The Clap
President El-Sisi decided to exclude importing raw materials and production inputs from the Letter of Credit (L/C) system, in favor of the previously applied system of documentary collection.
Claps Class
Letter of Credit is a guarantee issued by a bank that represents the importer, in which it pledges that buyer’s payment to the seller will be on time and for full amount.
What’s the problem?
L/C Procedures get the importer’s bank to ask for plenty of documents to guarantee payment, which causes delays in shipment. Also, the expenses of L/C incurred by importers are high, which contributes to more rising prices and higher inflation.
Documentary Collection Vs. L/C?
Documentary collection involves the importer’s bank paying the exporter once it gets documents proving goods are shipped or reached the importer like a commercial invoice.
Many listed companies welcomed the decision most notably Edita (EFID) & Domty (DOMT).
