TradeBrief X M ICC eBSI BANKING P C 1 EETING IN …...ICC Banking Commission Meeting in eBSI Paris...

ELECTRONIC BUSINESS SCHOOL INTERNATIONAL www.ebsi.ie

1

TradeBrief eBSI ICC BANKING COMMISSION

MEETING IN PARIS ....................... 1 ADVANCED CERTIFICATE IN

INTERNATIONAL TRADE & LOGISTICS LAUNCHED BY EBSI....................... 2

EXPERT COMMENTARY – ASHFAK BOKHARI – FALL IN EXPORTS & FOREIGN INVESTMENT FLOWS ...... 4

IFC / ICC TOOLS FOR TRADE…………………………..... 5

WEBLINKS FOR EXPORTERS..... 9 TRADE PRACTICE CLINIC.......... 10 COUNTRY FOCUS - TURKEY ..... 11 IRISH EXPORT SURVEY ............ 13 EXPERT COMMENTARY – XAVIER

FORNT – FINANCIAL CRISIS & ISLAMIC BANKING ..................................... 14

EXPERT COMMENTARY – SOH CHEE SENG – MALAYSIAN COURT JUDGMENT ON STANDBY LC......... 20

EXPERT COMMENTARY – MAMUN RASHID – EXPORT, REMITTANCE & GDP GROWTH ............................ 22

BUSINESS IN… LIBYA............... 23

TradeBriefeBSIICC Banking Commission Meeting in

Paris Steps-up URDG Revision… The most recent meeting of the ICC Banking Commission took place in Paris on Thursday 23 October and Friday 24 October 2008 and was hosted by BNP Paribas. The welcoming remarks were delivered by Ms. Regina Prehofer, Banking Commission Chair, who made special reference to the involvement of the International Finance Corporation (IFC). Mr. Pierre Mariani (France), Global Head of International Retail Services and member of the Executive Committee, BNP Paribas, also welcomed delegates and set the scene for the important meeting in the backdrop of the evolving global financial crisis. Ms. Bonnie Gallat acted as moderator for a panel of the IFC trade finance specialists who reported the activity and progress of the IFC Global Trade Finance Program.

ICC BC TO BE HELD IN DUBAI The next ICC Banking Commission meeting will be held from 10-12 March, 2009, in Dubai, United Arab Emirates, and promises to be a strategic meeting in the development of the Banking Commission of the International Chamber of Commerce. The three day event will feature a full review of the latest draft of the Uniform Rules for Demand Guarantees (URDG), analysis of ICC draft opinions with the third day dedicated exclusively to the impact of the financial crisis on trade finance operations globally. This important meeting will be preceeded by a Technical Trade Finance Workshop on 9 March covering UCP600, URR525, Maritime Fraud, and Islamic Trade Finance. For further information: [email protected]

ICC Opinions and DOCDEX The second day of this meeting was opened by Mr. Gary Collyer, Technical Advisor to the Banking Commission, who led the discussion on ICC Official Opinions as well as recent DOCDEX cases. The event was dedicated to panel discussions on critical issues facing the trade finance markets. Dr. Georges Affaki provided the commission members with a progress update on the revision of the Uniform Rules for Demand Guarantees (URDG). Mr. Fung King Tak from Hong Kong took the members through an intricate case dealing with the URDG in court. Focused updates were also provided on:

1. anti money laundering. 2. forfaiting guidelines. 3. SWIFT initiatives 4. UCP 600 endorsement by

UNCITRAL.

Save the date… 10-12 March 2009

The IFC Partners meeting was held just in advance of the October 2008 Banking Commission meeting to ensure maximum participation from members of the ICC Banking Commission and trade bankers from the IFC Global Trade Finance Program (GTFP) This strategy proved to be an outstanding success.

ISSUE 2 2009


2

TradeBrief eBSI

Advanced Certificate in International Trade & Logistics launched by eBSI

Logistics and Trade

Professionals alike will have a

single entry point to degree level studies in

their related disciplines

News & Commentary

Directors Note

Welcome to

2009! The coming year will be challenging.

We will fight for survival but trade professionals are ready and able to fight for the cause of international development and global advancement through trade. Trade practitioners are well trained professionals who constantly strive to improve techniques and practice. We play a complex international trade game which is fraught with risk but supported by internationally proven rules. In the preceding decade the growth in World markets which was reflected in commodity prices has now been seen as a hall of mirrors. However, on deep reflection and having undergone a reality check we can see that international banking is going back to basics. Trade finance is the basic foundation of international banking and provides the cornerstone of global trade, securing international commerce and, in turn, economic development. Like any challenging game you need to be on the right team, not only to win, but now more than ever just to remain in the international trade game. Thank you for your ongoing support and being part of the eBSI trade professional team. Wishing you success in all your endeavours during 2009.

Vincent O’Brien

Modular Schematic of the Advanced Certificate in International Trade & Logistics

Dublin, Ireland At the request of interested students and trade practitioners alike, eBSI has combined its two most popular programs to lead to a dual certification for trade professionals awarded by the Institute of Export UK and the Chartered Institute of Logistics & Transport (CILT) in Ireland.

The first component of this program addresses the needs of those in the transport/logistics industry for a practical certified entry into an academic programme in Logistics. The Certificate in Logistics from the CILT is a 3 month module which can be used as an entry point to further studies with CILT to degreelevel.

The second pillar to this dual certificate programme addresses the need for logisticians and transport personnel to have a comprehensive understanding of the mechanics of International Trade. The Advanced Certificate in International Trade has long been awarded to graduates of eBSI’s International Trade Specialist Accreditation programme and now will allow those in the transport sector to expand their knowledge.

The combination of these two programmes of study into a dual certificate programme will enable trade professionals to access two broad career development options from the completion of one combined certified online training programme.

The Advanced Certificate in international trade & Logistics will cover the following key areas: Export Marketing Operations

Trade & Customs Practice

Finance of International Trade

eBusiness Logistics

On completion of this 11 month programme successful participants will be awarded the Advanced Certificate in International Trade from the Institute of Export, UK and a Certificate in Logistics from the Chartered Institute of Logistics & Transport in Ireland. For further details about this new innovative e-Learning dual certificate programme contact Thomas Smith of eBSI ([email protected]) Enrolments will take place on until 26 January 2009, and every 2 months thereafter.


3

TradeBrief eBSI News & Commentary

Institute of International Trade of Ireland Graduation Ceremony held in Dublin Port HQ

Congratulations to Institute of Export UK Graduates

Vincent O’Brien receives Certificate of Honour in Mongolia

The 2008 graduation ceremony for the Institute of International Trade of Ireland’s Diploma in International Trade and E-Business and Professional Diploma in Global Trade and E-Business, and International Trade Specialist Accreditation which is delivered by eBSI took place at the Dublin Port Company, Dublin on Friday 14th November 2008 and the occasion was truly International with a broad spectrum of nationalities represented at the event. eBSI’s Top Graduate for 2008 at the ceremony was Mr. Wagner Da Paixao Santos from Brazil, pictured to the right as he received his International Trade Specialist Accreditation from IITI President Dr. Christina Gates.

Readers will recall the country report we ran last issue on eBSI’s activities in Mongolia. One major EBRD project which was being implemented by eBSI First Director, Mr. Vincent O’Brien for a number of Mongolian Banks was successfully concluded in September 2008. As a token of appreciation for his efforts in developing Trade Finance capacity within Mongolian Banks Mr. O’Brien was awarded a Certificate of Honour from the Central Bank of Mongolia.

Given the multinational nature of our e-learning programmes it’s not always possible to arrange graduation events in every country. However when it is possible we do our best to celebrate our graduates accomplishments!

This issue we are delighted to congratulate the following recent graduates of the Institute of Export Advanced Certificate in International Trade that have taken advantage of the learning path to this qualification available through the International Trade Specialist Accreditation Programme. We congratulate Antonio Jesus Rodiguez Mato from Spain, pictured below with eBSI Operations Director Thomas Smith, who was awarded his Advanced Certificate at a special ceremony in Dublin, Ireland. To enrol or for further details on the ITS or Advanced Certificate courses please email John Farrell at [email protected].


