Since our independence, 53 years have gone by and the country has already become a quasi-dominant player in the global supply chain. Yet our dominant stakeholders are being forced to take shelter under the Foreign Exchange Regulation Act (FERA) 1947 delineated by East India Company, barring foreign exchange liquidity or exchange rate stability issues. Our trading community and investors, local or foreign, still find our foreign exchange regime to be the most cumbersome and complex among emerging economies. We, in most cases, have to go back to our central bank for almost every other cross-border transaction approval. Hence, it is not helping us at all. No matter how sympathetic our central bank officials are, they are mostly busy with day-to-day transaction approvals, with no time to think beyond or reforming the cross-border transaction domain we are in.

What do we need to do?

• Implement an easier pre-and post-facto approval process against outward remittance of surplus earnings, dividends, training, technical know-how, operational assistance, software purchase and renewal fees, etc.
• Liberalise the external borrowing guideline to promote access to cost-effective financing options for Bangladeshi borrowers.
• Develop a comprehensive guideline to promote financial market growth by removing case-to-case time-consuming approval.
• Allow a discount against export on compelling grounds (e.g., quality issues): As of now, the pre-facto discount approval process is quite painstaking and uncertain. Such a conservative approach remains a hindrance to remaining competitive, notably with increasingly demanding global apparel buyers.
• Open account trade is still restricted in the local context while global trade is heavily reliant on this.
•  Allow electronic presentation of import and export-related trade documents through secured electronic platforms.

A few more points on process and technical approaches could be:

• Relook at the role of exchange houses. Like exports, it has to happen like USD drawing arrangements (no buying of Taka, which is currently in place); the flow has to come in USD in designated banks and be converted into a published rate. With Taka buying, competition happens, and less USD comes into the country.
• Interbank foreign exchange market should be built up from the ground again. In absence of brokers like other similar countries, here interbank trades are one way traffic only -- between two banks with sides known to each other. So, no market making is happening. In an ideal situation all excess from one bank to another bank should route via buy /sell through brokerage houses and in the absence, the central bank. In this way, transparency in rate may be ensured.
• L/C clearance mechanism not needed; as official outflow is already significantly down. The L/C clearance process may unnecessarily delay the process or may lead to unofficial forex outflow.

One may of course argue that external borrowing rates are already high now. Hence, it is not certain if liberalising would help.

Without liberalising interest rates of the government bills and bonds, and letting FX forward pricing based on market forces, steps may not be very effective.

I would also push for a few more fundamental points:

(a) The quality of auditors and BB's enlistment process for auditors. It must be made more stringent; (b) strict compliance with local rating companies' rating process. A local rating company rated known to be 'quite bad bank' AAA. What would you think, when a relatively far better bank is rated AAA? After S Alam took over and bad loans started piling up, Islami Bank's rating improved.

We are now talking of various reforms with the interim government, then why not reforming our cross-border trade, remittance and payment regime?

The writer is the chairman at Financial Excellence Ltd