Open account trade overcomes obstacles to march forward

The growth in open account trade in Asia is expected to continue its march forward this year. That’s despite some regulatory concerns, a lack of regional credit insurance cover and a simple failure by some local banks to understand the process. “In 2010 open account exceeded 2008’s peaks by between 15% and 17% by contrast, letters of credit grew by only a few percent in 2010 over 2008,” said Ashutosh Kumar, Standard Chartered Bank’s global head of local corporate products and receivables management.

Open account already accounts for about 90% of global trade with letters of credit accounting for just 10%. In Asia-Pacific, letters of credit probably account for a slightly higher proportion, but...