Dhaka, Bangladesh (BBN)– Global freight forwarder and logistics services provider Damco has sought policy support from the Bangladesh Bank (BB) for resolving payment problems centering its sea-air shipment business.
The Danish company has also requested the central bank to allow settlement of its overseas obligations in US dollar instead of Bangladesh Taka (BDT).
The appeals were made at a meeting with BB Governor Atiur Rahman at the central bank in Dhaka on Thursday.
Danish Ambassador to Bangladesh Hanne Fugl Eskjæar led a six-member delegation at the meeting. The central bank governor was accompanied by Allah Malik Kazemi, change management advisor, Ahsan Ullah, executive director, and other BB officials.
Damco Bangladesh is providing logistics services to global retailers, including H&M, Wal-Mart, Sears, JC Penney, Tesco, Target and Macy’s and other importers, particularly of apparel sector.
Damco is represented by a locally incorporated, wholly foreign-owned subsidiary – APM Global Logistics (Bangladesh) Limited – since 1993.
“We’ve developed an innovative multi-modal transport solution, the sea-air, which has received great attention and demand from the Bangladesh exporters in recent times of turbulence.” Nikolaj Galskjoet Wilhjelm, country manager of the APM Global Logistics Bangladesh Limited, told BBN in Dhaka.
However, as new commercial products develop, the regulatory framework has to accommodate innovation, the country manager added.
The sea-air product is unique, as it has two separate transaction modes combined into one product solution. It shortens the transit time in case of late production allowing the exporters to retain the business and avoid penalties, the company said.
Firstly, goods produced in Bangladesh for exports are consolidated in a warehouse in the country’s port city, Chittagong and sent by container-ship to Dubai. The goods are then re-consolidated into air-pallets and airlifted to the final destination countries, particularly in Europe and North America.
“We’re facing pressure in conducting our business in Bangladesh because of payment-related difficulties,” another senior official of APM Global Logistics
Bangladesh Limited said, adding that sea-air is comparatively cheaper than pure airfreight, securing higher profits and more foreign exchange earnings for Bangladesh exporters.
He also said in Bangladesh Damco is paid in BDT by the exporters for total sea-air shipments. But the air-freight leg has to be settled in the US currency in Dubai in line with the International Air Transport Association (IATA) rules and regulations.
Currently, Damco Bangladesh is not allowed to remit US dollar to settle the airfreight, and the exporters are not allowed to settle this directly, as the cargo leaves Bangladesh on an original bill of lading (OBL), the company official explained.
At the meeting, the company has been advised to settle its payment using exporter retention quota (ERQ), a BB official said, adding that the central bank will take necessary measures after examining the issue.
He also said the BB may consider the issue on the case-to-case basis to facilitate the country’s overall export businesses.
At the outset of the meeting BB governor welcome the ambassador and her team by remembering the long-standing relationship between the two countries. He reaffirms BB’s commitment in maintaining and improving this relationship. He also requests their continuous support in building a prosperous Bangladesh. In reply, the Danish ambassador assures all sorts cooperation and says that nothing will change the long standing friendly relationship between the two nations, according to a BB press statement.
BBN/SSR/AD-25Jan13-2:33 pm (BST)