KTFA:
Henig: The prices of oil are close to $86 a barrel
Baghdad / NINA / – Before closing today, Tuesday, global oil prices approached the barrier of $86 a barrel.
Brent crude futures reached $85.82 a barrel, more than a dollar higher than yesterday’s price.
US crude futures contracts reached $80.59, also higher by more than $1. LINK
Henig: Legal expert: The US is obliged to salvage the economic situation in the country
Baghdad / NINA / – Legal expert Ali Al-Tamimi confirmed: The United States is obligated to save the economic situation in the country.
He told the National Iraqi News Agency / NINA /: The strategic agreement between Iraq and the United States, according to Article 27 of it in all its paragraphs, made it clear that the United States of America is obligated to assist Iraq economically in the event of crises and to intervene to save the situation if it deteriorates economically in Iraq.
Al-Tamimi added: This article is binding on the United States, and Iraq can demand it formally first through bilateral communication, especially in light of the significant shift in the dollar price, which came due to the procedures of the US Federal Bank with regard to foreign transfers, and Iraq can ask it to implement the provisions of the agreement in force.
He explained: In the event of non-implementation, Iraq can resort to the United Nations and ask it to oblige the United States to implement it, because the strategic agreement is deposited with the United Nations under Article 102 of its charter.
Al-Tamimi continued: The United States is an occupying country and it is obligated under the four Geneva Conventions to help countries economically in light of its control over the price of the dollar in the world, and Iraq can benefit from that to solve its current crisis. LINK
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Henig: Iraqi dinar trembles as US fights currency flow to Iran
For years dollars have been channeled to Iran and Syria, which are under US sanctions, via state-run foreign currency auctions
Sinan Mahmoud Baghdad Dec 26, 2022
Recent measures taken by US authorities to tighten the channelling of dollars to Iran from Iraq have decreased the value of the Iraqi dinar on the black market, government officials and traders said on Monday.
The Iran-backed Iraqi government has been struggling to control the exchange rate to contain mounting public anger over soaring goods prices.
The dollar exchange rate in the black market has been hovering around 1,550 Iraqi dinars from around 1,470 dinars, Dhirgham Hameed, owner of a Baghdad-based exchange company, told The National.
“The dinar has been trembling against the dollar since early this month, wreaking havoc in the market,” Mr Hameed, 44, said.
In 2004, the Central Bank of Iraq introduced the foreign currency auction as one of its policy tools to achieve monetary stability.
Through that auction, the government has succeeded in controlling the exchange rate on the black market.
For years, the official rate for banks and exchange companies was 1,182 dinars, while the rate on the street was around 1,200 dinars.
However, the process has been mired with accusations of corruption, money laundering and the channelling of dollars to Iraq’s neighbours, Iran and Syria, using forged bills. Both countries are under punishing US sanctions.
Since then, the US has blacklisted a number of Iraqi banks that deal mainly with Iran. The US sanctioned Iraq’s Al Bilad Islamic Bank for dealing with Iran’s Islamic Revolutionary Guard Corps in May 2018.
Amid a liquidity crisis due to plummeting oil prices on the international market, Iraq’s Central Bank devalued the dinar in December 2020 to 1,460 dinars per dollar for banks and 1,470 dinars for individuals.
The interim government argued the move would also curb the flight of the “cheap dollar” outside the country.
But that didn’t stop the outflow of much-needed hard currency.
The US Ambassador to Iraq has complained to Iraqi officials on many occasions that the dollar was still being sent to Iran, a Central Bank official and a lawmaker said.
But Mohammed Shia Al Sudani‘s government, which took office in late October and is close to Iran, has not taken any action, they said.
“When there was no action from the government, the Federal Reserve bank started to apply scrutiny measures on foreign transactions and that has delayed the process of releasing the money from the US to cover the imports and other needs,” the Central Bank official said.
Both spoke on condition of anonymity as there is no government statement on the latest US measures.
How the process goes
Each dollar Iraq gains from selling crude oil goes to an account at the Federal Reserve Bank of New York, and Iraq makes withdrawals to pay government salaries and imports.
Oil revenue makes up nearly 95 per cent of the federal budget and the war-torn country depends heavily on imports to meet the demand for food and materials for key sectors of the economy.
The Federal Reserve Bank of New York supplies Iraq with hard currency on request from the Iraqi government, either in cash or foreign transactions.
While some of these funds are used to cover government imports and other requirements, much of it is passed on to commercial banks, ostensibly for private sector imports in a process that was hijacked long ago by Iraq’s money-laundering cartels.
The rest of the money is added to the international reserve.
