LAHORE: Efforts to enhance rice exports from current level of US two billion dollars to $ 2.7 billion may hit a snag despite a good production as the commercial banks have declined to enhance the Export Refinance Facility (ERF) limits to the exporters.
“Rice exporters are facing trouble obtaining Export Refinance Facilities from their banks which are attributing it to lack of allocation from the State Bank of Pakistan (SBP) as the reason for not being able to issue any further enhancements in the current credit lines,” alleged Rice Exporters Association of Pakistan (REAP) Chairman Ali Hussam Asghar.
While talking to the Business Recorder on Wednesday, Ali Hussam said he has written to the SBP Governor Reza Baqir about this issue and also raised this point in November 2021 in a letter to the Advisor to PM for Commerce Abdul Razzak Dawood to arrange a joint meeting of the MINCOM, SBP and Commercial Banks to increase share of credit to rice sectors enabling exporters to meet their working capital requirements.
Exporters are aiming to take rice exports from current level of $ 2 billion to $ 2.7 billion during the current fiscal as good produce especially non-basmati, Malaysia and China as emerging markets for non-basmati rice having better payment capabilities.
He said that we need immediate intervention of the SBP to allocate more financial spread for the commercial banks to extend increase in ERF to the rice sector. Unlike other six export sectors, the rice sector has no incentive except export refinance facility. If this facility is denied, rice sector will neither be able to complete in the international market nor can it meet the export target.
Ali Hussam said rice sector as per rules should be extended $ 1 billion’s ERF if the last year’s export stands at $ 2 billion. While there should also be a 50 percent increase of ERF to an exporter with the condition that it should perform at least double the extended ERF. However, he said that presently sector is facing numerous issues especially two big hurdles i.e., non-allocation of enhanced limits of ERF and non-availability of containers and higher freight charges.
The REAP chairman said that export during first five months of the current fiscal has shown great results. From July to November 2021, Basmati export rises to 294,196 tons as compared to last year’s same period of 202,223 tons, showing an increase of 45 percent. With the same space Pakistan’s export can achieve one million tons milestone after one decade provided the sector is provided extension in ERF.
Copyright Business Recorder, 2021
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