More than 300 claim documents, checked by the scrutiny committee, formed in the Export Promotion Bureau (EPB) to conduct internal audit of the freight subsidy claims, were found defective for one reason or another.
The issue on freight subsidy was discussed in a meeting of the steering committee held under the chairmanship of EPB Vice-Chairman.
The audit was conducted to ensure that the payments were made to the genuine exporters. In most of the cases, the objection to these claims was submission of insufficient documents, required under the procedure of the freight subsidy scheme.
This necessitated sending back such claims to the exporters through their banks, for completion and resubmission, involving a lot of time.
It was, therefore, decided in the EPB to allow payment of these claims against receipt of necessary indemnity/bank guarantee from the processing banks. Most of the banks are submitting the required indemnity to the National Bank of Pakistan (NBP) and getting their claims processed.
The meeting further decided that the NBP, FTC branch, in consultation with the State Bank of Pakistan and processing banks, would suggest a time bound guarantee meeting the requirements of EPB/NBP and also address the concerns of the processing banks.
The decision was taken when it was brought to the notice of the EPB that some banks are reluctant to provide necessary indemnity against pending claims of 2002-03 of their exporters, mainly due to open-ended nature of the guarantee prescribed.
The limitation of the freight subsidy by the government to the first port of call of vessels under the new freight subsidy procedure (2003-04) was also discussed.
The meeting reviewed in detail the issue involved in providing freight subsidy to the land-locked countries.
It was argued that the freight subsidy be given to all eligible countries irrespective of their location as provided in the 2002-03 trade policy, continued for 2003-04.
That argument was countered by the views that the administration of the freight subsidy for the land-locked countries was difficult and there were possibilities of misuse.
The matter was referred to the technical committee on freight subsidy for further examination of the issue and submission of a report to the steering committee.
The procedure for freight subsidy for 2003-04 also provides freight subsidy provision on export through the land route, where the freight subsidy is to be provided according to the benchmark freight rates, established by the EPB for such destinations.
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