4

TradeBrief eBSI Fall in Exports and Foreign Investment Flows

News Commentary

THE emerging economies have now begun feeling the painful effects of the financial crisis and recession in the United States and Europe. They are dismayed to discover that their export orders are rapidly shrinking because of a bearish consumer sentiment and tight credit in the West. The trade data released in mid-December 2008 shows a trade slump across Asia, confirming fears that the region’s strategy of export-led growth may backfire once the West buckled. The figures help crystallise a grim economic picture of Asia, although much of the region is less likely to see a downturn of the kind that the United States and Europe are experiencing. The decline in world trade has come faster than many had predicted only weeks ago. It is evident from a 90 per cent slash in prices by the freight lines that were sailing full this summer following a big drop in cargo traffic resulting in a pile-up of unsold goods at ports from Baltimore to Shanghai.

The World Bank had warned earlier that the world economy was on the brink of a rare global recession, with world trade projected to fall next year by 2.1 per cent for the first time since 1982 and capital flows to developing countries predicted to plunge by 50 per cent. If these projections come true, the downturn could become serious for many Asian countries. In any case, the falling world trade could mean an end to the global export boom that helped bring huge foreign investment and greater trade to nations like China, South Korea, Singapore and India in recent years. Rising joblessness and closure of factories has been forecast in the months ahead. The volume of world trade, which grew 9.8 per cent in 2006 and was 6.2 per cent in 2008, and is expected to contract by 2.1 per cent in 2009. That drop would be deeper than the last major contraction in trade: a 1.9 per cent decline in 1975. Net private flows of capital to developing countries are expected to fall to $530 billion in 2009, from $1 trillion in 2007. This decline will sharply reduce investment inflows to emerging economies, with annual investment growth slowing to 3.5 per cent in 2009 from 13.2 per cent in 2007.China’s exports and foreign direct investment (FDI) fell in November. Exports dropped by 2.2 per cent to $114.99 billion, the largest monthly decline in seven years, according to official figures. And FDI fell by 36.52 per cent year-on-year to $5.3 billion, Chinese ministry of commerce said. But the country’s trade surplus soared to a record $40.09 billion in November despite a fall in exports because imports fell, too, by 17.9 per cent year-on-year after having risen 15.6 per cent in October. Two-thirds of China’s small-toy exporters closed their businesses in the first nine months of 2008, according to government statistics.

China, whose economy has been growing at more than 10 per cent a year for the past half decade, announced a massive $586 billion stimulus package last month in an effort to maintain at least eight per cent economic growth.

Moody’s, the ratings agency, is, however, of the view that the stimulus programme would have an insignificant effect and would not offset the expected contraction of the economy and negative effects on the manufacturing sector. Beijing has taken aggressive measures to try to spur trade, such as re-introducing tax rebates for exports and helping banks increase lending. But they have so far failed.

Similarly, exports in Japan registered the biggest annual drop in seven years in October, pushing the trade balance into deficit and raising worries of recession. The machinery orders, its major exports, fell 4.4 per cent from the previous month. Exports to Asia fell for the first time since 2002, with sales to China also declining. The slide in exports to Asia indicates that the Asian economies are also taking a blow from weakness in developed economies. Exports fell 7.7 per cent in October from a year earlier, the biggest decline since December 2001, official data shows.

Pakistan’s exports declined in November by 0.76 per cent to $1.527 billion from $1.539 billion a year ago. Pakistan’s trade deficit has risen to an all-time high of $8.736 billion during the first five months (July-Nov) of the current fiscal year, up by 20.27 per cent from $7.264 billion over the corresponding period last year.

India’s exports fell by 12.1 per cent or to $12.82 billion in October from $14.58 billion a year ago. However, imports grew by 10.6 per cent to $23.36 billion in October compared with $21.12 billion in the same month last year. Trade deficit ballooned by more than 61 per cent to $10.53 billion. Exporters are unsure of achieving the target of $200 billion worth of exports fixed for the current fiscal. Morgan Stanley has cut its forecast for Indian economic growth in 2008/09 to 5.7 per cent from 6.5 per cent due to high cost of capital, falling consumer loan growth and reduced demand.

South Korea’s exports also fell sharply in November. They dropped by 8.3 per cent compared to the same month last year to $29.26 billion – the biggest drop since 2001. Imports fell by 14.6 per cent to $28.97 billion for a trade surplus of $297 million. Economic growth next year is expected to slow considerably and the country could experience its first contraction in a decade. The developing countries are expected to grow at an average rate of 4.5 per cent next year. But the forecast for economies in East Asia is not so worrisome where the World Bank expects 5.3 per cent growth, a marked decline from nine per cent the region enjoyed in 2007, and the projected seven per cent this year. Although East Asian countries appear better poised this time to face a crisis than they were in 1997, none looks capable of eluding the adverse effects of the recession in the western economies.

According to The Washington Post, the slowdown illustrates how globalisation, which contributed to rapid growth during times of plenty, can quickly turn against nations during times of bust. Depressed car sales in the United States, for instance, are spreading through the global supply chain, eliminating jobs for contract auto workers in Japan and labourers in South Africa who mine the metals used in car parts.

In November car sales were down 37 per cent in the United States. They were also down by 10 per cent in China, 15 per cent in India and 30 per cent in South Africa. In the old days, if there was a crisis in one part of the world, it would take three to six months to affect another part. But now, everybody is so interconnected through trade that the impact is happening instantaneously.

What is more worrying for the western nations is that China, the only emerging economy which offered a ray of hope to them in these times, is itself in trouble. The US was counting on sales to China to help combat recession at home. The sharp drop in the US trade deficit should, as a matter of fact, generate more jobs as domestic manufacturers pick up the slack left by declining imports. But it is unlikely to happen now. The reason is that many US manufacturing jobs have already moved overseas because products could be made more cheaply abroad. If consumers won’t buy a $600 flat-screen TV made in China, chances are they now won’t buy a more expensive one made in the United States. In 2009 only nations fit to trade will be fit to survive!

This Article was republished with the kind permission of the Author and The Dawn Newspaper, Pakistan, the original article can be viewed at http://www.dawn.com/2008/12/22/ebr15.htm

Expert Profile Name: Ashfak Bokhari Position: Economic Journalist and Blogger Employer: The Dawn Newspaper Location: Karachi, Pakistan Specialisation: Emerging Economies Contact: [email protected]


5

TradeBrief eBSI

IFC Co-organises International Seminar with ICC Paris on ICC Rules for Trade at ICC Headquarters

IFC/ICC Seminar

Paris, France In a unique event organised by ICC and IFC, The ICC Rules for Trade workshop comprised of a series of focused presentations on best practices in structuring trade finance products to support trade to and from emerging markets. A central focus was the correct application of ICC Rules as an integral part of such trade finance products and operations. This practical case oriented workshop provided a practical value-added dimension for participants.

This workshop was chaired by Vincent O’Brien and delivered by trade finance professionals who have significant experience in trade finance operations in emerging and developing markets. The core focus of the workshop was the Internationally recognised and respected rules and codes of practice established by the International Chamber of Commerce, namely the Uniform Customs & Practice for Documentary Credits; Uniform Rules for Collections; Uniform Rules for Demand Guarantees; International Standard Banking Practices and the International Standby Practices.

Introduction and welcome from Mr. Thierry Senechal, Policy Manager of the ICC Banking and Financial Services and Insurance commissions

Reaction to Implementation of UCP 600 by Mr. Gary Collyer, Technical Advisor to the ICC

Banking Commission.

Ms Bonnie Galat of IFC took participants through the workings of the IFC Global Trade Finance

Program

Vincent O’Brien chaired the proceedings and directed technical

questions from the seminar participants.


6

TradeBrief eBSI IFC/ICC Seminar A summary of the programme of the event is listed to the right. This unique and high profile event attracted a large audience of international bankers, many of whom remained during the days after the workshop to attend an IFC Partners meeting or the ICC Banking Commission meeting which was being held the same week in Paris.

A practical overview of the procedures for availing of the ICC DOCDEX system of dispute resolution was explained by Mrs Calliope Sudborough, head of DOCDEX in

ICC Paris.

Mr. Pavel Andrle of ICC Czech Republic examined a series of cases regarding the interpretation and application of

UCP600 since its launch in July 2007 from the perspective of Emerging Markets Bankers

Mr. Iqbal Karmally, Coordinator of ICC UAE and head of Trade Finance at Sharjah Islamic Bank delivered a practical and comprehensive overview into the operation of Islamic Trade Finance products.

