Lasbela Chamber of Commerce and Industries shows great concern over the circular issued by the State Bank of Pakistan, which aims to discourage holding forex in foreign accounts to gain the advantage of the devaluation of PKR.

SBP Circular No. 02 of 2023 in Para 33A chapter12 of the FE manual regarding delayed export proceeds will result in an unnecessary burden on the exporters which will mark a negative impact on Pakistan’s trade and exports says Ismail Suttar, President LCCI.

The circular requires exporters to bring their delayed export proceeds to Pakistan by April 30, 2023, failing which the Authorized Dealers (Ads) will mark a lien on the number of export proceeds realized by the exporter. President LCCI states that this change will lead to a significant financial burden on the exporters, who might face additional charges, as the lien would be marked at a rate of 3%, 6%, and 9% depending on the number of days delayed in export proceeds. Moreover, the weekly submission of a consolidated statement regarding all such liens by the ADs to the Director, Foreign Exchange Operations Department (FEOD), SBP-BSC will create further bureaucracy for the exporters, causing additional inconvenience.

Ismail emphasizes that the issued circular ignores the fact that the exporters might have genuine reasons for the delay in the realization of export proceeds, which at times are not in control. The global economy is currently going through a recession and has impacted the importers the most, as a result, delay in payments is commonly observed, and many importers are facing tremendous difficulties in paying in due time. Under such circumstances, imposing additional regulations on the exporters would not only be unfair but also highly impractical.

President LCCI states that the circular issued by the State Bank of Pakistan does not provide any clarity on how an exporter can justify to the authorized dealers (ADs) that the delay in export proceeds is due to the buyer’s inability to pay, and not a deliberate attempt by the exporter. This lack of clarity may lead to ambiguity and confusion, causing undue hardship to the exporters.

LCCI expresses great concerns regarding the potential of the circular to encourage the miss-declaration of invoice value by the exporters. The new working mechanism will result in an undervaluation of the exports, which will eliminate the chances of forex inflows by the undervalued amount that would have otherwise landed in the exchequer with a few days’ delay.

“Instead of implementing policies to encourage dishonest practices, the State Bank of Pakistan should take steps to promote transparency and integrity in the export process”, says Ismail. This will not only enhance the country’s reputation as a reliable and trustworthy trading partner but will also create a level playing field for all exporters.

We believe that the State Bank of Pakistan should work towards creating an enabling environment for the exporters, which encourages and supports the export business, rather than imposing additional regulations that would further increase their financial burden.

LCCI urges the State Bank of Pakistan to reconsider the circular and provide relief to the exporters by revising the regulations and removing the liens on their funds. We request the SBP engage with the stakeholders to find a mutually acceptable solution to address the issue of delayed realization of export proceeds. President LCCI is confident that the mutually devised measures will work for the benefit of the business and trade environment of Pakistan.