Factoring is very important for international transaction. In Bangladesh export earning is growing rapidly and our export has more potential to grow. Letter of Credits (L/C) is a popularly used international trade payment method in Bangladesh. But because of more formalities and more costing, importers are becoming less interested to import under L/C. Rather importers are more interested to import under open account terms. As open account is involved with risk, international factoring removes the danger of open account trade said Mr. Hedayet Ullah Al-Mamoon, Senior Secretary, Ministry of Commerce, Government of Bangladesh while inaugurating the ICC Training on International Factoring for Foreign Trade organized by ICC Bangladesh at Dhaka on 24 February as a Chief Guest. He thanked ICC Bangladesh President Mahbubur Rahman for ICC Bangladesh’s role to act as a catalyst between business sector and the banking sector.
ICC Bangladesh President Mahbubur Rahman said both banks and corporate houses face challenges in case of Non L/C methods particularly open account trade. Under open account trade, payment is received many weeks or even months after delivery. International factoring provides a simple solution of problems faced in case of Non–L/C trade payment. As international factoring lets exporters safely offer of competitive credit terms to their foreign customers, this international trade payment and financing mechanism is now popular among both exporters and importers. It is assumed that percentage of Non-L/C mechanisms of trade payment particularly open account transaction is usually around 80 per cent of world trade, he added.
Mr. Rahman mentioned that as per our last year’s seminar recommendations on Factoring, the Ministry of Commerce has already included Factoring as a method for international trade payment in the Export Policy 2015. He suggested the Central Bank for implementation of Factoring in Bangladesh.
ICC Bangladesh Banking Commission Chairman Mr. Muhammad A. (Rumee) Ali in his welcome address said BGMEA has set a target for the textile sector to reach US$50 billion export by 2021. To achieve the target our export payment system must be smooth and modern and I guess International Factoring will minimize the export cost.
BGMEA Vice President Mohammed Nasir said in the next five years, in the world market Readymade Garments demand will be US$650 billion, so there has enormous opportunities for Bangladesh to avail the opportunity.
Mr. Lee Kheng Leong, Asia Director, Factor Chain International (FCI), Dr. Prashanta Kumar Banerjee, Professor & Director of BIBM and ICCB Secretary General Ataur Rahman also spoke at the inaugural session.
The training was conducted by Ahmad Jamal, Executive Director, Bangladesh Bank; Lee Kheng Leong, Asia Chapter Director of Factors Chain International; Dr. Prashanta Kumar Banerjee, Professor and Director of Bangladesh Institute of Bank Management and M. Imtiaz Farooq, BCL (Oxford), Barrister-at-Law (Lincoln’s Inn, UK), Advocate Supreme Court of Bangladesh. A total of 118 participants from export houses attended the training.
Tomorrow another workshop on the same topic will be held at Krishibid Institution Bangladesh Complex, Khamarbari, Dhaka. Around 161 participants from banking sector will attend the workshop.