Bangladesh is examining introducing direct banking with neighbouring Myanmar to facilitate trade between the two countries, Bangladesh Bank (BB) sources said yesterday.

"We are examining the pros and cons to develop direct banking link with Myanmar," a senior official of BB said seekinganonymity.

Although Bangladesh and Myanmar are close neighbours, the countries do not have any direct banking link, which has been blamed by businesses for the poor trade between the countries.

Absence of direct banking causes troubles to a Bangladeshi importer, as he/she has to pay exporters through a third country, which is time-consuming.

Major Gen Abu Roshde Rokonuddawla, Bangladesh ambassador to Myanmar, has recently written a letter to the foreign ministry urging it to take steps to develop direct banking with the military-ruled Myanmar.

“The exporters and importers of both the countries are

facing difficulties as the remittances are sent via a third country, thus increasing the price of commodities,” the ambassador said in his letter.

Bangladesh imported $20.56 million worth of goods from Myanmar in fiscal 2006-07, which was $29.53 million in fiscal 2005-06a and $32.66 million in 2004-05. While Bangladesh's export to Myanmar in these three fiscal years was $6.31 million, $5.16 million and $4.18 million respectively.

“We feel the need for a direct banking system with Myanmar as Bangladesh is increasingly getting dependent on import of food grains, especially rice," the BB official said.

“But there are some risk factors involved. Both the

countries have poor infrastructure at their border trading points. Unscrupulous people may smuggle arms instead of essentials,” observed the official.

Meanwhile, as an alternative to the direct banking system, the government has doubled the ceiling of border trade volume with Myanmar to facilitate more import of essential commodities, particularly the rice, to ease the soaring domestic market prices, BB officials said.

The government decided to increase the border trade volume to $20,000 from the existing ceiling of $ 10,000 in a single shipment.

“The decision will be implemented soon to boost import of essential items,” another BB

official, who also preferred not to be named, said.

“There is no direct banking because Myanmar is not a member of the International Chamber of Commerce," an official in the foreign exchange policy department of BB said.

Myanmar is an ACU (Asian Clearing Union) member and so is Bangladesh.

"The official said direct banking system may be developed under the ACU arrangement between the countries," the forex department official said. But traders are not interested to deal with the ACU payment system as it is timeconsuming.

State-owned Sonali Bank Limited and private National Credit and Commerce Bank Limited have dollar accounts in two banks in Myanmar. Bangladesh ambassador to Myanmar also suggested the government to devise ways to make trade transactions by using these two accounts. But he said the banks have to deposit more dollars in the accounts.

sajjad@thedailystar.net