The year 2022 certainly ended on a high for Bangladeshi manufacturers and exporters. We already knew some weeks ago that the country's November export figure was a landmark, having breached the $5 billion-mark for the very first time. Now the December numbers are out, and no matter how good the expectations may have been, no one would have expected the record set in November to be eclipsed the very next month - yet that is exactly what happened. From $5.1 billion in November, exports grew a brisk 9 percent to clock $5.4 billion in the last month of the year.

Since import figures from Bangladesh Bank lag behind the export numbers from the Export Promotion Bureau by about a month, we know that the country's trade deficit, which had ballooned out beyond the $30 billion mark in the 2021-22 fiscal, has been somewhat reined in during the first 5 months of the current fiscal. At the end of November, it stood at $11.8 billion, some 6.4 percent lower than it was twelve months earlier.

It is no secret of course, that the government has been looking to shore up its dwindling reserves of foreign exchange by cutting down imports of non-essential and luxury items, as well as tightening the process for issuing LCs (Letters of Credit) by banks on behalf of importers, during which trade misinvoicing occurs, opening the way for illegal money transfers using the cover of international trade. Global Financial Integrity (GFI), a Washington-based research organisation, has estimated that between 2009-18, on average $8.3 billion of Bangladesh's stated trade value was lost each year to this menace.

Even if GFI does not definitively say the entire amount ended up as part of illicit fund transfers from one country to another, it is safe to assume a significant portion of it surely did, since there is hardly any other reason for deliberately over-invoicing (as an importer) or under-invoicing. Honest mistakes don't run into the billions.

In fact experts are increasingly of the view that instead of getting too fixated on the list of import items to pick out and restrict those that it deems 'non-essential', the government would be far better advised to concentrate its resources on identifying and preventing, or at least minimising, the incidences of trade-based capital flight. At the same time we must guard against a creeping tendency to regard robust import growth as a negative per se. Rising imports signal strong demand in the economy and the people's purchasing power. Consumption can be a driver of growth.

Since July, which was the month a new kind of reality hit home for the Bangladesh economy, the central bank has asked banks to impose a 100 percent margin on the opening of LCs for non-essential items, meaning that importers have to make the full payment for their consignment in advance. But that really is just one measure. There is a whole lot more that banks can actually do during the LC-opening process, like ensuring responsive declaration procedures on the part of their clients, to prevent illicit fund flows. The government, now that it is setting up to build a 'Smart Bangladesh', has a ready opportunity to live up to its word by exploring technologies that help to check the stated value of a shipment against the expected price of the goods. With the advent of blockchain and the distributed ledger on which it is based, this is an area expected to develop fast in the coming years. Let's stay on top of it.