Dhaka, Bangladesh (BBN)-Bangladesh has requested Burma for taking initiatives to open letters of credit (LCs) with its commercial banks directly aiming to boost bilateral trade activities between the two countries.
“We’ve requested the visiting Myanmar delegation to encourage their exporters to take initiatives for opening LCs with commercial banks of Bangladesh directly rather than by any third country,” Senior Executive Director of the Bangladesh Bank (BB), the country’s central bank, Khandakar Muzharul Haque told BBN in Dhaka on Tuesday.
The visiting Burmese expert-level delegation assured Bangladesh of solving the issue through discussion with their trade bodies, banks and other related stakeholders.
The assurance was made at a wrap-up meeting with the officials of the central bank of Bangladesh, held at the conference room of the BB in Dhaka on Tuesday, the central bank officials said.
Currently, payments for foreign trade are settled between the two neighboring countries through a third country like Singapore or Thailand.
During the two-day long talks, the Burmese delegation asked the local commercial banks to keep sufficient funds in the foreign currency account, officially known as NOSTRO accounts, to make payments timely.
Local bankers and the BB officials informed the Burmese delegation that there is no scope of shortage of fund which may cause the delay of payment under the existing Asian Clearing Union (ACU) mechanism.
The ACU is an arrangement comprising Bangladesh, Bhutan, India, Iran, Burma, officially known as Myanmar, Nepal, Pakistan and Sri Lanka to settle payments for intra-regional transactions among the participating central banks on a multilateral basis.
“We place our funds with the central bank of Bangladesh and then the BB sends advice to the related member central banks to credit the funds with the commercial banks,” Deputy Managing Director of the National Credit and Commerce (NCC) Bank Limited, a leading private commercial bank, SM Shamsul Alam told BBN while explaining the ACU mechanism.
Mr. Alam attended the meeting with the visiting four-member Myanmar delegation on Monday along with other four representatives of commercial banks of Bangladesh.
The meeting also discussed increasing bilateral trade activities between the two countries using ACU mechanism, the BB officials and bankers confirmed.
The volume of bilateral trade between the two countries has been rather ‘insignificant’ for years because of lack of proper initiatives. The balance of trade, according to officials, has remained in favour of Burma over the past 13 years.
However, a review of bilateral trade between the two countries shows that the trade balance was in favour of Bangladesh from 1991-92 to 1995-96. But in 1996-97 it tilted in favour of the Southeast Asian country.
Dhaka exported goods and commodities worth only $9.17 million to Rangoon in fiscal year 2008-09 while its imports during the period stood at $66.49 million.
Bangladesh mainly exports pharmaceutical products, leather, woven garments and other manufacturing goods to Burma and imports wood articles, vegetable products, processed food and fish.
BBN/SS/SI/AD-07October09-11:17 am (BST)