Malaysian importers, exporters must know new payment system
Malaysian importers and exporters should quickly familiarise themselves with the new payment settlement mechanism, Bank Payment Obligation (BPO), which will come into force on July 1.
To educate the public, the International Chamber of Commerce (ICC) Malaysia will hold a seminar to familiarise banks, importers and exporters with the BPO on Aug 22.
In a statement yesterday, ICC Malaysia said the BPO is an irrevocable undertaking given by one bank to another bank for which payment will be made on a specified date after a specified event has taken place.
"The BPO will provide the benefits of a letter credit in an automated environment, without the drawbacks of manual processing associated with the traditional letter of credit," said ICC Malaysia. It said the BPO will protect the buyer since the bank only pays when the seller complies with the specific terms and conditions and produces the data required.
"The buyer can build safeguards into the BPO, including inspection of the goods and quality control and set production and delivery times. "The sellers get assurance of payment and access to pre-shipment or post-shipment finance," said ICC Malaysia.
The chamber said by matching data via the ISO 20022 messaging standard, banks can track events in the physical supply chain which trigger the availability of value-added services in the financial supply chain. "Unlike the manual checking of documents, there is no subjectivity attached to data matching -- it either matches or it doesn't," it said. - Bernama, June 20, 2013.