Bilateral Payment Arrangement

For the Importer and Exporter

Bilateral Payment Arrangement (BPA) is a system for settlement of monetary obligations arising from trade transactions between two countries conducted via Letter of Credit. It is an arrangement where central banks or monetary authorities of participating countries agree to pay each other or guarantee payments for its imports. Effectively, central banks or monetary authorities guarantee payments in domestic currencies to their exporters. BPA was initiated by Bank Negara Malaysia in 1991 and has 19 countries under its care including:

• Albania
• Algeria
• Argentina
• Chile
• Kyrgyzstan
• Lao PDR
• Mexico
• Peru
• Philippines
• Romania
• Seychelles
• Indonesia
• Thailand
• Tunisia
• Turkmenistan
• Uzbekistan
• Venezuela
• Vietnam
• Zimbabwe

BPA enables the importer and exporter to venture into new and emerging markets.

Benefits

• Enables importers and exporters to venture into new and emerging markets
• Payment guarantee is provided by the central bank converting commercial risk into sovereign risk
• Develop new trade links at a lower cost. For example the exporter will not be require Letter of Credit confirmation
• Cost savings enhances price competitiveness