than 100,000 tonnes during this period.

Speaking to Prothom Alo, Consumer Association of Bangladesh (CAB) president Golam Rahman said, “The government must allow opening of LCs regularly and monitor the supply system so that no crisis hits the essential market.”