The State Bank of Pakistan (SBP) has allowed the Authorized Dealers to make advance payments up to USD 10,000 per invoice on behalf of importers cum exporters for import of raw materials, accessories and spares. Earlier, the SBP restricted the advance payment facility in July 2018 which was previously allowed to importers through Authorized Dealers. Now, on the intervention of the chambers of commerce and industry, trade associations and the ministry of commerce, it has been decided to relax this ban to the extent of exporters who have to import accessories, raw material and spare-parts for their exports. It is expected that this move will improve the export environment.
Sources said the decision has been taken with a view to enhancing exports and generate economic activity through the industrial units intending to import spares and raw material for export of finished goods.
As per EPD Circular Letter No. 01 of 2019, issued Tuesday, SBP has asked Authorized Dealers to make payment payments up to USD 10,000 per invoice on behalf of importers cum exporters for import of raw materials, accessories and spares with effect from January 01, 2019.
Previously, the SBP as on July 14, 2018, withdrawn facility of import advance payments against irrevocable Letters of Credit (L/C) up to 100 percent of the value of the goods and up to US$10,000 per invoice for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 supplier abroad.
The withdrawn facility was allowed under Para 30, Chapter 13 of Foreign Exchange Manual 2018 and ADs were directed to approach State Bank along with appropriate recommendations, in case, Authorized Dealers deem that a request on the subject is merits consideration.
Later, two amendments were made to facilitate the industry. In August 2018, SBP allowed import advance payments up to USD 10,000 or equivalent per invoice and imports on open account basis up to the said limit against for life saving/essential medicines and devices subject to submission of a certificate to the Authorized Dealer issued by respective provincial health department confirming that the medicines/devices/instruments to be imported fall under life saving/essential category, for import of Aircraft related spare parts/components, Lab equipments/instruments imported by educational institutions for their own use and newspapers, magazines, periodicals, books
While, in September 2018, SBP had allowed imports on open account basis and advance payment up to USD 50,000 or equivalent per invoice for import of life saving medicines & devices. However, the limit for imports against advance payment or on open account basis for essential medicines and devices remains the same, ie, USD 10,000 per invoice.
Further, it was decided that import of life-saving and essential medicines & devices against advance payment or on open account basis will be subject to submission of a certificate to the Authorized Dealer issued by the principal of a teaching hospital in public sector or head of a Government specialized hospital, instead of a certificate issued by the respective provincial health department, confirming that the medicines/devices/instruments being imported fall under the life-saving/essential category.