Asif Showkat Kallol, Dhaka: Bangladesh Bank has said to the commerce ministry that the country’s private sector trade with Russia would not be affected due to Western sanctions and disconnecting Moscow from the international payment network, a commerce ministry official said.
The assurance of the central bank came at a recent meeting held at the foreign affairs ministry, recently.
“We are observing the Russia-Ukraine war to see if it impacts the trade of Bangladesh. It is for sure that there would be an impact in the long run on import of wheat, fertiliser, soybean and pulses,” the official who requested anonymity, said.
He further said: “We are engaging with Bangladesh Bank to assess the trade impact of the war on Bangladesh economy.”
The commerce ministry hopes that the central bank will submit the report to the ministry next month.
The buyers of the Russian federation have told the local businessmen that despite the ban on the transaction of seven Russian banks, local exporters will be able to ship their products and settle their transactions in some 300 Russian bank branches.
SWIFT is one of the systems of transacting and settling international businesses, but there are other mechanisms, too.
The official claimed that those local businessmen are doing their trade outside the sanction purview. Citing an example, he said, Germany is importing gas through Russian pipelines. He said a large Bangladeshi business house has maneuvered a trade channel in Dubai to carry out business with Russia.
A Bangladesh Bank official of the Department of Currency Management, on condition of anonymity, said local businessmen are doing business with Russia via some third parties.
They (Bangladeshi businessmen) have been trading with small business houses in Russia. But the amount of trade by Bangladeshi traders with large Russian conglomerate is insignificant, the BB official said.
However, the big concern lies with transporting goods through shipping lines which is now halted, he pointed out.
An additional secretary to the commerce ministry and WTO Cell director Md Hazifur Rahman told Business Insider Bangladesh that an alternative system to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has already been developed jointly by Russia and China. He said it could establish the System for Transfer of Financial Messages (SPFS) and the Cross-Border Interbank Payment System (CIPS), respectively.
However, Bangladesh’s banks are not compliant with the Sino-Russian alternative system, he said.
As the Western sanctions banning several Russian banks from the SWIFT international payments network were enforced, transactions in US dollars have been affected.
Russian shipping lines are not expelled by other sea ports, Hafizur said, adding that there is no ban on buying and selling of Russian commodities.
He further said: “We have to find alternative sources to procure wheat and fertiliser though most of the Bangladeshi traders settle their Russian transactions in Hong Kong and Singapore.
“We have no problem importing from Russia but local exporters would face problems while exporting their products to that country,” Hafizur explained.
However, exporters are relying on the government to chalk a way out for settling business transactions with Russia.
“We are observing the effects of the war. The government will take every possible measure to smooth trade between the two countries. Our export potential in the Russian market is higher than many European countries,” said Mohammad Hatem, senior vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
Russia has shown its interest in importing fish, vegetables and potatoes from Bangladesh in the face of blockade by the United States and European Union since Moscow occupied Crimea in 2014.
Exporters said there is a huge demand for Bangladeshi knitwear, medicines, shrimp and leather products in the Russian market.
In the fiscal year 2019-20, Bangladesh’s exports to Russia aggregated $ 487 million. At the same time, imports from Russia amounted to $782 million.