Workshop Program Reaction to implementation of UCP 600 • Specific feedback to the revised UCP rules • Introduction to ISBP and how it works with UCP • Key issues in application of UCP 600 • Avoiding pitfalls and getting the benefits. Typical trade finance structures used in emerging markets • Discounting credits available by deferred payment and acceptance • Sight payment credits with deferred payment reimbursement • Silent confirmation and position under UCP 600 • Transferable credits under UCP 600 Workings of IFC Global Trade Finance Program (GTFP) • Brief history and achievements • Structure and operation • Trade products covered (letters of credit, collections, guarantees) • Application of ICC rules under GTFP • Examples of transactions supported under the GTFP Impact of the first year of UCP600 from an emerging markets perspective Islamic finance alternatives for trade • Expansion of Islamic trade finance • Key foundation principles of Islamic trade finance • Structures and methodologies • Modifications and exclusions required in application of UCP 600 Queries and cases submitted by participants • Queries on obligations of banks under ICC rules • Queries on documentary compliance • Queries on interpretation of UCP 600 Questions and answers session

The ICC Sponsored Toolbox containing over €500 worth of ICC rules and publications is presented to the award winner.


7

TradeBrief eBSI eBSI Projects

FIT INITIATIVE GRADUATIONS Bangladesh and Pakistan Ceremonies a complete Success!

A series of Graduation events were recently held in Dhaka, Bangladesh and Lahore and Karachi, Pakistan for graduates of the recently launched FIT Initiative supported in these countries by the International Finance Corporation, IFC.

At the event in Karachi Pakistan, Mr. Umar Farooq of United Bank Limited said “The ‘FIT Initiative’ in Bangladesh and Pakistan is supported by the ‘IFC Global Trade Finance Program’ which itself, in a short period of time has proven to be a highly successful global trade finance support program for banks and their customers especially during turbulent times’. Notwithstanding the global financial crisis it is clear to everyone that international trade is of fundamental importance to growth development and reduction in poverty. The FIT Initiative provides graduates with international certification and integrates them into a growing network. See http://www.ifcfitinitiative.net.

Mr. Vincent O’Brien with participants at Graduation event organized by Institute of Bankers in Pakistan in Lahore on 20 December 2008.

Online Collaboration Site for stakeholders To leverage the network aspect of the 'FIT' Initiative all stakeholders (participants, tutors and coordinators) will have access to an online networking and collaboration system designed to facilitate exchange of ideas and contact building. CD ROM Based Core Learning Material The Finance of International Trade (FIT) is comprised of the following Learning Units: * Methods of Payment * Bills of Exchange * Documentary Collections * Documentary Credits * Import Documentary Credits * Bonds & Guarantees * Forfaiting, Factoring & Invoice Discounting * Structured Trade Finance * Export Credit Agencies * Complex Transactions * Warehouse Financing * Trade Facilitation Program

The IFC ‘FIT Initiative’ is an e-learning program that is designed with an important dual purpose: 1. to train and certify international trade finance professionals 2. to build an online global network of international trade and finance professionals who will share knowledge and experience on an online platform specifically developed for the program

This Three Month program is delivered in a combination of the following learning elements: Online Support site for students Students will be incorporated into the eBSI Alumni and will be able to collaborate through a purpose built learning platform. Online Specialised training in UCP 600 ICC Approved Online Training in UCP 600 (Mentor or Upskill 600).

FIT Initiative Graduation hosted by ICC Bangladesh in Dhaka on 3 December 2008

Dr. Salehuddin Ahmed, Governor of the Central Bank of Bangladesh was the Keynote Speaker at the

Graduation in Dhaka.


8

TradeBrief eBSI eBSI Projects

Mr. Vincent O’Brien with FIT Initiative Graduates Omer Faruque Khan and Kazi Quamrul Islam in Dhaka, Bangladesh.

Pakistan graduate receives his ‘FIT’ Cert and ICC Upskills Cert from Vincent O’Brien at Institute of Bankers in Karachi

Happy and ‘FIT’ Graduates from Pakistan

Next Intake Dates for the IFC FIT Initiative The next program intakes will take place in the following countries in

January/February 2009

Bangladesh, contact Ataur Rahman, [email protected]

Pakistan, contact Umar Farooq, [email protected]

Nigeria, contact Arije Abdulrasaq, [email protected]

Vietnam, contact Martin Nguyen, [email protected]

Cambodia, contact [email protected] For other countries please contact [email protected]

Project Partners in the IFC FIT Initiative eBSI Gratefully acknowledges the participation and contribution provided to

the success of this project by the following project participants:

FIT Initiative Graduation held in the Institute of Bankers Pakistan in Karachi on 22 December 2008

Participants at Graduation in Lahore on Saturday 20 December 2008


9

TradeBrief eBSI eBSI Weblinks for Exporters

eBSI Weblinks for Exporters is a new section that will provide you every issue with websites recommended by our course participants as being of particular use to them in their international Trade Activities! Websites that can be considered for inclusion in this section include but are not limited to International Trade, Trade Finance and Logistics sites such as:

If you have a site to recommend then send it to Weblinks for Exporters at [email protected]!

• Business Networking Sites • References or Blogs • Import Export Directories • Country Portals

Very informative website with blogs and podcasts relating to international business. Recent items covered include ‘3 Keys to Global Business in Today’s Economy’; a podcast on ‘Global Business Today, Opportunity or Challenge’; and ‘Do You have an Export Strategy?’. http://globalbusinessperspectives.com

Exportaid was founded in 2001 to help businesses throughout the world with their international trade requirements. The company currently supports businesses in more than 60 countries. http://www.exportaid.co.uk

Argonaut (argo0) is a web based community for the commercial shipping sector. Argo0 gives you access to the most comprehensive maritime glossary online and for ICS members and students, a wealth of information in the ICS Members Area. http://www.argo0.com/

International Network of ExportConsultants, Marketing andProject Management Specialistswhose primary focus is to helpexporters enter new markets. http://www.theexportnetwork.com/

Looking for marine transportation links, maritimeservices, yacht and boat supplies, shipping cruiseand sea freight links, bunkerfuels and bunkering,information about a port, harbour or marina? This should be your first ‘Port’ of call! http://www.worldportsource.com

Coastline Solutions deliver top quality Online Training in Documentary Credits, Documentary Collections, Online Doc Credit reference DCPRO, and advanced Doc Credit training DC MASTER and ISP Master all ideal for Trade Banking and serious traders! Visit http://www.coastlinesolutions.com

LinkedIn is one of the largest business networking sites in the

world with members drawing primarily from North America but

with significant further reach. Excellent business networking

and jobsite for all business!

Tradeprofessional.net is a Business Networking Site dedicated only to

International Traders and includes a trade Jobsite, Blogs, Forums, Events, groups and online Marketplace. Highly Recommended!

http://www.tradeprofessional.net

Ryze helps people make connections and grow their

networks. You can network to grow your business, build your career

and life, find a job and make sales. http://ryze.com/ http://www.linkedin.com


10

TradeBrief eBSI Trade Practice Clinic

Following on from our complete redesign of eBSI Tradebrief we have also given our Trade Practice Clinic a new look and feel. The process remains the same though, simply email us at [email protected] to have your question considered for the next issue! Our queries this issue come from Taiwan and Bangladesh!

DISCLAIMER: Articles within this publication contain information, which is for guidance on matters of general interest only. There may be omissions or inaccuracies in information contained in this publication and the information is given on the understanding that it should not represent a substitute for professional consultation. Although we have made every effort to ensure the information in this publication is reliable, the electronic Business School International, GTI Learning.com and the Authors of these articles accept no responsibility for errors, omissions or adverse results obtained from using the information. The electronic Business School International, GTI Learning.com and the Authors of these articles issue no guarantee of completeness, accuracy, timeliness or results obtained from using the information. The electronic Business School International, GTI Learning.com and the Authors of these articles will therefore not be liable to you or anyone else for decisions made or actions taken in reliance on the information in this publication.

Dubai, UAE

Q : We find your eZine very interesting and like your practical approach. We have a specific question. Our company acts as a trading organization based in Dubai. We have recently experienced problems with variances in the final cost of landed goods in various countries in the European Union based on applied tariffs. The reason for the variances has been given as ‘customs treatment as per rules of origin’ Can you throw some light onto ‘rules of origin’ and their importance in the context of international trade?

