a. Ikang Berhad is a company based in Terengganu, Malaysia, that specializes in seafood exports and commonly uses letters of credit (L/Cs) to ensure payment. It recently experienced a problem. Ikang Berhad had an irrevocable L/C issued by a Mongolian bank to ensure that it would receive payment upon shipment of 16,000 tons of fish to a Mongolian company. This bank backed out of its obligation, however, stating that it was not authorized to guarantee commercial transactions. Explain the function of irrevocable L/C for the case above.

b. Any business with widely dispersed operating subsidiaries can gain operational benefits by centralized cash management. Describe TWO (2) advantages of having central depository for multinational companies.