Muhammad Soban

The State Bank of Pakistan (SBP) has clarified that there is no restriction on importing raw material by the industries.

The State Bank said in a statement that several media reports and trade organization representatives had alleged that banks were not opening letters of credit (LCs) for essential raw material, including pharmaceuticals. “There is no evidence to support this claim,” the central bank clarified.

The central bank said it has advised the banks, through EPD Circular Letters #9 and #11 of May 20, 2022, and July 5, 2022, to seek prior authorization before initiating transactions for the import of motor cars (CKDs), mobile phones (CKDs) and machinery (as defined under HS codes Chapter 84, 85, and certain codes with prefix 87).

In response to industry concerns, the SBP and the federal government, in consultation with relevant stakeholders, have devised a mechanism to accommodate imports from various sectors/industries, such as automobiles, mobile phones, home appliances, tractors, two and three-wheelers, transformers, and switchgear, auto parts manufacturers, telecom operators, and exporters.

The SBP said it has already approved more than 7,000 cases to date. The approval delays are sometimes caused by the submission of inaccurate or insufficient information to the SBP. The central bank said it is striving hard to expedite the approval process as much as it can.

Prior to this, media reports had indicated that industries had expressed concerns about the possibility of their businesses closing as a result of restrictions on imports of raw material under customs tariff chapters 84 and 85, even though the international monetary fund (IMF) has approved a loan tranche.

Pakistan's industries expect that if imports of raw materials, parts, and machinery are halted, the industry will gradually stop working, which will result in a delay in export orders as well as damage to reputation. Due to the growing currency crisis, some sectors have already reduced production because they are in a difficult situation.

Industries owners claimed that the State Bank Foreign Exchange Department (FEOD) conditionally approved import payments under customs tariff chapters 84 and 85. After the State Bank's condition, they said, the commercial banks were not releasing dollars to importers.

Hundreds of consignments were reportedly stuck at the port after the government banned imports of luxury goods. Since the government did not waive demurrage and detention charges, importers had to pay heavy demurrage to the shipping companies.

Credit : Independent News Pakistan-WealthPk