Dubai's Department of Economic Development (DED) is using local media to emphasise the value of using letters of credit (L/C) to secure transactions between buyers and sellers.

The DED is promoting the use of L/Cs in its efforts to reduce the number of trade disputes in the emirate.

Trade disputes

The trade establishment complaints section at the DED often receives complaints after deals are entered into between dealers according to Abdul Latif Al Marzouki, senior director of the department's business awareness section.

He told the Khaleej Times that in most cases, a trader enters into a deal with another to purchase goods against payment of an agreed sum of money.

The agreement often calls for transferring the amount to the seller directly, who then dispatches the consignment of goods to the buyer, he said.

L/C recommendation

"In many cases the seller receives the amount but fails to send the consignment. This prompts the buyer to reach out to the complaints sections. He comes to us claiming he has incurred losses," said Al Marzouki.

The best way to transfer money between traders is by opening a L/C at the bank. This will enable both parties to secure their transactions he concluded.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.