In the context of the ongoing global financial and economic crisis, banks and businesses need to take stringent measures to ensure that their sales transactions are watertight.
Open account and International factoring are being adopted by most countries around the world for better and smoother trade finance.
Factoring in South Asia as a region in general and Bangladesh, in particular, has still been very limited, whereas factoring in most other regions of the world has exploded with the shift towards open account trade, said ICC Bangladesh Vice President A. K. Azad at the Certificate Award Ceremony of ICC Bangladesh Workshop on Factoring & Open Account for International Trade Finance.
Bangladesh has made a strong economic recovery from the COVID-19 pandemic. The export income is increasing and is successfully advancing overcoming all hurdles. During FY22, the RMG export was $42.62 billion, which is about 82 per cent of the total export of $52.08 billion. The Country is poised to overtake China in garments export to the EU. Bangladesh’s share in the global RMG market is only 6.50% as against China’s 32.21%, he added.
Azad mentioned that BGMEA is targeting to export US$100 billion worth of garment items by 2030. Besides, there is immense potential for Bangladesh to increase its export of leather goods, pharmaceuticals, plastic products and other products.
Azad observed that Bangladesh Bank’s circular on ‘conditional open account transactions’ is a good initiative. It is now more than two years that open account transactions have been allowed by Bangladesh. We would suggest undertaking studies on the impact of this decision as well as considering the possibility of allowing conditional open account for import as well. ICC Bangladesh can work together with Bangladesh Bank in this regard, he said,
“Bangladesh Government is promoting digitization to make Smart Bangladesh. Therefore, we would suggest appropriate policy changes should be made by Bangladesh Bank to digitize international trade. We from ICC Bangladesh will be delighted to support Bangladesh Bank in implementing DSI developed by ICC HQ.” Azad said.
Ahmed Jamal, Deputy Governor of Bangladesh Bank in his keynote speech mentioned that Bangladesh Bank after huge exercises brought radical changes in foreign trade transactions by the issuance of FE Circular No. 25 on June 30, 2020. Bangladesh Bank is always committed to providing policy support to our exporters and importers. Given the ongoing situation due to the Covid-19 pandemic, Bangladesh Bank extended policy supports to international trade by ways of (a) extending repatriation of export proceeds, (b) extension of usance periods of import payments including back-to-back LCs, (c) EDF loan repayment extended to 360 days, (d) refinancing from EDF for normal back to back LCs and so on, Deputy Governor added.
He observed even during the pandemic situation we are being visited by several international financing institutes. This indicates that we are growing despite different odds. I am sure external financiers will benefit from trade transactions in Bangladesh. He requested the exporters to use the policy to protect their payments.
Dr Md. Akhtaruzzaman, Director General, Bangladesh Institute of Bank Management (BIBM) & Peter Mourly, Secretary General, Factor Chain International, The Netherlands addressed the inaugural session and ICC Bangladesh Secretary General Ataur Rahman delivered the welcome address.
In the workshop, a panel discussion was held. The panel discussion was moderated by Muhammad A. (Rumee) Ali and the keynote speaker was Ahmed Jamal, Deputy Governor of Bangladesh Bank.
The panelists were: Md Fazlul Hoque, Managing Director, Plummy Fashions Ltd.; Mohammad Hatem, Executive President, BKMEA & Managing Director, MB Knit Fashion Ltd.; Muhammad Mohsin Reza, General Manager, Supply Chain of SKF Pharmaceuticals Limited; Naser Ezaz Bijoy, President, Foreign Investors’ Chamber of Commerce & Industry (FICCI) and Chief Executive Officer, Standard Chartered Bank; Ahmed Shaheen, Additional Managing Director, Eastern Bank Limited; Peter Mulroy, Secretary General, Factor Chain International (FCI) and Dr Prashanta Kumar Banerjee, Professor, Bangladesh Institute of Bank Management (BIBM).
A total of 131 participants including officials of the Ministry of Commerce and Bangladesh Bank, 96 participants from 31 banks and 32 participants from 24 companies attended the day-long workshop.
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