Cenbank allows import, export thru counter-trade

From now on, traders can make import and export transactions through counter-trade arrangements, without the need to make payments in foreign currency.

Bangladeshi exporters, importers, or traders can voluntarily enter into counter-trade arrangements with counterparts abroad for settlement of import payments against proceeds of goods exported from Bangladesh, said a central bank circular issued yesterday. 

Bankers said this facility will increase trade with untapped markets and help reduce the loss of foreign exchange in the country. 

Counter-trade is a unique form of international trade where goods or services are exchanged for other goods or services, rather than solely using cash. It is a reciprocal agreement between two parties, often seen in transactions between countries with limited access to foreign currency reserves.

A senior official from the central bank said the country's new export policy now includes counter-trade to enhance transparency in import and export activities and to expand Bangladesh's export reach to new markets. 

Due to the weak banking channels in many countries, importing from these countries will be simplified without payment pressure, said the official.

Another central bank official said the facility also aims to bolster trade relations with developed nations despite low foreign exchange reserves. "By establishing import agreements with these nations, it will further stimulate our country's export market and provide access to new markets." 

Additionally, addressing the net gap of imports and exports with Asian Clearing Union (ACU) countries, this new countertrade initiative allows businessmen in Bangladesh to engage in import and export agreements worldwide through a barter system, the official added.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, said the inclusion of counter-trade in the new export policy is promising for both imports and exports. 

He noted that while the central bank has provided guidelines, its effectiveness remains to be seen, with the possibility of adjustments in the future if needed. 

Another exporter highlighted challenges with countertrade, such as complex negotiations, longer transaction times, difficulty in valuing goods, and increased risk and logistical hurdles compared to cash transactions. 
Countertrade practices are prevalent in Asian countries like India, Vietnam, Malaysia, Indonesia, and China.

Guidelines for counter-trade

The Bangladesh Bank circular issued a set of guidelines for the countre-trade process. 

It said banks can open and maintain escrow accounts in the name of foreign counterparts or jointly with Bangladeshi parties. 

The escrow accounts will work to settle payments by credits with import payments received from importers in Bangladesh, and by debits for export payments to exporters against their exports.

It said Bangladeshi traders should follow up with their counterparts so the position in escrow accounts can be balanced within periodical intervals.

Bangladeshi traders can open and maintain escrow accounts with prior permission from the Bangladesh Bank, the circular noted.

The countertrade arrangement will not be applicable for transactions through the ACU mechanism, it said.