A : When goods are imported they are sometimes subject to different treatment by customs depending on the origin of the goods, that is what country the goods come from. The process of producing and distributing a product or ‘good’ may involve activity in more than one country. Consequently, there is a need for rules to determine ‘origin’ or in simple terms rules to determine in which country a good is deemed to be “made”. These rules are called “rules of origin”. In practice, rules of origin are broken down into two categories: * Non-preferential rules define the origin of a good for reporting purposes the purpose of such as trade statistics and import quotas. * Preferential rules, are rules of stricter application, these preferential rules are defined by members of regional free trade areas (or other groups countries who have signed up preferential trade agreements). These preferential rules ensure that only those goods which genuinely originate in one of the group member countries enjoy low tariffs or possibly other benefits laid down in the agreement. In the context of international trade the rules of origin can be very important. It is clear that the rules of origin can impact on the delivered cost of goods in a destination market. This obviously has cost competitive elements to be considered. Depending on the chosen international commercial term (INCOTERM) between the seller (exporter) and buyer (importer) the impact of rules of origin can be significant. I trust this clarifies what is meant by 'rules of origin'. Regards, Pauline Clery. Director, Global Customs Oracle Ireland

Eagle, USA

Q : I have recently been promoted to the post of Shipping Executive of my company. As part of my duties I am required to select a Freight Forwarder to handle the company's products. What I would like know is 1) What questions to ask Freight Forwarders and 2) How do I assess their answers in order to make the right selection...

A : First of all, let me make this point. It is important to distinguish in Law between a freight forwarder and a forwarding agent as a company may on one occasion act as a freight forwarder and on another as a forwarding agent. This is because a forwarder contracts with a principal, i.e. an exporter, to carry goods from A to B under its own trading terms and is responsible for loss or damage to goods that may be caused by negligence of his own or his servants or sub contractors. This implies that the freight forwarder’s invoice is higher than that of the forwarding agent. It must be noted that the specific operations of both a freight forwarding company and a forwarding agent are country specific and will vary according to country legislation and country freight forwarding association rules. Let’s discuss which questions to ask and how to assess a freight forwarder. I think it is best to consider their ability to perform efficiently, effectively and competitively in the following areas: 1. Customs Clearance; 2. Export Packing; 3. Freight Rate Quotations; 4. Marine Insurance; 5. Modes of Transport; 6. Shipping Documentation; 7. Other. For example under Freight Rate Quotations, you must understand the difference between LCL, FCL, RoRo, break bulk, etc. How long is a rate good for? What is the rate based on (i.e. volume, weight, commodity)? Are there formulas used to quote rates? When is it advantageous for you to go direct to a carrier? Proper research into the freight market can yield significant cost savings and is worth the time you will need to invest in obtaining this information.

Regards,

Gavin Makowski Logistics Specialist Dishman Europe


11

TradeBrief eBSI Country Focus - Turkey

TradeBrief takes a closer look at the newest country of operation of the EBRD!

In October 2008 the EBRD's shareholders agreed that the Bank will start operations in Turkey. The EBRD will support the private sector and reach out to areas away from the large metropolitan centres. In the first two years of operations, investment of up to US$ 600 million will focus on developing the agribusiness sector, supporting small and medium-sized enterprises, furthering privatisation, delivering municipal services effectively and promoting energy efficiency projects. eBSI has participated in training and conference events in Turkey for over 5 years now. Last issue you saw our announcement of a trade finance conference and workshop in Antalya, Turkey covering Documentary Trade Finance Operations - Operations – Rules – Regulations and Processes. As you will see from this report the objective of the conference, that is to bring CIS based trade finance operations personnel into contact with some of the leading lights of International Trade Finance to discuss the Global Financial Crisis and to explore avenues for growth through more traditional and less risky trade related finance instruments and products was a complete success!

Since Pictures speak a thousand words we have compiled a photo summary of some of the events eBSI has been involved in this exciting emerging market!

Turkey Background Turkey joins the EBRD as a country of operations and will rank as the second largest economy in the EBRD region. Modern Turkey was founded in 1923 from the Anatolian remnants of the defeated Ottoman Empire by national hero Mustafa KEMAL, who was later honored with the title Ataturk or "Father of the Turks." Under his authoritarian leadership, the country adopted wide-ranging social, legal, and political reforms. After a period of one-party rule, an experiment with multi-party politics led to the 1950 election victory of the opposition Democratic Party and the peaceful transfer of power. Turkey joined the UN in 1945 and in 1952 it became a member of NATO. In 1964, Turkey became an associate member of the European Community; over the past decade, it has undertaken many reforms to strengthen its democracy and economy enabling it to begin accession membership talks with the European Union. (Source: CIA - The World Factbook)

Group Photo of participants at the Documentary Finance Operations Conference in Antalya, October 6-8, 2008


12

TradeBrief eBSI Country Focus - Turkey

International Conference Documentary Trade Finance Operations

Operations – Rules – Regulations- Process Fame Residence Hotel, Antalya, Turkey

October 6 - 8, 2008 The conference speakers comprised Milan Figala (Czech Republic), Jeffrey Blum (United Kingdom), Thomas Smith (Ireland), Michael Panfilov (Russia), Pavel Andrle (Czech Republic), Karl Mayrl, (Austria), Johan Bergamin (Netherlands) and Conference Chairman Vincent O’Brien (Ireland). The multinational nature of the speaking panel was matched by that of the attendees who came from Austria, Azerbaijan, Belarus, Czech Republic, Georgia, Ireland, Kazakhstan, Kyrgyzstan, Netherlands, Russia, Ukraine and the United Kingdom.

Basic Economic Facts GDP: $853.9 billion (2007 est.) GDP per head: $12,000 (2007 est.) Annual Growth: 4.5% (2007 est.) Inflation: 8.7% (2007) Major Industries: textiles, food processing, autos, electronics, mining (coal, chromite, copper, boron), steel, petroleum, construction, lumber, paper Major trading partners: Russia, Germany, China, Italy, US, France Exchange rate: (in Turkish Lira). US dollar USD 1.562 Euro EUR 1.982 Japanese yen JPY 0.016 British pound GBP 2.400 Russian rouble RUB 0.055 Chinese yuan CNY 0.228

ECONOMY Background Turkey's dynamic economy is a complex mix of modern industry and commerce along with a traditional agriculture sector that still accounts for more than 35% of employment. It has a strong and rapidly growing private sector, yet the state still plays a major role in basic industry, banking, transport, and communication. The largest industrial sector is textiles and clothing, which accounts for one-third of industrial employment; it faces stiff competition in international markets with the end of the global quota system. However, other sectors, notably the automotive and electronics industries, are rising in importance within Turkey's export mix. Real GNP growth has exceeded 6% in many years. The economy is turning around with the implementation of economic reforms. Further economic and judicial reforms and prospective EU membership are expected to boost foreign direct investment. The stock value of FDI currently stands at about $85 billion. Privatization sales are currently approaching $21 billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline in May 2006, marking a major milestone that will bring up to 1 million barrels per day from the Caspian to market. Economic fundamentals are sound, marked by strong economic growth and foreign direct investment. Turkey's high current account deficit leaves the economy vulnerable to destabilizing shifts in investor confidence, however.

EBRD’s Trade Facilitation Programme The Trade Facilitation Programme (TFP) promotes foreign trade from central Europe to central Asia. The EBRD provides guarantees to international confirming banks, taking the political and commercial payment risk of international trade transactions undertaken by banks in the EBRD’s countries of operations. Over 115 issuing banks in 19 EBRD countries of operation participate currently in the Programme with facility limits exceeding €1 billion. Sixteen Turkish banks have joined the EBRD’s Trade Facilitation Programme as confirming banks, and received 708 trade guarantees totalling €49.6 million. Since the start of TFP in 1999, 805 export transactions for Turkish companies totalling €67.7 million have been supported through the Programme. Most transactions represented trade between Turkish enterprises and countries in the Western Balkans as well as member countries of the Commonwealth of Independent States. Turkish transactions represent a significant part of trade transactions processed under the TFP, ranking second only to Germany. EBRD’s Strategy An upcoming strategy will define the EBRD’s initial activities in Turkey. The EBRD identifies five priority areas for its activities in 2009 and 2010. 1. Improve availability of risk capital, long-term funding and management skills for the micro, small and medium-sized enterprise (MSME) sector 2. Emphasise investment along the food chain 3. Support the delivery of vital utilities to the population and enterprises in the regions of Turkey 4. Promote energy efficiency and renewable energy across economic sectors 5. Support the Turkish government’s privatisation programme in the enterprise and financial institutions sector.