Thanks to Iraq’s growing oil revenue, the Central Bank of Iraq has about $96 billion in foreign exchange reserves, Mr Al Sudani announced early this month.
As of last month, the CBI sold an average of $240 million to $250 million a day, said another owner of an exchange company, who asked to remain anonymous.
Only 10 per cent to 20 per cent of the money was cashed out to be distributed to banks and exchange companies and then to individuals, while the rest was sent to accounts in Dubai, Turkey, Amman and China to cover private sector imports, he said.
“Iraq has no problem with the money at all, it has good reserves,” the exchange company owner said. “It sounds as if the issue is politically motivated because the Americans are upset.”
Over the past 19 years, the Federal Reserve has never delayed a request or transaction from Iraq, he said. “They used to approve any bill immediately,” he added.
“But since early this month, the Americans have started applying scrutiny measures on foreign transactions and the new process has delayed each transaction for up to two weeks,” the exchange company owner said.
He added that most of the requests were being rejected due to suspicions that some banks are linked to Iran.
Since then, daily transactions have dropped from around $200 million to between $20 and $30 million a day.
“The reserves have been dried up in the accounts abroad and that has pushed up the demand for the dollar in the local market to cover imports,” he said.
To control the rate at the black market, the government has asked the CBI to take urgent steps to compensate for a dollar shortage in the local market.
It reduced the exchange rate for individuals from 1,470 dinars to 1,465 dinars to cover travel for the Hajj pilgrimage, medical treatment and study.
It also asked the CBI to help private banks strengthen their non-US dollar foreign currency reserves such as the Chinese yuan, the euro, the Emirati dirham and the Jordanian dinar.
But these measures failed to strengthen the currency.
“We are not optimistic and we believe that the worst is yet to come unless the government applies urgent, immediate and effective measures,” Mr Hameed said.
The current official dinar to dollar exchange rate is 158,000 LINK
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Henig: CBI issues recommendations to merchants and banks regarding exchange rates
Baghdad-INA
The Central Bank of Iraq-CBI issued on Tuesday, its recommendations to the merchants and banks regarding exchange rates.
“CBI Board of Directors held a meeting to discuss the repercussions and indicators of the rise in exchange rates in the local markets, the temporary pressures resulted from effect of the internal and external factors on foreign currency exchange rate,” CBI media office stated, in a statement received by the Iraqi News Agency (INA).
The statement added, “due to adopting mechanisms to protect the banking sector, customers and the financial system, as all foreign trade requirements (for the purposes of documentary credits or transfers) are fully covered by the official price (1465) dinars to the dollar for documentary credits and (1470) dinars to the dollar for transfers.”
CBI called on merchants to exchange currency with the banks directly and not resort to brokers and speculators to avoid charging their imports with undue commissions and expenses, referring in this regard to what was issued by the Council of Ministers in its decision No. (351) for the year 2022 regarding non-payment of customs duties and amounts of tax secretariats in advance. This will reduce excess loops, ease procedures, and remove costs resulting from pre-set prices problems.”
CBI stressed, “Banks must assume their responsibilities in facilitating and expediting procedures for their customers to ensure their access to financing with the best banking practices and with the least amount of loops, taking into account the established legal requirements.” LINK
Vietnam:
Henig: Agro-forestry-fishery exports to UK overcome barriers
06:00 | 28/12/2022
(VEN) – The UK-Vietnam Free Trade Agreement (UKVFTA), effective since May 1, 2021, has created favorable conditions as well as challenges for Vietnamese agro-forestry-fishery exports to this market.
The UKVFTA’s tax reduction commitments benefit many Vietnamese export products, especially agro-forestry-fishery products. It has eliminated taxes for more than 94 percent of the total 547 tariff lines applied to fruit and vegetables. The import tax rate applied to Vietnamese shrimp has also been reduced from 10-20 percent to zero. Many wood products will also be tax-free within the next five years.
The UK is one of the top five export markets for Vietnamese seafood and one of the three largest importers of Vietnamese wood products. Cashew nuts, coffee and rice are among traditional Vietnamese exports to the UK. In 2021, Vietnam exported to the UK 34,650 tonnes of coffee worth US$66.16 million. In the first half of 2022, coffee exports increased 180 percent year-on-year.
At a recent workshop on taking advantage of the UKVFTA to tap the potential of the UK market, Consul General of the UK in Ho Chi Minh City Oliver Todd said the UK considers Vietnam an important trading partner in Southeast Asia and believes it can compete with India and Indonesia to become a new agro-forestry-fishery supplier for the UK.
