"The government should actively promote the merits of either lending to, or offering credit support to the private sector in order to support businesses in their efforts to secure offshore suppliers credit or finance," the MCCI told the central bank in a recent letter.

Some regulations should be relaxed for imports associated with capital machinery purchases, infrastructure projects, domestic manufacture of import substitutes and backward integration projects undertaken by export-related businesses and industries, the chamber added.

In these cases, the maximum letter of credit authorisation (LCA) validity period should be extended from 18 months to 36 months and the maximum usance period for a deferred payment credit should be lengthened from 360 days to three years, MCCI suggested.

It may require the government to explain the positive economic prospects for Bangladesh and provide more transparent information. The primary recipients of any such promotional activity would largely be the export credit agencies (ECAs) of the main exporter countries including Sinosure of China and Exim Bank of India as well as the major ECAs from EU, US and Japan, the chamber explained.

"Increasing the availability of suppliers' credit in the private sector will delay the outflow of funds from the country and thereby reduce the short term pressure on foreign exchange reserves, exchange rate and banking sector liquidity."

Whilst suppliers' credit has been extensively used for the import of raw material for the readymade garment industry, its use for capital goods has been comparatively low due to the lengthy and uncertain approval process and lack of clear guidelines that deter applicants, MCCI said.

"The regulations are designed to support only short-term trade transaction and there is a lack of long-term bank confirmation lines for Bangladeshi banks, which reduces the overseas suppliers' willingness to provide long-term credit as their own overseas bank will not discount the bill acceptance."

There is also a lack of transparent information about Bangladesh among potential lenders or credit support agencies such as ECAs, the MCCI mentioned.

Foreign exporters of capital goods may require a payment guarantee from either an export credit agency (ECA) or a local bank (banker's acceptance), rather than the importer, to enable them to discount the receivables with their own bank in their home countries, it observed.

At present, most ECAs support limited cover for Bangladesh, and only on a case by case basis. This, to some extents, is driven by the lack of information and understanding of the risk factor, the chamber noted.