Trade and Investment Policy Coordination- Bilateral, Regional and Multilateral:
The international framework for financial and economic transactions has significantly changed with the presence of various multi-lateral, regional and bi-lateral trade agreements. Bangladesh is an active member of the World Trade Organization (WTO). Moreover, it has also been pursuing liberalization through many regional free-trade agreements like South-Asian Free Trade Area (SAFTA), BIMSTEC (comprising of Bangladesh, India, Myanmar, Sri Lanka and Thailand, including new members-Nepal and Bhutan) Free Trade Agreement and the Asia Pacific Trade Agreement (APTA). Bangladesh has also signed Preferential Trade Agreement with D-8 member countries. It is expected that all these RTAs will facilitate foreign investment and industrial relocation in Bangladesh. One of the objectives behind pursuing trade through these RTAs is to attract more foreign and local investment in the export oriented industries of the country. With this end in view every negotiating position is formed by consulting with the government and private sector bodies, along with other stakeholders, which are related to investment.
Bangladesh Financial Regulations of Foreign Trade Operations
1. Banking system:
The banking system in Bangladesh may be divided into the following categories:
The Central Bank (Bangladesh Bank);
Nationalized Commercial Banks
Private Commercial Banks and Foreign Banks;
Development Finance Institutions (DFI) and Specialized Banks;
Non-banking Financial Institutions; and
Nationalized Commercial Banks is composed of four banks like Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank.
Private and Foreign Banks are six: American Express Bank LTD, Bank indo-Suez, ANZ Grindlays Bank PLC, The Standard Chartered Bank, Habib Bank LTD and State Bank of India.
DFI and Specialized Banks: They are five: Bangladesh Shilpa Bank (BSB), Bangladesh Shilpa Rin Sangstha (BSRS) and Bank of Small Industries and Commerce Bangladesh LTD (BASIC) were set up to provide industrial credit. Bangladesh Krishi Bank and Rajshahi Krishi Unnayan (RAKUB) promote agriculture and rural sector.
Non-Banking Financial Institutions are generally promoting investment companies like house building finance corporation and leasing.
Exchange control is administered by the Bangladesh Bank in accordance with the general policy formulated in consultation with the Ministry of Finance.
Bangladesh maintains a rather liberal foreign exchange system. There are two exchange rates: the official rate and the secondary exchange market rate. The difference between these rates is generally ten per cent. The official rate includes imports of foods grains, fertilizers and crude petroleum and petroleum products but the second rate includes others import products.
Foreign exchange for authorized imports is provided automatically by authorized dealers when payments are due. Advance payments for imports require approval by the Bangladesh Bank, and this approval normally is given only for specialized or capital goods.
3. Methods and means for international settlement:
Bangladesh is a member of Asian Clearing Union. The central banks members do these payments for current international transactions on a multilateral basis.
Imports are financed either from Bangladesh own resources or with foreign aid, loans, and barter arrangements. Letter of credit authorization forms are required from all registered importers , including most government departments but excluding the Ministry of Defense, for all imports. Registered commercial importers are allowed to import against letter of credit authorization forms issued by authorized dealer banks. A separate import license is not required. Payment against imports is generally permissible only under cover of irrevocable letters of credit.
The following payments exist in Bangladesh:
Payments for current international transactions as defined by the Articles of Agreement of the International Monetary Fund;
Payments permitted by the country in which the payer resides.
Payment for goods exported from Bangladesh should be received through an authorized dealer (bank) in freely convertible foreign currency or in Bangladesh taka from a non resident bank account.
Commercial banks of customer countries must maintain accounts with their correspondents in the other member countries for the purpose of setting the transactions. The period within which exporters must receive full foreign exchange proceeds of exports is within four months from the date of shipment. Exporters may, as against the confirmed irrevocable Export L/C, open back-to-back L/C for import on usance basis covering up to 75 percent the value of Export L/C for the purpose of raw materials and accessories import required for the manufacture of the goods intended for exports.