 |
Businesses should be careful when negotiating payment terms in transactions to the Middle East region |
Vietnam Pepper Association (VPA) informed that lately, members of the Association have exported produce like pepper, cinnamon, anise, and cashew nuts to the UAE. However, some businesses reported that they have experienced signs of commercial frauds from one buyer and one bank sited in Dubai of the UAE.
Before this, four containers worth US$400,000 had completely lost in Jebel Ali Harbor of the UAE. At present, another container of anise which is supposed to arrive at the harbor on July 26, 2023 is likely to suffer the same fate with a similar fraudulent trick.
The Asia-Africa Market Department (under MoIT) said that the contract regulates Documents Against Payment for all merchandise (D/P), meaning the seller’s bank first sends a sight draft and necessary documents to the buyer’s bank. When the payment is deposited into the buyer’s bank and then transferred to the seller’s one, these documents will be delivered to the buyer to receive the goods. Therefore, the Asia-Africa Market Department, fraudulence signs may happen at the buyer’s bank.
Immediately after getting reports of the victims, MoIT sent a formal dispatch to the UAE Embassy in Hanoi, requesting that this Embassy ask competent agencies to address the issue.
Yesterday, MoIT also held a meeting with the UAE Ambassador to Vietnam, the Central Bank of Vietnam, VPA, the Import-Export Department, and concerned businesses which have exported merchandise to the UAE.
MoIT directed that the Vietnam Trade Office in the UAE quickly address the issue. In turn, the Vietnam Trade Office immediately sent a formal dispatch to the UAE Ministry of Foreign Affairs, Dubai Police, the UAE Central Bank, and related banks and shipping lines. It then worked with the relevant bank in Dubai and Dubai Police to submit a report of the case, followed by another working session with the shipping line and competent agencies of Jebel Ali Harbor.
MoIT warns of an increase in scamming activities in the UAE market, mostly from small-scale trading companies. The most common trick is that foreign buyers request a Telegraphic Transfer (TT) payment or issue a check to sellers, which are highly risky. In the first method, buyers only pay after receiving goods; meanwhile, in the second, sellers can receive a check from a bank account without any money left but cannot check any information of that bank account due to the rule of many banks in the UAE of not sharing customer’s data to the third party.
Therefore, MoIT proposes that domestic businesses carefully negotiate payment terms in their contract. Such payment methods as Letter of Credit (LC), D/P, or business representatives directly deliver necessary documents to buyers after receiving sufficient money are safer than the methods of TT or check receipt.
