Bangladesh Bank (BB) has urged the commerce ministry to remove a cap on imports under sales contracts, arguing that the restriction is driving up costs and contributing to rising prices of essential goods.
In a letter to the ministry, BB called for lifting the ceiling to allow bulk imports of staples including rice, lentils, chickpeas, dates, onions, garlic, ginger and soybean oil, officials said.
Imports under sales contracts are currently capped at $500,000 per transaction, far below the typical value of sea-borne consignments of essential goods, which usually range between $2 million and $2.5 million.
Economists and business leaders said that the limit prevents traders from importing in bulk, slowing supply and increasing costs at a time when prices of key commodities are beginning to rise again.
Traditionally, most consumer goods in Bangladesh are imported through Letters of Credit (LCs), which involve contractual obligations between domestic and foreign banks. Under this system, banks act as guarantors, ensuring payment and product quality. However, the process is time-consuming and costly.
By contrast, a sales contract is a direct agreement between the exporter and the importer, without a bank acting as guarantor. As a result, both time and transaction costs are significantly lower.
According to BB data, during the first four months (July-October) of the current fiscal year 2025-26, imports worth $60.40 billion were executed through LCs, while $7.64 billion came through sales contracts – accounting for just 12.65% of total imports.
A senior Bangladesh Bank official said the central bank had written to the commerce ministry at the end of 2025, ahead of Ramadan, seeking the removal of the cap.
"The governor's position is clear – imports under sales contracts are faster and help maintain market stability. However, we have yet to receive a response from the commerce ministry," the official said.
The move comes as prices of essential goods have begun rising again after several months of relative stability. Traders have blamed delays in cargo clearance at Chattogram Port, while consumer rights groups point to weak market monitoring.
Within a week, wholesale prices of key Ramadan commodities – including edible oil, sugar, chickpeas and lentils – have increased by Tk3 to Tk5 per kilogram, raising concerns about further retail price hikes.
Governor Ahsan H Mansur told the media that such import restrictions are not beneficial for the economy.
"If imports under sales contracts are made easier, the market becomes stronger and hoarding can be prevented. Most countries use sales contracts for importing essential goods," he said.
In many European countries, reliance on LCs in consumer goods trade is limited, with sales contracts preferred for their efficiency and reduced procedural complexity.
Bankers argue that LC-based imports involve various charges, including commission and confirming fees, which ultimately increase product prices. A senior official of a state-owned bank said that for a $2 million LC, commission and confirming charges alone could amount to nearly Tk3 million.
In contrast, a sales contract typically involves only a nominal opening charge of around $100.
Another Bangladesh Bank official said many foreign sellers now prefer sales contracts over LCs, but regulatory restrictions prevent Bangladeshi importers from fully utilising that option.
"Removing the cap would benefit everyone, from small traders in Khatunganj to large conglomerates," the official said.
While 60-70% of Bangladesh's exports are already conducted through sales contracts, economists argue that similar flexibility is needed in imports to ensure market competitiveness.
Arief Hossain Khan, executive director and spokesperson of Bangladesh Bank, said the central bank has formally sought approval to liberalise sales contract imports in line with global practices.
"Facilitating imports through sales contracts will reduce costs. We want imports under this mechanism to remain aligned with market needs," he said, adding that due attention must be given to preventing trade-based money laundering when opening LCs.
Zahid Hussain, former lead economist at the World Bank's Dhaka office, said prompt import arrangements are essential to prevent artificial shortages and price manipulation.
"If traders know that any price increase will immediately trigger additional imports, the tendency to manipulate the market will decline," he said.
Business leaders echoed the view. Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, said he once incurred losses of Tk4 crore due to high LC-related charges.
"Had it been under a sales contract, this loss could have been avoided," he said.
Courtesy: The Business Standard.
Bd-pratidin English/TR
