Letters of Credit in RMB to boost trade between Bangladesh-China: Bankers suggested in Kunming  Seminar

Bankers from Bangladesh and China suggested introduction of transaction in RMB (Chinese Yuan)   instead of US Dollar for International Trade between the two countries. This will help in reducing cost of transaction and price volatility due to changing exchange rates of US Dollar between Bangladesh and Chinese currencies. It will also save additional costs as this will involve two currencies instead of three. 

This was suggested by the participants during a day-long Seminar on Bangladesh China Trade Finance : Role of Banks held in Kunming, China on 21 August. A total of 45 senior level officials, including Bangladesh Bank Executive Director, MDs/CEOs and DMDs from 18 Commercial Banks of Bangladesh as well as 60 bankers of Commercial Banks of China from Beijing and Kunming attended the Seminar. 

CC Bangladesh President Mahbubur Rahman inaugurated the Seminar organized by International Chamber of Commerce (ICC) - Bangladesh, The world business organization jointly with ICC China and China Council for the Promotion of International Trade (CCPIT). He mentioned that currently China is Bangladesh’s largest trading partner. In fiscal 2013-14, trade volume between the two countries stood at around $8.29 billion. The trade balance is heavily tilted in favour of the Asian giant as Bangladesh is importing goods worth $7.54 billion and exporting goods worth $746.2 million.  

In order to reduce the huge trade imbalance with China, the Bangladesh government has taken a progressive move to bridge the widening gap between the two countries and has taken initiative to boost exports to China over the next five years.  In this regard, a pavilion is likely to be set up at Beijing in China and export of eel fish and leather products may increase further. Besides, the government will open commercial wing at different important locations in China including Kunming, he observed. Mr. Mahbubur Rahman said that Bangladesh is recognized as an investment-friendly country as it offers the most liberal investment opportunities in South Asia, featuring 100 percent foreign equity with unrestricted exit policy; easy remittance of royalty; repatriation of profits; and protection of foreign investments. Bangladesh also offers Export Processing Zones for foreign investors.

Bangladesh stands to gain much from China by way of higher exports and investment, as the Asian economic giant looks to deepen ties with its South Asian neighbours. BCIM (Bangladesh, China, India, Myanmar) Economic Corridor is on the top agenda of “One Belt and One Road” initiatives of China, once implemented will help in increasing trade and investment in this region, Mr. Rahman observed. He said that China has already announced to support Bangladesh by providing $20 billion in different mega infrastructure Projects to boost investment by both foreign and local including China.  The Seminar moderated by ICC Bangladesh Banking Commission Chairman Muhammad A (Rumee) Ali also suggested formation of a sub-committee by the Bankers of Bangladesh and China to sort out various issues for furtherance of trade between the two countries. 

 The inaugural session moderated by Mrs. Tan Yun, Director, Secretariat of China-South Asia Expo & Vice Secretary General of Yunnan Sub-council of CCPIT was also addressed by  ICC China Executive Director Zhao Zhenge, Bangladesh Bank Executive Director Md. Ahsan Ullah and ICC Bangladesh Secretary General Ataur Rahman.Bangladesh Bank Executive Director presented a paper on Bangladesh Foreign Exchange Regulations