"Prepare a blacklist and make up your mind whom you will not reach for any trade or business contract," Dr Salehuddin Ahmed urged them at a seminar in Dhaka yesterday, speaking out the bad experience gathered about some countries regarding payments.

The seminar on International Trade Payment Methods in Bangladesh was jointly organised by International Chamber of Commerce-Bangladesh (ICC-B) and Bangladesh Institute of Bank Management (BIBM).

Pointing it out that the international trade payment methods deserves due importance in Bangladesh, the Bangladesh Bank (BB) chief said, "We are working on updating our trading methods, but it needs time to enter into new trading systems, including an open account method."

He also advocated an appropriate payment system with regard to remittance besides such a system in trading.

The BB governor said the government has agreed with the central bank on a sovereign rating of the country.

"We have also taken initiative to modernise the foreign exchange regulations and exchange control guidelines," he added.

Meanwhile, most of the speakers at the seminar recommended for an 'open account' as a payment tool instead of documentary letter of credit (L/C), introduction of which, they thought, would reduce cost of import.

They also sought removal of regulatory barriers to make a headway for practicing open account payment method in import transactions saying that this account is one of the most simple and cheapest method of payments both in export and import transactions.

Speaking at the function, Mohd Ruhul Amin, director general of BIBM, said the regulators should leave it to the contracting parties to choose payment method for export-import transactions. "This will help both the exporter and importer to reduce their transaction cost," he said.

M Aminuzzaman, managing director of National Bank, said open account is a frequently used payment device on international trade deals.

"If we do not accept the method, we will lag behind in international trade," he said, urging the regulators to be objective.

In his welcome speech, ICC-B President Mahbubur Rahman said the recent statistics show that about 20 percent of global trade are now transacted through L/C. International standby practices and open account transactions as well as documentary collections are also widely used in settlement of trade payments world over.

"Therefore, Bangladesh Bank may also review these alternative methods for adoption in line with international practices," he said.

On the central bank's contractionary monetary policy, he said the policy has been questioned not only by the private sector but also by the economic analysts, as this policy does not necessarily and automatically help contain inflation.

"We apprehend that due to tight monetary policy the cost of doing business will increase and the banks' lending rates are expected to rise resulting in slow growth of the private sector, which may further affect the projected growth of GDP in FY 2008," he said.

Presenting a keynote paper on International Trade Payments-Practical Problems Being Faced by the Banking Sector, Mamun Rashid, managing director, Citibank NA, Bangladesh, said the foreign buyers such as JC Penny, Mark Spencer, Wall Mart, K Mart, Levis and H&M are pushing the local exporters to go for open account payment method, as the foreign buyers want to reduce their cost of import.

He also suggested immediate update of Foreign Exchange Regulation Act, 1947.

"Such an old act cannot guide the future of a country," he observed.

Dr Toufic Ahmed Choudhury, professor and director of BIBM, presented another keynote paper on An Evaluation of the Operations of International Trade Payment Methods in Bangladesh.

Among others, Mutual Trust Bank Managing Director Kazi Md Shafiqur Rahman and Premier Bank Managing Director Abu Hanif Khan spoke at the function.