The Bangladesh Bank (BB) and National Board of Revenue (NBR) should properly guide the government in short- and mid-term to stabilize the market as unrest of consumers over price hike has been noticed in recent times.
Two successive deluges – at Feni, Noakhali and Cumilla in August – later at Sherpur, Netrokona and Mymensingh in October –have caused a substantial losses in the production of crops and spike in prices of commodities….
Dr. Quazi Afzal Hossain, Director of Department of Agricultural Extension while talking to the Dazzling Dawn usually prices of crops remain high during month of October and early November as availability of summer crops and winter crops are low. Citing market price of the previous years, Dr. Quazi Afzal Hossain said two successive deluges have also caused price hike that will come down in the winter season.
As the prices of soybean oil and palm oil have increased in the international market in recent times, the government has slashed the VAT (value added tax) on the commodities to stabilize and control the price in the local market, sources in the National Board of Revenue (NBR).
The price of per tonne crude soybean oil recorded at 1018.10 US dollars on October 16, 2024 as against 917.13 US dollars one month and 893.10 US dollars one year back showing 11.01 and 14.00 per cent rise respectively.
The price of palm oil price per tone recorded at 1060.00 US dollars on October 16, 2024 dollars as against 962.50 US dollars one month and 827.50 US dollars and one year back showing 10.13 and 28.10 per cent respectively.
Kazi Salauddin Ahmed, senior general manager of S Alam group, one of the largest importers of consumer groups in the country, while talking to the Dazzling Dawn said LC (letter of credit) of importing commodities have either been suspended or disrupted since August, 2024 . He considers that dollar crisis is one of the reasons of slowing down LC opening in the country . He expects that commercial banks under prescription of Bangladesh Bank will intervene into the issue to ensure uninterrupted import of the commodities and stabilize prices in the market. The holy month of Ramadan will begin in March the source of Argentina and Malaysia
Meanwhile, the government of Bangladesh on Sunday reduced import duty and regulatory duty on import of rice alongside withdrawing advance tax to keep the price of rice within the purchasing power of common people and thus keep it at a tolerable level.
The National Board of Revenue (NBR) issued a gazette notification in this regard. The move is expected to boost the supply of rice in the market and also to ensure food security for the common people.
Under the fresh decision, the import duty on rice has been reduced to 15 percent from the existing 25 percent, the regulatory duty to 5 percent from the existing 25 percent, and withdrew the existing 5 percent advance tax.
The NBR said that with such move, the price of per kg rice will reduce by Taka 14.40.
The government of Bangladesh has reduced the value-added tax (VAT) on imports of crude and refined soybean oil, palm oil, and other edible oils to 10 percent from the existing 15 percent, according to a Statutory Regulatory Order (SRO) issued by the Internal Resources Division (IRD) .
Through another SRO, the division exempted all VAT on local production and trading stages of edible oils.
The reduced VAT will remain effective until December 15 this year.
The development came two days after the Bangladesh Trade and Tariff Commission recommended the revenue administration to cut the indirect taxes to contain prices of the edible oil and inflation, which has been hovering around 9 percent since March 2023.
The World Bank (WB) has projected that Bangladesh economy is likely to grow 4.0 percent in FY25, driven by subdued investment and industrial sector activities, before accelerating to 5.5 percent in FY26 and returning to a robust growth trajectory thereafter. Bangladesh also faces increasing income inequality, particularly in urban areas.
From 2010 to 2022, Bangladesh’s Gini index-a measure of income inequality- increased by nearly three points from 0.50 to 0.53.
Bangladesh’s real GDP growth moderated to 5.2 percent in FY24, primarily due to weak consumption and exports.
The World Bank (WB) has observed that bold and timely reforms will help Bangladesh create quality jobs and achieve inclusive growth.
The availability of jobs has declined for urban educated youth, and job creation in large industries, like the ready-made garments sector, has stagnated. Since 2016, while more jobs were created in Dhaka, three divisions-Chattogram, Rajshahi, and Sylhet-faced significant net employment losses.
The fiscal deficit is estimated to have moderated marginally to 4.5 percent of GDP in FY24 and is expected to remain within the government’s target of 4.3 percent of GDP in FY25, with fiscal space for productive expenditures increasing only gradually. The implementation of the Annual Development plan declined to 80.9 percent in FY24 compared to 85.2 percent in FY23.
The interim government of Professor Dr Mohammed Yunus has been in a catch -22 situation as major importers of the consumer commodities had closed connections with the dictator Prime Minister of Sheikh Hasina, and some of them are engaged in manipulating the market by reducing the import of daily necessities, sources said.
Bangladesh imports wheat, edible oil and sugar to meet domestic demands as local production can meet less than 5.00 per cent of total demand, source said.
The interim government should have short- and medium-term policy to control, monitor and stabilize the market of commodities and give a sigh of relief to consumers, said top business leaders.
Sheikh Hasina — the brutal dictator and last Prime Minister of Bangladesh, who ruled Bangladesh for 15-year plus– had to quit power on August 5, 2024.
The regime of Sheikh Hasina that lasted from January, 2009 to August 5, 2024, was the darkest period in the history of the country.
Prices of commodities have increased in the local market as the country has experienced two deluges in recent two months resulting in substantial loss of crops. Most of the commodities are being sold around 100 per kg with some vegetables are being sold at 120-140 per kg.
Meanwhile, prices of commodities in the international markets have risen that also discourages importers to reduce the import of commodities. Source said the holy Ramadan will begin in March and the government should plan ahead to stabalist the market in the coming days.
Meanwhile, Adviser to the Ministries of Finance and Commerce Dr Salehuddin Ahmed said that the prices of commodities are very much related to the production and supply while the government is very much aware about the possible steps for controlling the prices of commodities.
“We’re very much aware about the matters which are related to trade and commerce. Another colleague (Dr Wahiduddin Mahmud) of mine is also looking after the Ministry of Planning. Usually, we’re used to such matters,” he said while replying to queries of reporters at the Ministry of Finance at Bangladesh Secretariat .
The Adviser earlier held a meeting with the country director of the Asian Development Bank (ADB) Edimon Ginting at his ERD office.
Noting that the government is also aware about the imported inflation, he said that only essential items should have to be imported. “We’ll have to keep an eye so that additional pressure is not put on the common people and the consumers while the existing pressure could be reduced further,” he added.
Imtiaz Ahmed is a free-lance columnist
