Dhaka, Bangladesh (BBN) – Import orders for motor vehicles have significantly increased recently because of speculation that the government might raise duties on them in the new budget for fiscal 2009-2010.
Opening letters of credit (LCs) for motor vehicles recorded a rise by three folds in March last over that of the previous month, officials said on Tuesday.
Import LCs worth US$ 60 million were opened for the motor vehicles in April compared with $23 million in the previous month, according to the central bank statistics.
“The upward trend of opening LCs for the motor vehicles continues this month, ahead of the announcement of next national budget,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka.
Import LCs worth $27 million were opened for the motor vehicles during the first two weeks of this month, the BB’s data showed.
He also said the central bank is monitoring the opening of LCs for the motor vehicles closely.
“The importers are anticipating imposition of new taxes on motor vehicles in the next budget. As a result, the import order for motor vehicles is rising,” Director of the FBCCI Abdul Haque told BBN in Dhaka.
Mr. Haque, who is also Managing Director of the Haq’s Bay Automobiles Limited, said there is huge demand for cars, but due to higher taxes on import of motor vehicles people are forced to use very old vehicles.
Finance Minister AMA Muhith has already indicated that the government would increase taxes on luxury items in the next budget to ease pressure on the country’s hard-earned foreign exchange.
Bangladesh spent US$2.3 billion for car import in fiscal 2007-08. In addition, an amount of $75 million was spent on import of automobile spare parts in the same fiscal.
BBN/SS/SI/AD-19May09-11:33 pm (BST)