However, Vietnamese agro-forestry-fishery exporters have to meet strict UK requirements. Moreover, the UK will sign FTAs with 19 countries and territories, while at the same time preparing for participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, making the UKVFTA less beneficial to Vietnamese businesses. “Although it faces a scarcity of supply, the UK market demands high-quality, low-cost products – this is a hindrance for Vietnamese exporters,” said Nguyen Canh Cuong, Vietnamese Trade Counselor in the UK.
To promote Vietnamese farm produce exports to the UK, the Vietnamese Trade Office has organized workshops and online meetings to connect Vietnamese exporters with UK importers. Through such activities, some Vietnamese companies have found opportunities to export fruit and vegetables to the Birmingham Wholesale Market – one of the largest integrated wholesale markets in Europe. Some UK companies also have plans to import Vietnamese products, such as cashew nuts and coconut meat jam.
The Vietnamese Trade Office in the UK provides Vietnamese exporters with updated information about the UK market. Nguyen Canh Cuong said the office will diversify activities to expand access to the UK market for Vietnamese exporters, especially those operating in the agro-forestry-fishery sector.
The UK applies a free trade policy and has high demand for farm produce imports. Vietnamese agro-forestry-fishery exporters should take advantage of the UKVFTA and adopt a strategy to access potential partners for increased exports.
Bao Thoa LINK
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Henig: FTAs boost Vietnam-Latin America trade
06:00 | 27/12/2022
(VEN) – Trade between Vietnam and Latin America has experienced impressive growth thanks to efficient implementation of free trade agreements (FTAs).
Tremendous growth
In the first 10 months of 2022, trade between Vietnam and Latin American countries reached US$18.7 billion (up 10.5 percent from the same period in 2021), including Vietnam’s exports worth US$10.2 billion (up 5.3 percent) and Vietnam’s imports worth US$8.6 billion (up 17.3 percent). Apart from major markets of Brazil, Mexico, Argentina and Chile, newly emerging markets of Panama, Colombia and Peru have become bright spots in Vietnam’s trade with Latin America.
In terms of Vietnam’s trade exchange, Latin America has always been among the markets with the highest growth. Not only a potential export market for Vietnam’s key products such as garment and textile, footwear, and agricultural and aquatic products, Latin America is also an important source of raw materials for the Vietnamese processing industry with such products as corn, soybean, and animal feed.
Vietnam and its Latin American partners are efficiently implementing free trade deals to create leverage in economic, trade and investment ties, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Vietnam-Chile Free Trade Agreement and the Vietnam-Cuba Trade Agreement, which have all been boosting trade and investment relations.
Phan Minh Thong, Chair of Phuc Sinh Group, a successful exporter to Latin America, said his group has sold goods to Colombia, Chile, Peru, and Mexico and imported a number of items from these countries. Phuc Sinh also bought pepper from Brazil, he added. In 2019, before the pandemic, Phuc Sinh exported goods worth US$830,000 to Latin American markets, with the value growing more than 450 percent to reach US$4.6 million in 2021. The Latin American market has its own unique, interesting business and indigenous cultures, and market approach suitable to this market would help exporters improve their niches and efficiency, Thong said.
Major room for trade
Despite its growth, the US$21.4-billion bilateral trade accounts for only three percent of Vietnam’s global trade, suggesting major room for trade development with Latin America.
Ngo Manh Khoi, Head of the Vietnam Trade Office in Argentina, said Argentina is one of the four members of the Southern Common Market (MERCOSUR) with nearly 300 million residents and a gross domestic product (GDP) of US$2.2 trillion, which has a high demand for textiles, garments and agricultural products. Argentina imports 45 million tonnes of coffee each year, 80 percent from Brazil. In recent years, Vietnamese coffee enterprises have surveyed the Argentinian market and see potential opportunities to increase coffee exports, he said.
However, according to Phan Minh Thong, Chair of Phuc Sinh Group, the cost of transportation to Latin American markets is too high, importers often make deferred payments, and the language barrier is also a problem, as Spanish is more popular than English in these markets.
Thong advised exporters to Latin America to study their customers, norms, standards and regulations/trade barriers of regional markets if they are to reach favorable, efficient trade.
Vo Thi Phuong Lan, Chair and General Director of Amerasian Shipping Logistics Corp (ASL) recommends that enterprises choose shipping lines going directly to Latin American ports such as those in Mexico, Cuba, and Argentina, and leading logistics companies that offer package solutions to save time and reduce costs.
The Ministry of Industry and Trade is building a project for sustainable development of trade and industrial cooperation with Latin American markets to 2030.
Duyen Duong LINK
