In the wake of the Covid-19 pandemic, policy changes are taking place across the world in recent times to facilitate international trade.
Keeping this in mind, stakeholders, especially bankers, should gather knowledge in the latest global practices of cross-border trade and implement them in line with the local regulator's instructions.
This was observed during the inaugural ceremony of a two-day webinar styled 'International Standard Demand Guarantee Practice (ISDGP)' hosted by the International Chamber of Commerce Bangladesh (ICCB) on Friday.
ICCB president and eminent business personality Mahbubur Rahman spoke as the chief guest at the event moderated by ICCB secretary-general Ataur Rahman.
ICC Banking Commission chairman and Bangladesh International Arbitration Centre (BIAC) CEO Muhammad A. (Rumee) Ali, and BRAC Bank head of import settlement and OBU KM Lutfor Rahman also spoke.
Addressing the virtual event, the ICCB chief says trade finance is like oxygen that keeps trade flow alive particularly for emerging markets like Bangladesh.
According to the ICC Global Trade Finance Survey-2020, global trade flow has trebled from $6.2 trillion to $18.1 trillion by the end of 2019.
The government has announced a $51-billion export earnings target projecting 12.37-per cent year-on-year growth for fiscal year 2021-22, cited Mr Rahman. Of the target, he says, $43.50 billion will come from goods shipment and $7.5 billion from services with 12.23 per cent and 13.15-per cent growth respectively.
"It is, therefore, essential that our bankers acquire knowledge in latest rules or tools practised globally so that they can better serve their clients."
Given the pandemic situation, the Bangladesh Bank has also been making multiple policy changes to facilitate international trade, mentioned Mr Rahman.
In the light of local and global policy swings, the ICCB has been organising a wide range of programmes for stakeholders.
"In March this year, the ICC Banking Commission has approved a new set of rules called International Standard Demand Guarantee Practice (ISDGP)," said the business leader.
Demand guarantees, which are payment and risk mitigation instruments, have been playing a vital role in facilitating international trade finance through mitigating risk and providing protection to businesses.
According to the survey, nearly 25 per cent of global trade was financed through guarantees and standby letters of credit, stated the ICCB chief.
"In the wake of uncertainty created by the Covid-19 pandemic, guarantees have become more relevant than before as these instruments are being designed for the purpose of providing beneficiaries comfort in such difficult circumstances."
Some 67 participants, mostly from 20 banks, are participating in the programme.
Addressing the attendees, the BIAC CEO says the pandemic creates volatility and volatility means risk that demands mitigation.
"People always try to mitigate risk, whether you are an importer or exporter or any other part of the supply chain," he said.
There are some existing tools to reduce the risk and new ones are emerging, Mr Ali added.
Natural calamities like drought, prairie fire and floods also disrupt the global supply chain, he continues.
Globally renowned organisation like the ICC comes forward with some tools and strategies to help facilitate international trade, said Mr Ali.
He called on the participants to understand risk mitigation tools and help clients.
Mr Lutfor says the URDG is already in practice in Bangladesh, and the new ISDGP will guide bankers and practitioners in correct application of international standard guarantee practices.