Conference Speakers Group Photo

Conference Participants at one of the sessions

Johan Bergamin, chairman of the first days proceedings.


13

TradeBrief eBSI Irish Export Survey

Outlook Challenging but Manageable for Irish Exporters despite Global Crisis

Sources of Funding of Trade Transactions in Irish Exporters Methods Used to Manage Currency Risk by Irish Exporters

Thomas Smith at launch of Irish Export Survey. Pictured with the speakers at the launch, Brendan

O'Connor, AIB, Pat Higgins, IEA Vice-President, Dean O'Brien, Euler Hermes, John Whelan, CEO,

Irish Exporters Association

Irish Export Survey Exporters Survey reveals significant challenges for Irish exporters. High labour costs, high cost of finance, high cost of energy and wildly fluctuating currencies have been pinpointed as the major concerns for exporters according to the findings of a major survey conducted by the Irish Exporters Association. The survey also revealed the changing attitudes of Irish exporters on a range of subjects such as export credit insurance, late payments and financing. The full findings of this annual survey were revealed in Dublin at the launch of the ‘Export Ireland Survey and International Trade Finance Review 2008’. The main features of the Survey are shown below: Challenges in the market place The survey indicated that just under half of the export community surveyed believe that they can increase export sales before year end 2008. Most exporters see their main sales growth coming from the euro zone. However, there are also expectations for sales growth arising in the UK, particularly for the services exporters. The rest of Europe outside the euro zone is ranked third in importance for sales growth with a particular emphasis on Poland. There are a number of “major concerns” which exporters have in 2008 as reported by the survey findings. The primary concern for the long term growth prospects in Ireland is the loss of competitiveness associated with the cost of labour. The pay pause in the new pay phase negotiated under the Social Partnership Agreement “Towards 2016” will go some way towards alleviating this concern, but many will have to invoke the - inability to pay - clause when the first payment falls due. Adding further to the concern for competitiveness loss, particularly by the manufacturing sector, was the cost of energy. Payment Methods The method of payment sought by exporters from their overseas clients continues to be “open- account”, effectively offering the same terms as for clients in Ireland. Exporters to the UK and the euro zone offer open-account to 80% of their clients, whereas in Asia, Middle East and Africa only 40% of clients are given the best terms or open-account trading. Letters of credit and advance payment account for the rest of the trading arrangements, with the latter being utilised much more frequently than the LC’s. Financing of export activity was stated by 52% of exporters as coming from their own resources with only 17% resorting to overdrafts. Coupling the information with the assertion by 97%9of exporters that they have no difficulty in getting banking finance, points to a very positive scenario for the export industry in the aftermath of the credit crises affecting the banking sector. Export Opportunities and State Support The survey shows a growing level of maturity and self reliance amongst exporters when it comes to identifying export sales opportunities. Most exporters (55%) state they use their own marketing efforts to identify export sales opportunities. In second place with 24% of respondents was the reliance on overseas agents and distributors for sales opportunity identification. This is followed by 20% who state they extensively use the internet for this function. A further 15% stated they use trade shows, with an equal number or 15% relying on customer referrals. Less than 10% stated they use Enterprise Ireland and the Irish embassies in their search for export sales opportunities.

Sources of Bad Debts for Irish Exporters

Use of Export Credit Insurance by Irish Exporters


14

TradeBrief eBSI Expert Commentary

The Financial Crisis and Islamic Banking

Many countries in the Islamic World have adopted elements of ‘Sharia’ (Islamic Law) in their respective legal systems regulating Financial entities. And how are they weathering this current rather grave financial crisis? Well, they appear to be doing ok so far, or at least, in our tumultuous western World, we haven’t heard of any Islamic Banks in severe difficulty. European and American Banks, which seemed to be invulnerable, towering examples of stable and modern financial institutions, are falling, stumbling or clinging desperately on to government backed rescue plans. Should public Money be used to save private debacles? Well, this may be a debate best left for another day. The question we will look at today is why is it that those Arab countries that have incorporated Sharia principles into their Financial Regulation and are practicing ‘Islamic Banking’ appear to have remained at the margin of the International Financial Crisis.

Some other principles, more focused on ethics and moral conduct, such as the prohibition of the charging of interest or of hiding material defects in the sale of goods, still don’t, or shouldn’t, differentiate Islamic banks from western ones. They are more differences in form. Sharia Law prohibits charging or paying interest, which makes Islamic banks have to achieve an equivalent result in other ways. For example, in a mortgage transaction as carried out with an Islamic bank, only up to 80% of the value of the property may be borrowed, which is very different when compared to some of the lending excesses of western banks in recent years. And why only 80%? Because one of the requirements of Sharia Law is prudence when taking on risks. Its that simple. Furthermore, the buyer of the property under mortgage is the bank, and the client pays a monthly rent (which would be equivalent to western capital + interest), and the percentage of ownership in the property transfers to the client of the bank as they continue meeting their rental payments. One might say this is a complicated system, from our point of view in the west, but in essence its similar to a building leasing transaction. If this lending ceiling of 80% of the value of the property is diligently respected by islamic banks, this certainly is one of the reasons why islamic banking has been less affected by the current crisis.

But in the end, selling what one doesn’t yet possess goes against all logic and it opens the door to speculation, since with a small amount of Money, you can close a transaction with a much higher nominal value. And this is how things have gone… or better said, that’s how things are going. If we are looking for an answer to the initial question of this article, why Islamic banking seems less affected by the financial crisis, this is the answer. Two simple but very important reasons: 1) be prudent when taking risks, and 2) don’t sell what you don’t have. For the Islamic World, its purely the written law. For the western World its pure logic. Unfortunately, it appears that the immeasurable ambition of many western fund managers has made them forget logic. Perhaps we should put logic into law?

But there is more… a lot more. Another requirement of Sharia law is the impossibility of selling that which one does not possess. One must have possession of the object of the transaction. This is another significant difference to some practices in the western World. This simple principle leads to proper asset valuations. An example of intangible transactions which have become common in the western World but which would be prohibited under Sharia law are transactions involving derivatives and options. If I pay a small Premium which bestows me with the rights to an underlying asset, (foreign Exchange, shares, raw materials, etc) and then I am able to sell these assets in the futures markets, assets, which I don’t yet have in my possession, since all I have in reality is the right to buy, but as yet I haven’t exercised that right. These types of transactions, under Sharia Law would be impossible, because we would be trying to sell something we still didn’t possess. All we possess are some rights to purchase the assets, but not the assets themselves. We all know that many hedge funds are working on this basis, and that many fund managers (bad ones) found an easy way to make easy Money while things were going well.

Expert Profile Name: Xavier Fornt Position: Professor International Economics Employer: College of International Business Location: Barcelona, Spain Specialisation: International Trade Finance Contact: [email protected]

Iqbal Karmally of ICC UAE speaking at recent event on Tools for Trade at ICC HQ in Paris provided a practical insight into Islamic Trade Finance.


15

TradeBrief eBSI Career Focus

eLearning Benefits for Companies

Career Focus

In many cases, the biggest dilemma facing a company considering employing e-Learning as a tool to train staff is how to justify the cost of such an approach. Within the context of International Trade and Finance training, without doubt e-Learning delivers more training benefits to more people for the lowest training investment. E-Learning, if it is done the right way always saves time, money, resources, and delivers measurable, tangible results. Instant access to information is one of the driving factors in today's international economy. The key to success is moving knowledge from the people who have it to the people who need it. E-Learning provided by competent content providers gives you the power to do exactly that. Virtually anyone anywhere can sharpen their trade skills or develop new ones.

