Steps must be taken to strengthen the systems to ensure monitoring and to implement measures that lead to the complete repatriation and conversion of export proceeds within a reasonable period, the Central Bank said.
Releasing an information series note on the current status of the export earnings, the Central Bank justified that it would be reasonable for the Government and the Central Bank to take steps to ensure the complete repatriation of export proceeds within a reasonable period and the conversion of inflows of export proceeds into the local currency, including the proceeds already accumulated in exporters’ accounts.
“As would be well appreciated, an export would realise its objective only when it finally culminates in the flow of foreign exchange that is generated by the export into the country’s financial system in its local currency,” the Economic Research Department of the Central Bank said.
“That objective would obviously not be fulfilled if the final conversion of export proceeds into local currency does not take place.”
Many emerging market economies have repatriation and conversion requirements imposed on merchandise and services exports.
Country experiences vary, and over time, with the buildup of a country’s foreign exchange reserves through such non-debt inflows, countries have also gradually relaxed these requirements.
Regional economies such as Bangladesh, India, Indonesia, Malaysia, Nepal, Pakistan, and Thailand have export proceeds repatriation requirements currently in place varying from 3 months to 2 years of the export.
Bangladesh, India, Pakistan and Thailand have repatriation requirements on both goods and services export proceeds, while in Nepal, Malaysia and Indonesia, the repatriation requirement is only applicable on goods exports.
Bangladesh, India, Pakistan and Thailand also have rules on conversion to respective local currencies in different percentages based on nature and the amount of repatriated export proceeds and their utilisation.