Dollar crisis cuts trade thru land ports in half

Cross-border trade through land ports in Bangladesh has halved over the past month as importers are facing severe difficulties in opening letters of credit (LCs) amid the country's US dollar shortage.

Importers say banks are issuing LCs for only a handful of consumables, such as rice and onion. As a result, shipments of other items, including animal feed and coal, have slowed considerably.

Imports through land ports in the country have dropped by almost 50 per cent on average due to the dollar crisis and unstable rates for the greenback in global markets.

Besides, rising international commodity prices resulting from ongoing inflationary pressure worldwide has exacerbated the situation by increasing the cost of purchases from abroad.

Traders had been facing difficulties in opening LCs from the end of October, but their troubles deepened halfway through the current month due to continued depreciation of the local currency.

"Most banks are rejecting our requests to open LCs citing that they do not have the authority," said Mostaq Ahmed, a trader of the Hili land port in Dinajpur.

Bangladesh Bank had tightened the rules regarding the opening of LCs for non-essential items earlier this year in a bid to ease the pressure of import payments on the economy.

However, Mostaq, who imports edible goods, said he tried and failed to open LCs at several banks in Hakimpur upazila of Dinajpur and Panchbibi upazila in Joypurhat midway through November.

Traders at other land ports in the region, namely Sonahar in Kurigram, Banglabandha in Panchagarh, Burimari in Lalmonirhat, Biral in Dinajpur and Sonamasjid in Chapainawabganj, are enduring similar experiences.

Officials say the ports will mostly likely miss their revenue targets this year considering the decline in imports, which will also impact the earnings of a large number of people working at these facilities.

Sarkar Rakib Ahmed, president of the Clearing and Forwarding Agents Association of Sonahar, said the port is mainly used to import food items alongside stone, coal and limestone.

However, shipments have dropped by as much as 60 per cent due to difficulties in opening LCs. Also, there have been unusual delays in the release of LC payments even after importers paid their dues in full, he added.

Md Shaheed, an importer of Hili land port, said he could not import wheat and rice bran from India as banks declined to open an LC even though these items are essential for making animal feed.

He then informed that shipments of bran through the port have remained halted since October 20 as banks are opening LCs only for importing onion and rice, leading to a 70 per cent decline in his business.

During normal times, Hili land port is mainly used for importing rice, wheat, maize, mustard cakes, molasses, rock, ginger, garlic, onion and chilly, among other items.

Harun Ur Rashid, president of the Importers and Exporters Group at Hili land port, said banks seem to have silently imposed a restriction on opening LCs for most goods due to the dollar crisis.

"If we need 10 LCs, banks are releasing just 2 of them," he added.

Rashid went on to say that trade through the port has fallen by some 30 per cent amid the current situation.

"Previously, around 300 trucks loaded with various goods would enter Bangladesh through the port each day but now, the number is around 200," he said, adding that banks hardly provide LCs for importing cattle and poultry feed items.

Port and customs authorities of Hili land port say that around 4.68 lakh tonnes of goods were imported between July and October in the current fiscal while it was around 6.64 lakh tonnes during the same period last year.

Kudrat-e-Khuda Milon, president of the Importers and Exporters Group of Banglabandha land port, said banks have almost completely stopped issuing fresh LCs.

"Only goods of previous LCs are being imported through the port at present," he added.

An official of a private bank in Joypurhat, on condition of anonymity, said Bangladesh Bank has imposed tougher restrictions on opening LCs as the dollar crisis is getting worse every day.

"Before opening any LCs, we send it to Dhaka for approval after starting the process here," he said, adding that it has become a lengthy process.