Participants in the International Trade Specialist Accreditation (ITS) have reported achieving significant cost savings in their trade operations simply by carrying out an audit of entrenched trade procedures and ensuring that service provision contracted such as transport or insurance is still the most cost effective available. Regular revision of customs regulations can also open up opportunities for cost savings through implementation of alternative customs regimes or applying for duty relief where relevant. With a structured e-Learning programme such as the ITS it is easy to stay abreast of events and to obtain practical advice from other trade practitioners within the network from around the world. This availability of focused technical information can dramatically improve your bottom line.

Global competitive edge The benefit that high-growth companies gain by implementing e-Learning strategies and technologies is consistently beating the competition and maintaining their competitive edge in the marketplace. By availing of an international network of experts intrinsic to a World class learning a company can reduce the need for external consultants until a specific business need arises. The best advice for anyone with a latent interest in e-Learning is to take a tester by undertaking a short modularized and certified e-Learning course or nominating an employee as a pilot trainee.

Studies have shown that without travel time or expenses, e-Learning can save up to 40 to 60 percent when compared to traditional training. And students can take as many courses as often as they need. E-learning participants tend to develop professional relationships which last indefinitely. Just-In-Time Training The ITS Accreditation deliver international trade knowledge on-demand, with up-to-the-minute information. Students can access training instantly-at the office, at home, or on the road, 24 hours a day, seven days a week. Education is available when and where they want (and need) it. The learner has the option of CD ROM delivery or totally online or a combination of both.

Features of E-Learning • Learning is self-paced and gives students a chance to speed up or slow down as necessary • Learning is partly self-directed, while we guide students through course content, they are free to

choose content and tools appropriate to their differing interests, needs, and skill levels • Accommodates multiple learning styles using a variety of delivery methods geared to different

learners; more effective for certain learners • Designed around the learner • Geographical barriers are eliminated, opening up broader education options • 24/7 accessibility makes scheduling easy and allows a greater number of people to attend classes • On-demand access means learning can happen precisely when needed • Travel time and associated costs (parking, fuel, vehicle maintenance) are reduced or eliminated • Overall student costs are frequently less (tuition, residence, food, child care) • Potentially lower costs for companies needing training, due to group rates available • Fosters greater student interaction and collaboration • Fosters greater student/instructor contact • Enhances computer and Internet skills • Content is available for reference for the student in a quick and easy to access format for when a

technical question arises. • Can’t find the answer in the course content? Ask your tutor on the online campus!

Expert Profile Name: Thomas Smith Position: Operations Director Employer: eBSI Location: Kiltimagh, Ireland Specialisation: International Trade Training Contact: [email protected]


16

TradeBrief eBSI eBSI Recent Events We have been clocking up a lot of air miles while delivering seminars and attending conferences around the world, here is a brief overview of some of our more notable appearances since last issue!

Ulaanbaatar, Mongolia eBSI First Director and Finance Tutor, Vincent O'Brien was invited to address the 12th Biennial Conference of the Asian & Pacific Association of Banking Institutes was held in Ulaanbaatar on 14 and 15 September 2008.

Mr Vincent O’Brien with participants of APABI Conference.

Belgrade, Serbia A workshop was held in Belgrade, Serbia on 13-14 October 2008 covering cae studies on UCP600. The 2 day workshop was organised by the Association of Serbian Banks and delivered by eBSI Finance Tutor, Pavel Andrle.

Pavel Andrle with Participants at the UCP600 Seminar

held in Belgrade on 13-14 October 2008

Ulaanbaatar, Mongolia A Trade Finance Workshop was organised by Zoosbank mark the launch of their International Trade Services. The workshop was delivered by eBSI First Director, Vincent O'Brien.

Vincent O’Brien, eBSI Director addresses Participants at the ‘Silk Road 2008’ Seminar in Ulaanbaatar on 20 September 2008


17

TradeBrief eBSI eBSI Recent Events

Dubai, United Arab Emirates A workshop was held in Dubai Chamber of Commerce in Dubai, United Arab Emirates on 8 November 2008 covering International Standard Banking Practices (ISBP). The training was delivered by Pradeep Taneja and Vincent O'Brien.

Mumbai, India

Vincent O’Brien presents the China Systems Award to Ms. Hema Kapoor Vice President Trade Finance, India & South Asia at JP Morgan.

Lusaka, Zambia A week long trade finance seminar was delivered on behalf of the IFC for their regional issuing banks in Lusaka from 29 September to 3 October 2008 by eBSI Consultant and Trade Finance Tutor Mr. Pavel Andrle.

Pavel Andrle with Seminar Participants in Lusaka.


18


Kinshasa, Democratic Republic of Congo A week long Trade Finance Operations Workshop was delivered on behalf of the IFC in Kinshasa, from 29 September to 3 October 2008. The training which was conducted in French for local issuing banks in the region was delivered by eBSI Consultant Monique Philippe.

Monique Philippe with participants of the Trade Finance Training Program

Hanoi, Vietnam A Week long Trade Finance Operations Seminar was delivered on behalf of the IFC in Hanoi from 3-7 November 2008 and delivered by eBSI Consultant and

Trade Finance Tutor Mr. Pavel Andrle. The seminar was delivered for Vietnamese Issuing Banks under the IFC GTFP and funded by the Government of Japan.

Pavel Andrle with Vietnamese participants at the seminar in Hanoi.

Prague, Czech Republic The International Forfaiting Association Annual conference was held in Prague, Czech Republic from 3rd to 5th September 2008.

Vincent O’Brien presenting ‘ICC rules – Legal v Practice’ at IFA Annual Conference.


19


Dubai, United Arab Emirates eBSI partnered with Standard Chartered bank in delivering a Trade Finance Seminar ‘Trade Finance for Emerging Markets’ which was held in Dubai on 18 November 2008 for corporate clients of the bank.

Vincent O’Brien at recent Standard Chartered Bank corporate trade finance workshop

Chisinau, Moldova On 5th and 6th November, 2008 a Structured Trade Finance Seminar was delivered on behalf of the EBRD for Regional Issuing Banks from Belarus, Moldova and Ukraine. The seminar, funded by the Government of Taiwan, was delivered by eBSI First Director Vincent O’Brien and Johan Bergamin of ING Bank.

Participants of the Structured Trade Finance Seminar with Vincent O’Brien

and Johan Bergamin at Mobias Bank’s Headquarters where the seminar took place.

Certificate in Finance of International Trade Learn all you need to know about Methods of Payment & Finance!

• Online Tutorials with ICC Banking Commission Members • Certified by the Institute of Export UK • Includes ICC Online Training in UCP 600 • Recognised by International Finance Corporation

Contact us for more details: The electronic Business School International Tel: +353 94 9381444 Fax: +353 94 9381708 Web: http://www.ebsi.ie Email: [email protected]


20


SPECIAL COURT OF MALAYSIA ISSUES JUDGMENT IN STANDBY LETTER OF CREDIT

An irrevocable standby letter of credit (standby LC) can only be revoked or rescinded with the consent of the beneficiary. This judgment was given by Chief Justice Tun Abdul Hamid Mohamad who headed the five-man bench of the Special Court of Malaya in two related lawsuits. In the first suit, Standard Chartered Bank (Malaysia) Berhad (SCBM) was the plaintiff and the former king of Malaysia, Yang Dipertuan Besar of Negeri Sembilan (Ruler of Negeri Sembilan, a state of Malaysia), Duli Yang Maha Mulia Tuanku Ja’afar Tuanku Abdul Rahman was the defendant.

