Industrialists have urged the State Bank of Pakistan (SBP) to include the current Letters of Credit (LCs) and already imported equipment, lying at ports, in the Temporary Economic Refinance Facility (TERF) scheme.
The SBP, on March 17, introduced TERF and its Shariah compliant version to stimulate new investment in manufacturing sector as the outbreak of COVID-19 has impacted the economic activity in the country.
TERF will be available for one year only, requiring a letter of credit (LC) to be opened by end-March 2021. Under this scheme, the SBP announced to refinance banks for financing at a maximum end-user rate of 7 percent for 10 years for setting up of new industrial units. The total size of the scheme is Rs 100 billion, with a maximum loan size per project of Rs 5 billion.
However, industrialists have asked for further clarification on this scheme. Bin Qasim Association of Trade & Industry (BQATI), represents the largest industries in the country, has written a letter to Governor SBP Dr. Reza Baqir and asked for further clarification regarding ongoing Expansion and BMR of existing facilities through already established LC.
According to BQATI most of the industries are heavily dependent on Chinese economy and Asian markets are facing stern financial crises during these times. The said hardships were amplified in upcoming months of COVID-19 lockdown in Pakistan.
Majority of shipments pertaining to plant and machinery of several members have been held in the bonded warehouse-of customs as the importing industries are unable to pay taxes and duties and accordingly clear these imported equipments due to financial crunch in wake of COVID-19.
Naveed Shakoor President BQATI said that the current economic scenario will not allow the most of industries to complete projects and the investment made so far with respect to BMR/expansion are also on the brink of becoming a sunk cost altogether if the remaining project investment are not restructured in accordance with the spirit of rehabilitation sought under the TERF scheme.
In view of the current scenario, he has urged the governor SBP to take some more extraordinary measure during this crisis and allow including the already established LCs and imported machinery in the TERF scheme to facilitate the industry.
"The ongoing projects, current LCs and equipment, which still has not been cleared due to COVID-19 pandemic, may also be included in the TERF scheme. He said that with the right policies nation will come out of this grave scenario successfully."
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