Rewriting forex rules gains pace

The government has expedited the process of replacing more than 70-year-old foreign exchange regulations in order to attract investments while improving the ease of doing business.

The foreign exchange policy and operations in Bangladesh are now governed under the provisions of foreign exchange regulations, 1947, which empowered the central bank to regulate the movement of such currencies.

The ministry of finance will organise an inter-ministerial meeting tomorrow (Sunday) to finalise it.

The ministry of commerce, ministry of foreign affairs, Economic Relations Division and the Finance Division will take part in the meeting.

Besides, representatives from Bangladesh Bank, Bangladesh Investment Development Authority or BIDA, Bangladesh Economic Zones Authority or BEZA will attend the meeting intended to give the draft a final shape.

This may be last meeting before the draft is placed before the cabinet for its approval. After the cabinet, it will go parliament after required vetting to make it a legislation to be named after the Foreign Currency and Exchange Management Act 2020.

"We are giving more emphasis on how to finalise the law," said a senior official at the Financial Institutions Division on Friday.

He said they have already received stakeholder's suggestions and translated it into Bengali.

He said although the objective is to make it more investment-friendly, the coronavirus pandemic is also being considered.

He said the government wants to expedite it as it will help attract foreign direct investment, especially from those who are leaving China.

He said there are major changes in the banking part of the law, which will help improve the country's ranking in the World Bank's ease of doing business index.

He said the pandemic has forced them to delay the process, but they now are conducting meetings virtually.

The act will make simplify the opening of foreign currency account, which is now complex.

The repatriation of profit, dividend and costs for dependents abroad will be much easier under the act.

The finance official said the rules after the enactment of the law will give more explanation to the proposed act.

"There will be control by the central bank, but everything will be hassle-free and business-friendly," the official said.

But businesses said more modern concepts need to be included in it to improve both local and foreign investments.

Even letter of credit or LC is now less-used in many parts of the world replaced with PayPal, telephone transfer and other such modern instruments.

Abul Kasem Khan, chairman at the BUILD, said non-exporting local enterprises face many hurdles while making overseas payment.

"There are many hurdles to non-exporting local companies when they import or transact with international counterparts," said Mr Khan.

He said maintaining accounts abroad by local businessmen should be allowed as it will ensure transparency and accountability for the people. Economists welcome expediting the process, but said the law should be more liberalised.

Dr. Ahsan H Mansur, executive director at the think tank Policy Research Institute of Bangladesh, said there are many conditions in the draft and such barriers will not be helpful for attracting investment.

He said there should the provision for opening up the capital account to attract investment.

"Repatriating certain amount without any question from the central bank should be allowed," Dr. Mansur noted.

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