ISLAMABAD: State Bank of Pakistan (SBP) has proposed to the federal ministries to prepare a list of reputable suppliers to import solar panels to avoid money-laundering or over-invoicing as some local importers have established trade entities abroad which are carrying the risk of over invoicing
This proposal has been sent by Director State Bank of Pakistan, Dr Asif Ali, in a letter to Special Assistant to Prime Minister on Finance and Revenue, Tariq Bajwa.
Responding to a letter of SAPM on Governance Effectiveness, Jehanzeb Khan, SBP wrote that previously banks were required to seek prior permission from SBP before initiating transactions/ LCs for import of items falling under HS codes Chapter 84 and 85 (including solar panels, invertors, etc.).
This requirement of prior permission was withdrawn by SBP vide Circular Letter No 20 of December 27, 2022. Therefore, now all such importers are required to approach their banks to undertake import transactions/ LCs and no approval from SBP is required anymore.
SBP says it understands that in view of Balance of Payment (BoP) situation banks are accommodating requests of imports based on their own liquidity and risk assessment, adding that as soon as BoP situation improves the banks would be in a better position to facilitate such import transactions.
Director SBP argued that SBP has already issued the necessary instructions to banks for one-time facilitation for release of shipping documents to ease congestion at ports due to stuck-up containers (i.e. demurrage-related cases). In this regard banks have been advised to release the shipping documents for goods which have been shipped on or before January 18, 2023: (i) in case of deferment, on receipt of SWIFT message from the bank abroad that imports are on deferred payment basis for at least 180 days; or (ii) the funding arrangement has been made from abroad, on receipt of confirmation from suppliers’ banks.
The central bank maintains that it understands that with issuance of such instructions the matter of stuck up shipments including that of solar panels is being resolved to a great extent.
According to SBP, it understands that as per current Customs Regulations, solar panels (HS code 8541.4300) have 0% custom duty; therefore, there is a possibility that import of solar panels could be misused by some unscrupulous elements to launder their illicit money abroad by over invoicing.“In our assessments, some of the suppliers providing deferred payment terms turn out to be related to Pakistani importers or the local importers have established trade entities abroad, which carry risk of over invoicing,” said Dr Asif Ali.
In this regard, SBP has suggested that the relevant ministries may come up with a list of reputable suppliers from whom imports of Solar Panels could be allowed without any risk of money laundering/ over invoicing.
Moreover, in order to reduce reliance on imported components, the federal government may consider coming up with a policy to encourage domestic entrepreneurs to establish manufacturing facilities for clean / environment-friendly energy producing equipment like solar panels and other related components which will also help reduce Pakistan’s reliance on imported fossil fuels in future and act as a mitigation factor for managing environmental risk.
Copyright Business Recorder, 2023