The laboured process for settlement of letters of credit is one of the bottlenecks of Bangladesh’s investment climate, said a delegation from Japan on Thursday.
“Bangladesh has the most complicated LC opening conditions — there are terms and conditions unique only to this country,” said Hideaki Kojima, managing director and chief representative of Mitsubishi UFG Bank, Japan’s largest lender.
Kojima’s comment came at a roundtable styled Japan-Bangladesh trade and business growth and the role of private sector banks organised by Eastern Bank, which was attended by Ito Naoki, Japan’s ambassador to Bangladesh, and delegates from the Japan International Cooperation Agency (JICA), the Japan External Trade Organisation (JETRO) and the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI).
Simplification in LC opening conditions is crucial for business growth, Kojima said, while advising Bangladesh to introduce telegraphic transfer remittance settlement to join global or regional supply chain.
A telegraphic transfer is an electronic method of transferring funds utilised primarily for overseas wire transactions. Typically, the telegraphic transfer is complete within two to four business days, depending on the origin and destination of the transfer, as well as any currency exchange requirements.
“Improvement in LC settlement will greatly improve the investment climate of Bangladesh,” said Yuji Ando, country representative of JETRO.
The terms and conditions of LC should be more simplified for business growth in Bangladesh, said Ando, also the president of JBCCI.
Japanese companies are eager to invest in Bangladesh but the bottlenecks are holding them back, Naoki said.
“To attract Japanese companies to invest more in Bangladesh it is important to address the existing issues of the companies operating in Bangladesh.”
There are 315 Japanese companies currently operating in Bangladesh, 70 per cent of which are willing to increase their investment, according to a Jetro survey. The companies have so far poured in about $3 billion in Bangladesh.
“If that can be addressed there will be a greater flow of Japanese investment,” he said, adding that a favourable business climate is imperative.
In 2019, Japanese investment in Bangladesh soared 160 per cent year-on-year to $72.9 million.
Over the past six months, some of the bottlenecks have been removed, but there are still issues that need to be addressed on an urgent basis, Naoki added.
Ali Reza Iftekhar, MD and chief executive officer of EBL and also the chairman of the Association of Bankers, Bangladesh, a platform of banks’ MDs, assured of looking into issues slowing down Bangladesh’s business growth and resolving those.
Yuho Hayakawa, country representative of JICA, and Tareq Rafi Bhuiyan, secretary-general of JBCCI also spoke.
