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Why a big amount of export income is not coming to the country

As opposed to exported goods, the amount of income that is supposed to be coming to the country is not coming. There is a wide gap between Export Development Bureau (EPB) export statistics and Bangladesh Bank’s export earnings data.

Figure: As opposed to exported goods, the amount of income that is supposed to be coming to the country is not coming.

Analyzing the statistics of the two institutions for almost three years, it is seen that during this period, the amount of non-repatriated money against the exported goods has gradually increased. Those concerned say that since the outbreak of Covid, there have been many cases of trade disputes between buyers and exporters. Along with this, there has also been an increase in price reduction against exports. Again, the repayment period against the loan has also increased.

All this is reflected in the statistics of repatriated money against exports.

EPB regularly publishes statistics of products shipped for export. On the other hand, the central bank discloses income against that export.

Traders and experts say that there may be a difference in these two figures due to price reduction in the context of trade disputes. In that case the amount of money repatriated against exports may also be less. However, there is no chance for it to be more than 10 percent.

Bangladesh export earning-receiving-amount difference FY2021-22

Again, the repayment period may also increase. However, it is adjusted in due time. All in all, there is no scope for the difference in receipts against exports to be very large. However, taking advantage of the situation, money laundering can happen with the connivance of buyers and exporters. As a whole, the gap between exports and receipts continues to widen.

According to the bank’s statistical analysis, the rate of unrepatriated or unreceived money against exports is more than 13 percent in three years.

According to the statistical analysis of EPB and Bangladesh Bank, in the fiscal year 2019-20, exports were worth 3 thousand 367 million dollars. Although the money came to 2 thousand 996 million dollars. As such, the non-repatriated money in exports remains more than 11 percent.

In the financial year 2020-21, products worth 38.75 billion dollars have been exported. Against this came 33.96 billion dollars. As such, the difference between exported and repatriated money is more than 12 percent.

In the first nine months of the fiscal year 2021-22, the exports were worth 38.60 billion dollars. Against this, 31.61 billion dollars came. As such, the difference between export and repatriated money is 18 percent.


Bangladesh's export and receiving amount diffrence last 3 FY

A senior official from the Bangladesh Bank said to media that there is a difference between the goods exported and the money received against them as per fiscal year. The reason for this is that many times it has been seen that the buyer has given a discount even after the export. There is a provision that no more than 10 percent discount can be given.

But in practice it is seen that the discount rate is very high due to the lack of bargaining power of the exporters. It can be seen that due to not delivering the product on time, due to the quality not being appropriate, the buyer has asked for a discount. A part of the discount component.

There are other reasons too. Many times, it has been seen that the buyer did not accept the shipment of the goods for some reason or the other, that is, there were cases of non-delivery. In such cases no payment is received against the goods exported.

He also said that sometimes it becomes difficult to fulfill the strict role of bankers in the interest of exporters. In terms of unethical practices, if any payment is not made, the loan cannot be opened at a later date. I don’t think there is any scope for unethical activities in that case.

EPB sources said that the export data is published based on customs authority level statistics. There are several reasons why there is a mismatch between exports and export receipts. First of these is the deadline.

EPB figures are based on cargo handling and shipment at ports. Bangladesh Bank’s figures are based on accounts received through commercial banks. That is, the money paid after the exported goods reach the designated destination of the importer, if the money is repatriated to the commercial bank of Bangladesh, it is considered as export receipt. In this case, there is a chance that the amount received will be less due to the difference in the time of product shipment and receipt of payment.

Besides, due to time differences or international commercial conditions, there may be a discrepancy in the amount received against the export. According to them, a portion of the total value declared in the export bill of entry is supposed to be deducted by the buyer for shipment insurance or transportation costs.

Because of this, when the money is repatriated, it comes with a fixed portion deducted. All in all, there remains a gap between exports and receipts. In order to reduce this difference, there is a need for coordination between all parties concerned.

It is also alleged that unfair commercial practices may be one of the reasons for the statistical discrepancy between the Bangladesh Bank’s money receipts and the shipment data of goods exported. In these cases, there are precedents of not bringing money to the country by exporting products.

According to those concerned, international trade is an important area of ​​money laundering from any country. Such incidents may happen, but there is no opportunity for it to escape the attention of Bangladesh Bank. Even so, there are opportunities for such dishonest work to be done due to loopholes.

The monitoring system of the bank should also be taken into consideration in this regard. But above all, the difference between exports and receipts has widened due to the impact of Covid-19. Whatever the reason for the statistical discrepancy, the difference should be small.

More than 80 percent of the country’s total exports are ready-made garments. It is being said by the representatives of this sector that the practice of discount in exports is also a major reason for the mismatch between exports and received money. Exports with fixed products mean that buyers receive the product at a discounted price in the event of a disruption.

In this process, there is a chance that the amount received against the goods shipped will be less. The figures published by EPB do not account for discounts. However, the discount is reflected in the amount received. Again, partial export against the original letter of credit is done with the permission of the importer.

600 pieces were exported against the export of 1000 pieces of LC. But as declared in the bill of entry, the export is as 1000 pieces. But when the payment is 600 pieces, naturally it is less.

BGMEA Acting President SM Mannan Kochi told media that EPB’s information is on product exports. And the money that comes into the country against the export is available in the data of Bangladesh Bank. Differences can be observed between the two.

“When we export, there are often short shipments or partial shipments. Products are sometimes not shipped together. It can be seen that the purchase order of one lakh pieces, out of which 20 thousand pieces have not been exported. Meanwhile, buyers often ask for discounts for various reasons, starting from product quality.”

It can be seen that 30 or 20 percent discount is asked for $100,000 products. Customs authorities report on gross product figures. We believe there is a reporting error in this case. When the money comes through Bangladesh Bank, and when the account of Bangladesh Bank is available, it is genuine and correct. EPB provides information on export shipments, not income. Bangladesh Bank provides real income information.

A similar view was expressed by BKMEA, an association of net goods manufacturers and exporters in the ready-made garment sector. The executive president of the organization, Mohammad Hatem told, “Export figures vary from year to year. Later the money is repatriated. In some cases the buyer does not pay on time. In some cases there is also a discount, the amount of which is approved by a committee. In some cases, the committee has approved 100% discount or waiver. Discounts are allowed only if there is reasonable cause.”

“However, there is no chance of the amount being much higher. That is, there is no chance of the difference being so big. If there is an opportunity, the question remains, where did the rest of the dollars go? If we assume that exports in a fiscal year are 120 million dollars. If more than 10 percent of this is not repatriated, then all further import-export activities will be stopped. No unethical practices allowed.”

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