‘Cash on counter’ facility: PAJCCI seeks annulment of notification

KARACHI: The State Bank of Pakistan’s notification issued on 7th December 2021 to withdraw ‘cash on counter’ facility, wef, 13th December 2021 must be revoked with immediate effect, Zubair Motiwala, Chairman Pakistan Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) said.

Motiwala has sought immediate intervention of Prime Minister Imran Khan to instruct State Bank, Federal Board of Revenue and Ministry of Commerce to annul the said notification and continue to extend the facility till Afghan banking system becomes operational and Afghanistan gets access to its forex reserves that is halted.

He commented that these types of unplanned and inconsiderate policy changes have shaken the confidence of business community on both sides who are striving to revive economy in such turbulent times. This change has nullified all efforts made by PAJCCI in last few months to stabilize the border trade not only with Afghanistan but with CARs. PAJCCI have tabled all concerns with government entities, has used its Afghan Chapter’s good offices to pave way for Pakistani business community in Afghanistan and CARs; evident from recent visit of Afghan ministerial delegation.

It is a well-known fact that Afghanistan’s banking system is currently halted have no access to Dollars, is going through socio-economic crisis and Pakistan enjoys unique position in the region to be most trustworthy neighbor who can create a sustainable dependency for economic uplift of Afghanistan and the region.

At present traders on both sides are using barter, Pakistani traders using cash on counter facility on behalf of their Afghan counterparts by purchasing dollars and depositing in banks with complete documentation on behalf of Afghan traders for transit and bilateral trade.

Despite investing the time and effort, Pakistani traders are subjected to harassment by FIA and other government entities whereby facing 5-6 hours of undue investigation. This is critical to note that same practice is being utilized for transacting with CIS countries due to lack of strong banking infrastructure and connectivity.

Motiwala questioned the logic of carrying such huge sum of cash by Afghan traders at the border inviting security issues, especially at this moment where presently Afghan banks are only allowing minimum cash withdrawals. Additionally access of foreign exchange within Afghanistan itself is a big question. Banks operating in Pakistan are also reluctant to support trade and facilitate payments to Afghanistan due to fear of sanctions and unclear policy of government.

PAJCCI is a joint chamber voicing concerns of businesses across the border in line with the vision of Prime Minister of Pakistan who is not only keen to support Afghanistan’s economy from collapsing in these difficult circumstances but also intend to strengthen bilateral trade, transit and investment landscape with Afghanistan and further with CIS countries.

However, this step goes in opposite direction and will further reduce the economic ties with Afghanistan and Pakistan will lose major business with the only country with which it enjoys more than 80% trade surplus.

Motiwala acknowledges pressures on Pakistan’s economy and requirement of foreign exchange through economic measures, nevertheless, Afghanistan will not be able to survive this blow and sufferings will be mutually felt by border based businesses leading to halt of exports to Afghanistan. This may also lead to severe reciprocal backlash and will dilute the effect of confidence building measures employed by honorable Prime Minister.

It is noteworthy that trade, diplomatic, security, peace and long-term relations of Pakistan with not only Afghanistan but with CARs will be negatively affected with such rampant measures. Instead of building regional capability and capacity; this type of policy changes area leading already low trade to total halt thereby hurting people on both sides of the border and adding to prevalent humanitarian crisis.

On behalf of business community, Zubair Motiwala vociferously requests Prime Minister for his intervention and urges him to formulate stable, viable, innovative and profitable policy with long-term measures in the national interest by engaging joint chamber like PAJCCI that is representing business sentiments across the border.

PAJCCI has already shared several alternatives to tackle the situation at hand and urged SBP to deliberate the matters before making such announcements which can further aggravate the financial stability and Pakistan will lose exclusive trade and economic corridor of Afghanistan and CARs. He further requested honorable Prime Minister for a meeting to discuss issues of urgent importance for their mutually beneficial resolution.

Copyright Business Recorder, 2021