Exporters asked to bring proceeds in 120 days

SBP amends regulations to improve inflow of foreign exchange

KARACHI:

The State Bank of Pakistan (SBP) has amended foreign exchange regulations following which exporters are liable to bring export proceeds within a maximum period of 120 days from the date of shipment.

According to a statement issued on Wednesday, the objective of the decision is to improve the inflow of foreign exchange from export proceeds in the market.

“Earlier, exporters were required to bring export proceeds within a maximum period of 180 days,” it said. “This move also brings Pakistan’s regulations closer to international best practices.”

It is pertinent to mention that in the recent past, the SBP introduced a number of policy measures in its foreign exchange regulations to facilitate exporters.

These include allowing up to 10% of exporters’ annual exports for equity investment abroad to establish an overseas subsidiary/ branch office.

Moreover, it also permitted eligible exporters to retain part of their export proceeds to make payments abroad from their export retention account for a number of additional purposes including marketing and promotion, purchase of design/ patterns and warehousing.

“The central bank also facilitated e-commerce by allowing traders to sell their products directly through their own websites as well as through international digital marketplaces including Amazon, eBay and Alibaba,” it said.

Finally, it permitted exports through the dispatch of shipping documents directly to the foreign buyer to make exporters competitive in the international market.

“The new measure is expected to positively impact foreign exchange inflows in the market,” the central bank said.

It pointed out that flexible exchange rate had appropriately played its role as a shock absorber and it was important that its role be complemented by strong export proceeds realisation.

The SBP modified paragraph six, Chapter 12 of the Foreign Exchange Manual.

“Full export value of goods exported from Pakistan and declared to the Customs authorities should be received in an approved manner, as embodied in SBP notification number FE 1/2022-SB dated January 5, 2022 on the due date for payment or within 120 days from the date of shipment, whichever is earlier,” it said.

In case of shipment on DP/CAD/ sight basis, the payment should be received within 45 days from the date of shipment.

Prior approval of the SBP’s Exchange Policy Department should be obtained before arranging for payment in any manner other than that mentioned above.

Published in The Express Tribune, January 6^th, 2022.

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