Bangladesh has been striving hard to initiate bilateral trade with its neighbouring countries for the last several years. As a part of its look east policy, the country has taken special efforts to increase its export to this Southeast Asian nation which was named as Myanmar in 1989. In spite of frantic efforts to increase export of Bangladesh to Burma, it decreased from US$5.07 million in 1994-95 to US$0.98 in 2002-03 against import of $9.10 million (ratio being 1: 79) and $26.13 million (ratio beings at 1: 26.66) respectively.
This situation has been analysed from different quarters at different forums but the real problems remain unaddressed. The main vehicle in trade with Burma was the border trade, signed in the year 1994, which came into effect on September 1995. Banking facilities of Burma is not up to the mark to finance either imports or exports. They have to rely on their importers for financing their exports.
Under border trade agreement an importer from Bangladesh can approach through Sonali Bank and now also through AB Bank to issue a dollar draft maximum to the amount of US$ 5000 in his favour by depositing equivalent amount of local currency. Upon receiving the dollar draft by the MICB in Burma, they issue a foreign exchange certificate which is encashable in the market at market rate of exchange.
Same procedures are followed when goods are exported from Bangladesh. Some mentioned that the border trade agreement needs to be reviewed and the ceiling of US$ 5000 limit should be increased up to US$ 10,000, which has not been implemented yet. As the direct communication between Bangladesh and Burma through road link and shipping link is not available, most of the shipment have to be done through Singapore, which is time consuming and costly also.
Though there remains huge demand of Bangladeshi products in Burma, private sector business entrepreneurs could not avail of these opportunities because of stringent rules and regulations prevailing as barriers to increased trade. Bangladeshi pharmaceuticals, toiletries and construction materials have got huge demand in Burma and has been exported also but could not sometimes be recorded as official exports which is one of the reasons for the poor figure of receipts in the official trade.
Bangladesh single country fair was organised by the Export Promotion Bureau (EPB) in collaboration with the ministry of commerce and private sector initiatives since 1996. Bangladeshi products attracted a large number of buyers. During the fair some agreement were also signed and some are in process. Among them were memorandum of understanding (MoU) on account trade agreement, MoUs on the establishment of the joint trade commission, banking agreement for account trade, agreement on maritime and coastal shipping, MoU for establishing road link, technical taskforce for road link, financial taskforce etc. Objectives of all these MoUs and agreements are to increase official trade between the two countries. Private sector is also enthusiastically active to see the implementation of these agreements in order to achieve their eventual goal to promote trade.
A MoU on account trade agreement (ATA) was signed on March 19, 2003. The agreement was signed for one year. Sonali Bank of Bangladesh and Burma Investment and Commercial Bank(MICB) owned by Burma have been designated by their respective governments to handle transactions under the agreement between the governments of Burma and the Governments of the People's Republic of Bangladesh. Signing of agreement took a long time to materialise as the MoU the process had to meet several stringent issues. These were: to facilitate the promotion of trade under such arrangement there will have to be an indicative list of export products to be determined by the two sides; only those products in the manufacture of which at least 30% value is added in either country will be eligible for trading under the agreement. In addition, there should be a designated person (government official) to be a witness, etc.
Exchange of documents and finalisation of preparation takes a long time. In the mean time, the duration of agreement has almost come to an end. So far no trade under the agreement has been done. The process of ATA is also cumbersome. The designated banks shall issue import L.C. under this arrangement as long as the net payable amount from any side does not exceed $0.1 million. The two designated banks shall send the statements of payables and receivable with detail particulars like transaction reference numbers, L.C numbers, bill numbers, amount and dates etc. on daily basis.
Any outstanding items and any divergence of value in the daily statements shall be reconciled and reconciliation statements shall be sent by tested telex or by other authenticated electronic system/mode to one another on monthly basis as may be occasionally required. Settlement will be made on six monthly basis.
At the close of these settlement dates, the two banks shall compute the net number of payable to or receivable from its counterpart and this amount shall be advised by tested telex or authenticated electronic system to one another and reconciled. The net payable will be settled within seven working days. For being late, the owing bank will be liable to pay interest at SIBOR (Singapore Inter bank offer rate) for a period starting from the eighth working day of the following month of the settlement date to the date of actual settlement.
Forty four items have been included in the ATA indicative which are mostly consumable products ranging from pharmaceuticals, ceramics products, biscuits, household and home textiles, footwear, cosmetics, melamine tableware, imitation jewellery, plastic items, battery , kitchen ware, wooden furniture, garments accessories, condensed milk, handicraft items, toys and luggage, etc. On the other hand, indicative list of exports of Myanmar contains twenty four products which include mostly consumer plus industrial products like dried and instant noodles, sweets and candies, purified water, methyl sprit, spiralling chips and powder, soap bar, marble slab, granite slab, glass sheet, power tiller with rotary cultivator, diesel engine, centrifugal pump, pumping set, dry and storage battery etc.
A joint meeting of the Bangladesh-Myanmar Business Promotion Council (BMBPC), EPB, FBCCI, DCCI and CCCI recently discussed, reviewed and analysed the status of Account Trade Agreement signed between Bangladesh and Burma. Private sector feels that the cushion amount of opening L.C. under this agreement is US$0.1 million only and other procedures like settlement within seven days, two bank accounts in the two countries etc., are all stringent measures hampering the growth of trade. A/C trade settlement will be made on six months basis. This will be another disadvantages with less possibility of trade transaction. They proposed to increase the margin of the amount of US$0.1 million and review to be done after two months gap.
Agreement on maritime coastal and shipping which has been rectified by the government of Bangladesh. For inspection purpose a coastal protocol has to be done, this has not been completed yet. Bangladesh has inland shipping arrangement with India, a similar type of arrangement with Burma could be helpful. In connection to road link also a long task has to be finished. Locational importance of Burma is very important, if we would like to increase our trade relation with South East Asia. The bilateral trade relation between the two countries is very important. Burma is rich in raw material.
Utilising its resources, a number of industries can be established in Bangladesh and for this transport and communication and agreed policies between the two government will have to be finalised and made operational. Burma is also rich in agricultural resources. Regional cooperation in the fields of gas and agriculture can be good for the investors. In order to reap benefit, official processes between the two countries have to be formalised, the account trade agreement as one of the vehicle should be renewed and reviewed as soon as possible.