Expatriates can open business account

After successfully connecting overseas Pakistanis to their homeland through the Roshan Digital Account (RDA), the central bank has now enabled business entities abroad with majority shareholding held by non-resident Pakistanis to open business value accounts in local banks to spend, invest and disinvest in the country.

State Bank of Pakistan’s (SBP) circulars said on Tuesday that foreign businesses having 51% or more shareholding held by non-resident Pakistanis (NRPs) may open and operate business value accounts in both foreign currencies and Pakistani rupee in domestic banks. They can spend, invest and disinvest from “permissible securities, provided that the relevant laws/ regulations permit such investment.”

The businesses would have a foreign currency business value account (FCBVA) that could invest and disinvest “only (from) foreign currency-denominated government of Pakistan’s registered debt securities (and) foreign currencydenominated term deposit/ remunerative product scheme of same AD (authorised dealers/ banks),” a circular said.

The businesses would opt to open and operate rupee-denominated accounts named as nonresident rupee business value account (NRBVA) that could invest and disinvest in a range of products including rupee-based government debt securities, in shares of companies listed on the Pakistan Stock Exchange (PSX), SECP-registered and approved non-listed companies, asset management companies, and private fund management companies and rupee-denominated term deposit/ remunerative product schemes.

The primary objective of facilitating the NRP’s businesses through domestic banks is apparently to increase foreign currency inflows like the non-resident Pakistanis (NRPs) deposited and invested $4.6 billion through RDA in the past 22 months till June 30, 2022. The RDA inflows have helped maintain the country’s foreign exchange reserves at $8.6 billion. While commenting on the development, Ismail Iqbal Securities Head of Research Fahad Rauf said the idea of facilitating overseas Pakistani businesses through domestic banks is good.

This, however, may not work to a great extent in attracting huge foreign currency inflows like the one the country did through Roshan Digital Accounts (RDA). The foreign businesses having a majority shareholding of overseas Pakistanis have already been investing in the country through a special convertible rupee account (SCRA) maintained at the central bank. The businesses would maintain a foreign currency business value account (FCBVA) may help improve the country’s foreign exchange reserves, he said.

He said authorities concerned should focus on reviving export earnings and attracting higher foreign direct investment (FDI) in different sectors of the economy to improve the balance of current account and balance of international payments instead increasing their reliance on workers’ remittances and now business remittances. “The additional remittances through RDA and business value accounts can come and go anytime. There is always a fear of aggressive pull out of the short-term investment from the country,” he said, adding export earnings and FDIs would stay long-lasting in the country.