Scrap ship imports saw a seven-fold rise in October after a steady decline in the previous three months of the current fiscal year.
According to data from the National Board of Revenue (NBR), 18 ships worth Tk1,095 crore were imported in October compared to six ships worth Tk147 crore in September.
Imports fell after the Bangladesh Bank tightened its belt on forex reserves in July, imposing a higher letter of credit (LC) margin to discourage non-essential imports.
NBR data shows that nine vessels worth Tk172 crore were imported in July and 12 worth Tk409 crore in August.
According to the NBR, 45 scrap ships worth Tk1,823 crore were imported in the first four months of FY2022-23. Of them, 27 ships worth Tk728 crore were imported between July and September.
According to insiders in the shipbreaking industry, a group of bankers who also own shipyards are behind the sudden surge in imports of scrap ships.
They said a shortage of raw materials, mainly scrap metal, has been feared in the industry due to the decline in imports since July and a group of yard owners is banking on it.
When ordinary traders are having difficulty opening LCs for scrap ship imports amid the foreign exchange crisis, these yard owners, who are also bankers, are finding it a bit easiest to open LCs, they alleged.
Of Tk1,095 crore imports in October, five traders, who are either chairmen or directors of various banks, imported eight ships for Tk660 crore while other shipyard owners imported Tk435 crore worth of ships, NBR data shows.
These shipyard owners also account for the import of eight ships worth Tk408 crore in July-September.
Yard owners anticipate that the price of scrap metal will go up amid a shortage.
Sekander Hossain, chairman of KR Group, said most of the entrepreneurs of the shipbreaking industry have reduced or completely stopped the import of ships, adhering to the government's decision on curbing imports.
But some yard owners, especially those holding bank ownership, are importing scrap ships worth hundreds of crores of taka, which is amplifying the dollar crisis, he said.
According to NBR data, Liakat Ali Chowdhury, director of Al-Arafah Islami Bank, imported the highest number of ships among the bank owners in October.
His firm Jamuna Ship Breakers imported scrap ships worth Tk247 crore last month. In September, the company imported a vessel worth Tk66 crore. The company, however, did not import a single ship in the previous eight months – January-August.
Eastern Bank Ltd Chairman MdShowkat Ali Chowdhury is among the other big importers. His company SN Corporation imported two vessels worth Tk133 crore in October but in the previous three months, the company imported only three ships worth Tk95 crore.
Besides, Showkat Ali Chowdhury's nephew Kazi Muharam Ali Babu, also a shipbreaker, imported three ships worth Tk180 crore in the last four months.
Similarly, Midland Bank Director Master AbulKashem imported ships worth Tk25 crore in October. His company imported two ships in the previous three months for Tk31 crore.
Two companies run by Modhumoti Bank Director Didarul Alam imported two ships worth Tk16 crore last month. They imported three ships in the previous three months for Tk26 crore.
Liakat Ali Chowdhury, director of Al-Arafah Bank, declined to comment when asked about the import of high-value ships amid the ongoing dollar crisis.
Eastern Bank Ltd Chairman Md Showkat Ali Chowdhury could not be contacted as he is out of the country now.
Barkat Ullah, director of SN Corporation, did not wish to comment on the matter.
Midland Bank Director Master Abul Kashem said, "Scrap ships are imported through deferred LCs. As there is a six-month period for clearing import duties, it will not have a sudden impact on the forex reserve."
DidarulAlam, director of Modhumoti Bank, was also out of the country and could not be contacted.
However, Didarul Alam's father and Chairman of Taher Group, Md Abu Taher, admitted that the total import volume decreased in July-September and surged in October.
"Due to a decrease in imports for three months, there are growing fears of a shortage of raw materials in the shipbreaking and steel sectors. Those who are capable of imports stepped on it to keep the yards and factories running," he said.
Economist Moinul Islam said money laundering is already happening in the country through over-invoicing in imports. Import of less necessary products will increase the country's economic predicament.
Executive Vice President of Bank Asia Jahangir Alam said, "We are struggling to import daily necessities now and importing scrap ships worth crores of taka is unexpected at this critical time."
"The central bank and related institutions should be stricter in stopping the import of luxury and less essential products," he said.
In FY2021-22, a total of 232 ships were imported into the yards at a cost of Tk13,585 crores.
At present, about 35 shipbreaking yards are dismantling scrap ships on the sea coast of Chattogram even though 115 companies are listed as members of the Bangladesh Ship Breakers and Recyclers Association.