A massive drop in the opening of letters of credit (L/Cs) for some imports into Bangladesh is an indication of a lack of investment in the productive economy, according to Bangladesh Bank.

The central bank said in its June 2009 Update that it sees a bleak production scenario and a frustrating future ahead.

Sharp falls

According to the Bangladesh Bank data, the values of L/Cs opened for imports of capital machinery was 30.21 per cent lower in April 2009 compared with the same month last year.

The data also shows an 11.12 per cent decrease over the same period in the value of L/Cs opened for industrial raw materials.

Fewer L/Cs opened for these types of imports clearly indicates that Bangladeshi manufacturers are investing less in their businesses, according to the central bank report.

Root causes

Research director at Bangladesh Institute of Development Studies (BIBS), Zaid Bahkt, told local media that investment is being squeezed by the global financial crisis.

He also reckons poor power and gas supplies and political uncertainties are dampening investor enthusiasm.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.