The State Bank of Pakistan’s (SBP) move to ease curbs on the import of essential goods required for manufacturing export products could not end the prevailing uncertainty as traders are reluctant to file requests for imports.
“Importers are hesitant to open Letters of Credit (LCs) for import of raw material and essential goods, though the SBP has lifted the ban and directed banks to facilitate and prioritise such imports,” said Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver.
Importers are wary because of fears they may not have sufficient funds for honouring the Bills of Exchange and as a result they will not be able to get the imported goods cleared from ports.
“It is a messy situation as the mainstream political forces are busy in point scoring instead of taking serious notice of the business community’s concerns,” Employers Federation of Pakistan President Ismail Suttar told The Express Tribune.
Importers had some genuine concerns as they were feeling insecure in the wake of widespread uncertainty, fearing that the finance minister may fail to steer the economy out of current troubles, he said.
“In such a difficult situation, the Bills of Exchange are held up and cleared according to the foreign exchange earned from exports or home remittances,” said Thaver. “It is, therefore, necessary that steps are taken to ensure that import bills are paid as per the agreement or contract.”
He called on the SBP to make prior arrangements, in coordination with the finance ministry, with the countries exporting goods to Pakistan for deferred payment or extending the time period beyond the due dates of bills.
“It is very unfortunate that the authorities are not coming up with any relief measures,” Thaver said, adding that with no timely imports of essential raw material and other goods, the country would face shortages, leading to the closure of manufacturing concerns.
He stressed that Pakistan may try to sell its assets or enter into some barter arrangements. Alternatively, “the government may issue promissory notes to the exporting countries”. Thaver pointed out that foreign shippers were not inclined to supply goods to Pakistan because they had a bitter experience of consignments stuck at ports as well as delay in clearance of bills. “For almost 75 years, we have been importing cars and parts from Japan and now believe it should stand by us and save us from the vulnerable situation by supplying auto parts to help run assembly lines.”
Moreover, the countries having free trade agreements with Pakistan must be approached for providing support.
“We need to import raw material, packing material, motor parts and components, parts of machinery that are not manufactured in Pakistan, medicinal oil and other chemicals for textile industries,” he said.
“All these are badly needed that can be provided on deferred payment to help the country navigate through the difficult economic times.”
Korangi Association of Trade and Industry (KATI) President Farazur Rehman, however, sounded optimistic and welcomed the decision of the government and the SBP to lift the ban on LCs.
He emphasised that the removal of restrictions was a positive move and expressed hope that the central bank would come up with measures that would be beneficial for trade as well as generate revenue for the government.