PHMA fears import restriction to hinder export orders

LAHORE: Pakistan Hosiery Manufacturers & Exporters Association (PHMA) Monday feared that the latest move of import restriction by the State Bank of Pakistan (SBP) would hinder smooth process of future export orders, leading to decline in foreign inflows amidst highest trade deficit in the country.

In a meeting of the PHMA office-bearers and executive committee here, PHMA Central Chairman Dr Khurram Anwar Khawaja expressed the concern over inconvenience caused to exporters in completion of their orders due to disallowing exporters to make advance payment up to US$10,000 per invoice for the import of all eligible items without the requirement of L/C or Bank Guarantee from the supplier abroad.

The PHMA meeting demanded of the SBP to immediately restore the required facility for the exporters to avoid further decline in country’s exports as the orders from foreign buyers had been affected.

Dr Khurram mentioned that the SBP, through its Circular No C06, dated 14th of July, 2018, had withdrawn the facility extended to manufacturers to import even the basic raw materials used in export items on advance payments up to 100 percent of the value of the goods and up to US$10,000 per invoice for the import of all eligible items without the requirement of L/C or Bank Guarantee from the suppliers abroad.

However, in case Authorized Dealers deemed that a request on the subject merits consideration, they might approach State Bank of Pakistan along with appropriate recommendations on a case to case basis.

Nevertheless, the SBP had not processed a single request till date and the time consumed at the central bank for this purpose was not at all affordable for export sector in this highly competitive world.

Dr Khurram Anwar Khawaja pointed out that the above withdrawal had been affecting the export-oriented industries and creating hurdles in meeting export commitment in time, besides increasing cost of business.

He said that generally exporters import trims and accessories from the buyers' nominated foreign suppliers through advance payments because foreign suppliers only start working after receiving advance payment.

Further Export Orientated Units have to abide by buyers’ requirements otherwise future orders would not be placed. "Additionally, the dollar value of accessories is nominal, thus, opening of LC is neither feasible nor workable and highly time consuming.

In some cases, buyers nominate foreign supplier of price tags from which exporters ought to import price tag for garment manufactured meant for export and that price tags cost are only US $250 which supplier needs in advance.

Hence, exporters transfer that via TT through bank and send copy of TT to the supplier and very same day supplier sends Price Tags through courier service which is matter of routine," he added.

Dr Khurram said that several of import consignments are pending as suppliers need advance payments which lead to cancellation of orders and decrease in exports.

He added, "PHMA understands that such withdrawal of advance payment facility against imports by commercial importers is to curtail imports of domestic needs.

Therefore, the permission of advance payment for accessories and trims to be used in export-based products must be continued as this temporary import is for export purposes only, otherwise, all the goods requiring imported accessories will face major hurdles causing a significant blow to the Export Industry."

The PHMA chairman and its Executive Committee strongly demanded the SBP to resolve this burning issue by allowing only the Export Oriented Units (excluding Commercial Importers) to make advance payment against import up to US $10,000 per invoice for the import of all eligible items without the requirement of L/C from the supplier abroad. They also demanded intervention of Ministry of Commerce & Textile to address the matter.