Indenting agents, who act on behalf of exporters to Bangladesh, are calling on the government to ban a system whereby importers can open letters of credit (L/Cs) to buy goods direct from other countries.

The Bangladeshi agents say that the Direct Proforma Invoice (DPI) system is open to abuse. They say it is used for money laundering and it is costing Bangladesh millions of US dollars each year in hard currency earnings.

The agents' real agenda may, however, be to remove legislation enacted in the 1980s which meant that importers could easily buy direct from abroad rather than having to go through an indenting agent.

Exposed

Since DPI was introduced in 1986, importers in Bangladesh have been able to open L/Cs to purchase goods from abroad. At the same time the need for traders to declare all imports to Bangladesh Bank was removed according to the indenting agents.

They say this left the country exposed to schemes whereby unscrupulous traders could under-invoice exports and over-invoice imports in such L/C transactions.

Vested interests

"With the introduction of DPI, a vested local interest group found out the way to make money by joining hands with the foreigners," according to President of the Bangladesh Indenting Agents' Association (BIAA), Syed Moazzam Hossain.

He alleges that these "vested interests" are involved in money laundering by opening L/Cs under the DPI system and he reckons that between US$80-160 million is being remitted abroad illegally each year because of under- and over-invoicing scams.

Unregistered

The indenters also allege that foreigners are engaged in the indenting business in Bangladesh without the required registration or certification.

Hossain reckons that more than 100,000 foreign nationals who have been working in the country are illegally operating indenting businesses without any valid documents.

The BIAA is urging government to reduce indenting registration and renewal fees.

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