A letter of credit (L/C) based trade facility designed to promote trade between Myanmar and Bangladesh remains under review by the two countries.

The Account Trade Arrangement (ATA) ended 30 April 2005 with officials saying the decision whether to renew the agreement depends on several factors, including a report from one of the banks involved in the facility.

Report awaited

According to a senior Bangladeshi official, the final decision whether to renew the ATA will be made only after a performance report from the state-owned Sonali Bank of Bangladesh has been reviewed.

The bank is believed to be in the process of preparing a report on the bilateral trade position of the two countries under the arrangement. The Bangladeshi official also said that moves by officials from Myanmar would be required before the facility could be renewed.

Currency savings

The ATA, originally agreed in March 2003, is a trade facilitating mechanism that allows traders in the participating countries to conduct normal trade activities without incurring the expense of having to purchase hard currency for every transaction.

Under the ATA, the two participating banks - one from each country - establish L/Cs worth up to US$10 million per transaction.

On account

Instead of settling each transaction in US dollars, the banks keep an account of import and export transactions.

The banks settle the account at the end of a six-month period, with the debtor paying the creditor only the difference between the account totals for each country.

The two participating commercial banks in the recently expired agreement were Sonali Bank of Bangladesh and Myanmar Investment and Commercial Bank.

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