The former king had applied for a standby LC from SCBM which was secured by a fixed deposit account. When SCBM sought to charge the account following a drawing on the standby, the former king sued for a declaration that it was not entitled to do so. The Special Court, set up to hear cases involving members of the royalty in 1993 after amendment of the Constitution of Malaysia, sat for the first time to hear witnesses in a civil suit brought by a bank against a member of the royalty. In addition to the Chief Justice, the other distinguished judges were: Chief Judge of Malaya, Tan Sri Alaudin Mohd Sheriff; Chief Judge of Sabah and Sarawak, Tan Sri Richard Malanjum; and Federal Court judges Datuk Arifin Zakaria and Datuk Zulkefli Ahmad Makinudin. The panel unanimously awarded the suit filed by SCBM against the former king with interests at the rate of 8% per annum from the date of this judgment and costs. In his judgment, CJ Tun Abdul Hamid Mohamad dismissed the former king’s counter-suit against the bank. Factual Summary The suit arose after the former king applied to SCBM on 5 February 1999 for a US$1 Million standby LC in favour of US-based Connecticut Bank of Commerce (CBC) for credit facilities to be extended to US- based company, Texas Encore LLC (TEC). The standby LC was subject to UCP500. It was advised through Standard Chartered Bank’s New York branch (SCBNY) on 12 February 1999 and was subsequently confirmed by SCBNY. TEC, a company involved in the production of activated tire rubber, was to use the credit facilities to set up and operate a factory that was to be located within the compound of Ford Motors, in Detroit, Michigan, USA. The former king undertook to provide funds to meet payments made by the bank under the credit, including all interest, commissions, charges, disbursements, and expenses. He also executed a Letter of Set-Off over a fixed deposit of MYR4.18 Million (about US$1.28 Million) owned by him as security for the standby LC. In a letter dated 6 April 1999, the former king wrote to SCBM requesting that the standby LC be suspended. SCBM relayed the message by SWIFT on 16 April 1999 to SCBNY. The former king asserted that the loan by CBC to TEC for which the standby LC was issued had not been disbursed to TEC as of the date of request. There was no communication on the notice of cancellation by SWIFT either from SCBNY or CBC with SCBM until 15 December 1999. On 15 December 1999, SCBM was informed by SCBNY that SCBNY had been given a notice of drawing on the standby LC for the purpose of retiring the loan given by CBC to TEC. On the same day, SCBM relayed the message to the former king. The former king obtained an ex-parte injunction on 18 December 1999 restraining, inter alia CBC from making a call on the standby LC and also restraining SCBM from reimbursing itself from the fixed deposit of MYR4.18 million under the letter of set- off. SCBM was notified of the order on the same day. On 29 December 1999, the former king obtained an injunction order on the inter parte basis, on the same terms as the inter parte order obtained earlier. SCBNY honored its confirmation by paying CBC US$314,772.44 on 22 December 1999 and US$685,000 on 24 December 1999. SCBM’s account with SCBNY was debited accordingly. Legal Issues 1. Irrevocability: The standby LC was subject to UCP500. In the application form for the standby LC, it clearly indicated the standby LC was irrevocable and subject to UCP500. The learned counsel for the former king argued that the UCP was not brought to the attention of the former king and that a copy should have been given to him, but was not given. The former king and his adviser had believed that the standby LC was revocable. The court disagreed with this argument and correctly quoted the relevant articles of UCP500 that the standby LC was irrevocable.

Expert Profile Name: Soh Chee Seng Position: Trade Finance Consultant Employer: Self employed Location: Singapore Specialisation: International Trade Finance Contact: [email protected]


21

TradeBrief eBSI Expert Commentary 2. Estoppel: The learned counsel for the former king argued that estoppel was raised in two ways: First, SCBM having issued the notice of rescission on behalf of the former king on 16 April 1999, SCBM was estopped from recognising or accepting any call on the standby LC or from exercising any rights under the Letter of Set-off; Second, having remained silent for eight months without rejecting the notice of rescission, SCBNY as the agent bank of SCBM, and SCBM were estopped from recognising any call on the standby LC. The court took the view that SCBM was very clear that the standby LC was irrevocable. Having considered the status of the former king and the sensitivity of the issue, SCBM agreed to assist by conveying the notice of rescission to SCBNY. It is not the law of estoppel to hold that someone is estopped merely because he obliges another person at the latter ’s request while at the same time he made clear his position on the issue which was to the opposite effect. The court also opined that silence by CBC did not amount to consent. It could not be imputed to SCBNY which was merely asked to convey the notice. 3. Injunction: The former king obtained an injunction order on 18 December 1999. Four parties were named as defendants: TEC; a TEC officer; CBC; and SCBM. The injunction order stated: “1. that an injunction be and that is hereby granted to restrain the 3rd Defendant from calling or drawing upon the Standby Letter of Credit No. 312010325732-A dated 12.2.1999 in the sum of USD1 million established by the 4th Defendant in favour of 3rd Defendant as beneficiary thereof to retire off or pay any outstanding indebtedness due from the 1st Defendant. 2. that an injunction be and is hereby granted to restrain the 4th Defendant from uplifting or exercising any rights under a Letter of Set- Off executed by the Plaintiff ’s Principal over a Fixed Deposit of MYR4,180,000.00 in the name of Plaintiff’s Principal deposited in the Seremban branch of the 4th Defendant.” The first part was to restrain CBC from calling or drawing upon the SBLC. The court would not consider the part involving CBC since it was not a party in these lawsuits. As for the second part, the order was to restrain SCBM from uplifting the Letter of Set-off. That had been complied with by SCBM and is the essence of these lawsuits. The court found no merit in the former king relying on the injunction order in these lawsuits.

4. Fraud: In his submission, the learned counsel for the former king also argued that the loan had never been released to TEC in November and/or December 1999 for US$1 Million and therefore the certificates of indebtedness dated 22 December 1999 and 23 December 1999 were false documents intended to defraud the paying bank. The court was clear that when an LC was issued and confirmed by a bank, the bank must honour if the documents were on the face in order and complied with the terms and conditions of the credit. There would only be an exception if an “obvious fraud” or a “clear fraud” has been brought to the attention of the bank. A breach of contract between the buyer and the seller is insufficient ground for the bank to refuse payment. In his Statement of Claim, the former king pleaded that, notwithstanding the notice of rescission, CBC proceeded to release the funds to TEC and/ or TEC’s officer sometime in or about November 1999. The court viewed that the parties were bound by their pleadings and rejected the submission to claim otherwise. 5. Judgment: The court allowed SCBM’s claim with interest at the rate of 8% per annum from the date of this judgment and costs and granted SCBM the liberty to set off the judgment sum against the fixed deposit pursuant to the letter of set- off. The former king’s claim was dismissed with costs. Comments The case is, in fact, simple but sensitive. In its judgment, the court quoted the relevant articles of UCP500 to allow SCBM’s claim. In summary, as the standby LC was irrevocable, it could not be revoked without all parties’ consent. An issuing bank or a confirming bank must honour its obligation to pay against a complying presentation. The judgment is encouraging and shows solid independent legal application by the judiciary in Malaysia. This case underwrites the power of ICC Rules. Even if the applicant is a member of the royalty, the court did not allow the LC to be revoked on the applicants unilateral instruction.

Are You a National of an Emerging Market? Would you like to Develop a Career in International Trade?

If you said YES to these two questions you may apply for and be eligible to up to 60% grant financial support toward the cost of the certified programmes listed in this advertisement!

• Certificate in Finance • International Trade Specialist

Accreditation • Diploma in Export Operations



22


International Trade Certified Training Programmes

Programme Intakes every two months from January & March 2009 • Certificate in Logistics • Certificate in Finance • ITS Accreditation • Advanced Certificate in

International Trade & Logistics • Diploma in Export Operations • Certified Courses in Shipping

Delivered exclusively by: The electronic Business School International Tel: +353 94 9381444 Fax: +353 94 9381708 Web: http://www.ebsi.ie Email: [email protected]

Expert Profile Name: Mamun Rashid Position: CEO Employer: Citigroup, NA, Bangladesh Location: Dhaka, Bangladesh Specialisation: International Trade Finance Contact: [email protected]

Export, Remittance and GDP Growth ‘The current financial and economic turmoil is putting Developing Countries everywhere under pressure. Mamun Rashid shares lessons to be learnt for all Emerging Markets from Bangladesh’s perspective.’ Over the last few months I have been privileged to have participated in the debate and discussion surrounding the current international Financial Crisis affecting the World, and in particular have drawn a number of conclusions which while formulated in the context of the economy in Bangladesh, I believe also apply to emerging economies in general.

1) This is a crisis the likes of which has not been seen in over 80 years. 2) The popular viewpoints regarding credit and its increase of money supply being an attractive tool for stimulating economic activity warrants a ‘Deep review’. 3) Regulators and Policy planners must draw a line between market and state. 4) Improvement of governance must be driven beyond personal, corporate or even national interest. How may it impact Bangladesh or other emerging markets? Bangladesh and other developing markets will eventually suffer an adverse impact from recessionary pressures in terms of exports, remittances and aid disbursements which will have a negative impact with a slowdown in GDP growth. On the upside, international institutional investors will prowl less emerging markets stock markets and net importing countries will see the benefit of lower fuel, food, steel and shipment costs. Moving forward emerging markets need to maintain focus on massive poverty reduction, creation of wealth and optimum distribution of that wealth or diversion to the hungry streams of the economy.

