Traders can conduct import and export transactions through counter-trade arrangements, eliminating the necessity for foreign currency payments. According to a recent circular issued by the central bank, Bangladeshi exporters, importers, or traders have the option to engage in counter-trade agreements with overseas counterparts for settling import payments using proceeds from goods exported from Bangladesh.
Bankers anticipate that this initiative will expand trade with untapped markets and curtail foreign exchange losses in the country. Counter-trade, a distinctive form of international trade, involves the exchange of goods or services instead of cash, often utilized between countries facing limitations in foreign currency reserves.
A senior official from the central bank emphasized that the inclusion of counter-trade in the country’s new export policy aims to enhance transparency in import and export activities while broadening Bangladesh’s export reach. This move is particularly beneficial for countries with weak banking channels, simplifying imports from such nations without financial strain.
Moreover, the initiative seeks to strengthen trade ties with developed nations despite low foreign exchange reserves, providing impetus to Bangladesh’s export market and facilitating access to new markets.
However, challenges associated with counter trade include intricate negotiations, prolonged transaction periods, valuation complexities, and heightened risks compared to cash transactions. Counter trade practices are prevalent in several Asian countries like India, Vietnam, Malaysia, Indonesia, and China.
Bangladesh Bank circular outlines guidelines for the counter-trade process, permitting banks to establish and manage escrow accounts in the name of foreign counterparts or jointly with Bangladeshi parties. These accounts will facilitate payment settlements through credits for import payments received from Bangladesh-based importers and debits for export payments to exporters against their exports.
Traders are required to maintain balanced positions in escrow accounts at regular intervals and must obtain prior permission from the Bangladesh Bank to open and maintain such accounts. Notably, the counter trade arrangement excludes transactions through the Asian Clearing Union (ACU) mechanism.
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