Finance facility for machinery exports introduced

Locally-manufactured plants and engineering goods eligible.


January 03, 2013
The financing facilities shall be available both at pre-shipment and post-shipment stages for a maximum period of five years. PHOTO: FILE/GETTY

KARACHI: The State Bank of Pakistan (SBP) has decided to introduce the Export Finance Facility for Locally-Manufactured Machinery (EFF-LMM) with a view to promoting the export of locally-manufactured plant and machinery.

A SBP statement issued here on Thursday said that the new financing facility shall be effective from January 3, 2013, and will remain valid till further instructions. The statement said that exporters can avail long-term financing facilities through banks for the export of eligible plants, machinery and engineering goods under the facility. The financing facilities shall be available both at pre-shipment and post-shipment stages for a maximum period of five years.

The salient features of the new financing facility are: financing for five years (including one year grace period) will be available for export of plant and machinery of the value of $10 million or more. Further, specified plant and machinery of value less than $10 million will be eligible for three years financing (including six months grace period). Other machinery items will be eligible for financing up to 1 year. Financing shall be available through banks, which are approved as participating financial institutions under the long-term financing facility. Requests of new banks shall be processed as per SBP’s criteria.

Financing shall be made available against a letter of credit. However, financing will also be available against export contracts for tenure up to one year. Refinancing shall be available to the extent of the total value of the letter of credit or the contract, less advance payment, or 80% of the value of letter of credit or contract, whichever is lower.

Finance to exporters will be available at rates applicable under the long-term financing facility which are 10.30% per annum and 10.90% per annum for three and five years respectively. However, as compared to the long-term financing facility, banks’ spread under this facility is being increased by 0.5% for three years financing to encourage banks to extend financing to non-traditional exporters, that is engineering goods.

The repayment of the principal amount of the loan shall be made in equal half-yearly or quarterly instalments after the grace period, if any. The mark-up shall be paid on a quarterly basis. This new financing facility will supersede the instructions concerning Part-B Export Sales of Locally-Manufactured Machinery Scheme.

Published in The Express Tribune, January 4th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

 

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