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L/C monitoring in Syria

Arab League observers are attempting to reduce violence in Syria. The states are also monitoring letters of credit in the country as sanctions imposed on the Syrian government tighten. The L/C monitoring will coincide with the Arab League's freeze on Syrian assets and severing of financial and commercial ties. Violence in late December appears to have galvanized Arab states into imposing a tough tranche of sanctions on Syria. The Arab League's sanctions, which could plunge the country's economy deeper into isolation, also included travel bans on certain Syrian officials and restrictions on commercial flights to Syria. The sanctions regime calls for Arab central banks to monitor L/C traffic to ensure that documentary credits do not support transactions proscribed by sanctions. Some L/C transactions, such as those involving the importation of basic essentials, were exempted from sanctions.

L/Cs for Bangladesh luxury goods

Bangladesh could insist that importers of luxury goods seek official authorization for L/Cs as the government considered a range of measures to reduce the country's balance of payment deficit. The government has also contemplated banning certain imports or imposing a regulatory duty higher than the current rate of 25 per cent to discourage imports of a large range of items. The government may opt to reduce imports of certain goods by making their importation conditional. In such cases, importers would have to obtain prior permission from the Ministry of Commerce before opening L/Cs. The ministry, along with the National Board of Revenue, would jointly identify luxury items to be restricted. These are likely to include vehicles, expensive electronic items, cosmetics, fruit juices, bottled food items, jam, jelly, chocolate and clothing.

Easing rules on Philippines L/Cs

Extensions to letters of credit will become easier to obtain in the Philippines under new foreign exchange liberalization measures introduced by the Bangko Sentral ng Pilipinas (BSP). The measures are aimed at boosting the country's investment climate and bolstering currency stability. Until recently, BSP approval has been required for L/C extensions beyond twelve months. Now the central bank has lifted its prior BSP approval requirement for extensions beyond one year of the validity of L/Cs. Other measures introduced at the same time included lifting the requirement to obtain prior BSP approval for foreign loans for certain infrastructure projects. The central bank is also lifting the three-day period within which foreign exchange purchased for import payments must be remitted to the offshore beneficiary.

Libyan letters of credit

Letters of credit are starting to flow again in Libya, where the central bank is reasserting its control over the country's banking system. Libya is rebuilding its economy as it recovers from eight months of brutal civil war. L/Cs for imports into Libya are beginning to flow once more, according to deputy director of research and statistics at the Tripoli-based central bank, Ezzedin Ashur. Libya's recovery is being supported by Western governments beginning to lift sanctions on the North African country's frozen assets, which include US$168 billion in assets abroad held by the Libyan central bank and the country's sovereign wealth fund.

Taiwan and China trade flows increase

A Taiwanese bank has reported that improved trade flows between mainland China and Taiwan have significantly boosted its letter of credit business. First Commercial Bank (FCB), which already has a physical presence on the Chinese mainland, also plans to expand its operations there. The Taiwanese bank says that increased trade flows across the Taiwan Strait have boosted its L/C business so that 20 per cent of the credits it writes are now for trades with mainland China. The improvement is a result of the bank's efforts to secure a firm foothold in China. FCB has already opened a branch in Shanghai and a leasing company in Suzhou in Jiangsu Province.