SBP advises banks to give one-time facilitation to importers
In order to clear the stuck consignments at ports, the State Bank of Pakistan (SBP) has advised banks to provide a onetime facilitation to all those importers who could extend their payment terms to 180 days or arrange funds from abroad to settle their pending import payments.
The business community, including various trade bodies and chambers of commerce, have highlighted that a large number of shipping containers carrying imported goods are stuck at ports, due to delays in release of the shipping documents by the banks.
Therefore, in order to facilitate businesses, the SBP announced withdrawal of the requirement of prior approval of imports (falling under HS code Chapters, 84, 85 and certain items under HS code Chapter 87) and instead gave a general guidance to banks to prioritize import of certain essential items such as food, pharmaceutical, energy, etc.
The SBP has also advised banks to provide a one-time facilitation to all those importers who could either extend their payment terms to 180 days (or beyond) or arrange funds from abroad to settle their pending import payments.
Accordingly, till March 31, 2023, banks have been advised to process and release documents of shipments/goods that have already arrived at a port in Pakistan or have been shipped on or before January 18, 2023.
Further, the SBP has advised the banks to educate their customers to inform their banks prior to initiation of any import transaction to avoid any complications in the future.
The State Bank of Pakistan (SBP) has withdrawn the requirement for prior approval of imports aiming to clear the backlog of containers stuck-up at the port carrying industrial raw materials and other essentials. The SBP announced that no prior approvals would be required for making imports under HS code Chapters 84, 85 and certain items under HS code Chapter 87).
Besides, the banks were instructed to prioritise the import of certain essential items like food, pharmaceutical, energy, etc.
The decision was widely welcomed by the business community which has been demanding an immediate solution to the problem since demurrage charges exceeded the actual cost of imported goods.
"The business community, including various trade bodies and chambers of commerce, have highlighted that a large number of shipping containers carrying imported goods are stuck up at the ports, due to delays in the release of the shipping documents by the banks," said the SBP circular.
The SBP has advised banks to provide one-time facilitation to all those importers who could either extend their payment terms to 180 days (or beyond) or arrange funds from abroad to settle their pending import payments.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Sheikh welcomed the SBP decision to allow clearance of pending letters of credit (LCs) of the containers stuck at the ports or those which are in transit. However, he demanded that the SBP should closely monitor commercial banks to ensure that the decision was implemented in letter and spirit as it had become a matter of survival for hundreds of factories and thousands of jobs.
He also proposed that preference should be given to export-oriented industries, food products, industrial raw materials, energyproducing imports, and agricultural raw materials while clearing the backlog.
The SBP circular said that till March 31, banks have been advised to process and release documents of shipments/goods that have already arrived at a port in Pakistan or have been shipped on or before Jan 18. "Banks have been advised to educate their customers to inform their banks before initiation of any import transaction to avoid any complications in the future," said the SBP circular.
Mr Sheikh said the issue was causing detention charges, demurrage, shortages of raw materials for industrial production, closure of major industrial units, disruptions in the supplies of agricultural inputs, closure of plants due to unavailability of spare parts of the machinery and equipment, non-fulfillment of export orders, loss of revenue due to dwindling production and massive layoffs.