Most of this growth will inevitably be private sector led, by micro-finance institutions, business and industry, export and remittance earners and not least by the agricultural sector. In order to ensure the private sector participates fully in this recovery a buoyant and congenial business environment is essential. A particular challenge in the case of Bangladesh is in Power generation. Industries and manufacturing plants are limping due to lack of power. To provide an incentive for power generation in the private sector, gas connections are needed. Competitive gas pricing is essential to attract gas companies to join in exploration. Small power plants can be set up mostly for captive use or including usage by surrounding neighbourhoods. Competitive exchange rates are needed to keep exports and inward remittance going and growing. Exporters, irrespective of their 'project or financing bank', should be allowed to sell their proceeds to any bank that offers attractive exchange rates. To make our exports competitive, we should also look at a turnaround time with regard to L/C advising, confirming, negotiation or discounting. Delay or mishandling at the ports must be avoided. Issues like the 'Open account' trading or `export against contract' should also be reviewed appropriately when adequate security is available. It is true that most emerging markets are reducing their GDP forecasts. Economists are projecting 6.8 percent GDP growth this fiscal year and 5.5 percent in the next fiscal for India, down from 8 to 9 percent growth. China is already witnessing 8 percent GDP growth, not 11 or 12 percent any more. But of course with coordinated efforts, driving leadership, emerging markets can change the course. And for that we need to address the power, gas, law and order, port management, congenial labour situations and timely agriculture input supply and procurement issues with absolute precision and without delay! Mamun Rashid is a banker and economic analyst. He is also the Chairman of ICC standing Committee on Banking Technique and Practice for Bangladesh. This Article was summarised from one originally printed in The Daily Star, a leading Bangladeshi Newspaper. www.thedailystar.net


23

TradeBrief eBSI Doing Business in… Libya

Expert Profile Name: Michal Kopczak Position: Export Consultant Employer: Synerg Libya Location: Krakow, Poland Specialisation: Export Consultant for facilitating trade into and out of Libya Contact: [email protected]

After more than two decades of isolation, the Socialist People's Libyan Arab Great Jamahiriya (Libya) is making an impressive comeback to international business. This has been due to its shedding of the status of ‘pariah’, cautious liberalisation of internal economic policies, until recently a seven-year period of increasing oil prices, as well as having succeeded in drawing a significant amount of foreign investment and global trade connections.

Another option, currently enjoying government support is setting up a joint-venture or a joint-stock company where a foreign partner is allowed to retain a majority of shares. The other investor will be a Libyan entity from the private or public sector. Some companies with “foreign branch” legal status, have decided nevertheless, to establish a joint-stock company in order to make sure that public procurement regulations will not prohibit them from bidding for valuable tender opportunities which are on the increase.

Companies seeking to export ready made goods to Libya will face greater challenges, as trade in goods is only allowed by Libyan companies. This leaves a potential exporter only with the option of indirect exports. In this case, a lot comes down to how you select and manage the relationship with the local business partner is. Indirect exports will mean an exporter has little or no control over marketing their products in Libya, unless you have the correct agreements and controls in place.

Despite those advances, entrepreneurs planning to export their goods or services to Libya face significant barriers without an insight into the inside track. This article is to provide you with the fist steps to success in the expanding Libyan market. In general, economic activity in Libya by non-Libyan companies is prohibited. Laws exist, which allow the possibility of registering a foreign company branch only to a handful of business activities, most of which are specialized types of services in the Oil and Construction industry

Exporters planning on entering the Libyan market should note the following: 1) Libya’s schedule for trade exhibitions (especially in construction, oil & gas and home interiors sectors) is surprisingly well developed. Fairs provide excellent opportunities to get acquainted with potential partners and to gain exposure. For 2009, check exhibition opportunities at http://www.biztradeshows.com/libya/ 2) Make sure you understand all documentary requirements when traveling and exporting to Libya. Regulations tend to change overnight without prior notice! Check frequently with your Embassy in Tripoli for the latest developments in visa regulations. As at the end of 2008, prior to issue in a country’s embassy or consulate abroad, all visas must be supported by an official invitation letter from public or private Libyan entity. 3) The Letter of Credit is the preferred method of payment in international transactions. Presentation of invoices in both English and Arabic, legalized in a Libyan embassy (“Libyan People’s Bureau”) in the country of origin is typically required . You will also need to present a translated and legalized Certificate of Origin, obtainable through your local Chamber of Commerce. 4) Logistically, the main points of entry to Libya are sea harbors and airports in Tripoli, Misuratah and Benghazi. Due to its central location near roads leading to oilfields in central and eastern Libya, Misuratah is the port of choice for suppliers to the oil and gas industry. 5) It is advisable to work with your Libyan partner in finding a reliable customs clearance agency. Bear in mind that re-exporting equipment which has been previously imported on permanent import basis is prohibited (although in some cases exception can be negotiated with the Ministry of Investments, Economics and Trade). Once you successfully enter the Libyan market some business practices tend to routineize with significant growth prospects.

Foreign businessmen try to overcome this through enabling potential local partners to set up their own companies and by creating durable business model with combining know-how and resources. These exporters with a solid local base can manage market developments on the ground, communicate regularly with end customers, monitor needs and offer good quality products and extended payments terms. This “double-tier” system may achieve positive impact in B2B relationships – when selling to companies with foreign shareholders in Libya. Some of them often complain about unreliability, lack of transparency and communication problems when dealing exclusively with national importers or those without seamless operational integration with abroad.


24

TradeBrief eBSI Upcoming Events

6th Annual Middle East Trade & Export

Finance February 24-25, 2009 Jumeirah Beach Hotel Dubai, United Arab

Emirates

3rd Annual Turkey Trade & Export

Finance Conference March 19-20, 2009 Moevenpick Hotel

Istanbul, Turkey

3rd Annual Africa Trade & Investment

Conference March 26-27, 2009

Table Bay Hotel At the Waterfront, Cape Town, South Africa

Global Trade Review The world’s leading international trade finance and export finance magazine.

emeafinance The complete

information source for the finance industry in

the EMEA region.

Competition!

Win a copy of the eBSI Trade & Customs Practice Course each month!

In order to win, simply forward this Ezine to your friends and colleagues and ask them to subscribe to TradeBrief! When they subscribe they should include your referring email address so that you will both be entered into the draw!

What’s more, each referred email will be treated as an additional entry to the draw! So refer 10 ezine subscribers and you will have 10 chances to win!

To subscribe to this quarterly ezine simply email [email protected] and we will add you to our subscriber list and add an entry to the draw for a free scholarship for our Trade & Customs Practice course Worth EUR 555!

What’s more, you will remain in the draw for as long as you subscribe to the ezine!

eBSI Upcoming Events:

Worldwide: Intakes for eBSI elearning programs 26 January 2009 & 23 March 2009

Country Specific:

Buenos Aires, Argentina – Trade Finance internal training 12 January 2009

London, United Kingdom – EBRD Conference on Trade 29 January 2009

Lagos, Nigeria – IFC FIT Initiative Launch February 2009

Dubai, UAE – Advanced Trade Finance Workshop 9 March 2009

Dubai, UAE – ICC Banking Commission Meeting 10-12 March 2009

Hanoi, Vietnam – IFC FIT Initiative Launch March 2009

Phnom Penh, Cambodia – IFC FIT Initiative Launch March 2009

Zagreb, Croatia – ISBP Legal Cases – ICC Croatia 25-26 March 2009 If you would like information on any of these events please email [email protected] and we will send you the relevant details.

Certificate in Logistics Learn all you need to know about Transport and Logistics!

• Online Tutorials • Certified by the Chartered Institute of Logistics & Transport • Includes Section on Logistics Customer Service • Recognised Internationally • Interactive self-paced learning • 3 Written Assignments and 1 Online Exam


TradeBrief X M ICC eBSI BANKING P C 1 EETING IN …...ICC Banking Commission Meeting in eBSI Paris...

Documents

Transcript of TradeBrief X M ICC eBSI BANKING P C 1 EETING IN …...ICC Banking Commission Meeting in eBSI Paris...