Bangladesh Bank imposed restrictions on the import of luxury goods on July 4, 2022, in an effort to prevent the decline of foreign exchange reserves. The restrictions required importers to pay a 100% cash margin on all luxury goods, including cars, electrical and electronics home appliances, and gold ornaments. However, the restrictions did not have a significant impact on the import of cars. In the 11 months after the restrictions were imposed, 17,509 cars were imported, an average of 1,591 cars per month. This is only slightly lower than the 23,000 cars that were imported in the previous financial year.
Economists argue that the government should have banned the import of luxury goods altogether, or at least increased the cash margin to a higher percentage. They also argue that the government should have provided more incentives for businesses to import essential goods, such as food and medicine. The import of luxury goods is a major drain on Bangladesh’s foreign exchange reserves. In the 11 months after the restrictions were imposed, the country spent $17.5 million on the import of cars. This money could have been used to import essential goods, such as food and medicine. The government needs to take more steps to discourage the import of luxury goods and to encourage the import of essential goods.
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