Businessmen demand end to fine on export proceeds
PHOTO: AFP
Businessmen have called on the government to take immediate action and discontinue the collection of 3-9% penalty by commercial banks, or authorised dealers of the State Bank of Pakistan (SBP), in foreign exchange for delay in realisation of export proceeds.
They claim that this fine is discouraging exporters from bringing their earnings back home, causing unbearable financial losses.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh, in a statement, emphasised that the SBP should immediately bar commercial banks from charging exporters the 3-9% penalty.
“There are genuine reasons beyond the control of exporters which lead to delay in realisation of export proceeds,” SITE Association of Industries (SAI) President Riazuddin told The Express Tribune.
These include disruption in global commercial transactions due to the Russia-Ukraine war, extreme volatility in rupee-dollar parity, delay in settling Letters of Credit (LCs) for import of raw material used in industrial production and the emergence of three simultaneous foreign exchange markets – formal banking channels, open market and grey market, he added.
It is pertinent to note that the authorised dealers are deducting 3% fine or marking lien on the export proceeds delayed by up to 30 days, 6% on delay of 30-60 days and 9% on delay of more than 60 days, the FPCCI statement cited.
Though the SBP has issued a circular on April 30 instructing commercial banks to accept and accommodate the genuine cases of delay in export proceeds and exempt them from fines, the directives have not been implemented in true letter and spirit, Sheikh maintained.
“It is surprising that the documentation of exporters or their foreign buyers are not given due weightage and ADs are making undue deductions on export proceeds of the already distressed exporters,” he noted with concern.
Foreign exchange is the lifeline of Pakistan’s economy and exporters need to be facilitated and incentivised for bringing dollars to the country, the FPCCI chief added.
“The SBP must offer an easy policy to welcome export proceeds and should not impose any fines or penalties for unavoidable delays,” suggested Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver.
“Most of the time the delay is due to the credit crunch in countries from where export proceeds have to be remitted,” he elaborated.
However, some exporters wait for the rupee to depreciate more to get more Pakistani currency. The SBP must ask trade bodies to get their members end this practice. Besides, it can introduce a scheme of reward for bringing remittances timely, suggested Thaver.
Published in The Express Tribune, May 9th, 2023.
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