Rice exporters fear that unavailability of financing under Export Finance Scheme (EFS) and higher interest rates on loans from the commercial banks may lead to rendering them uncompetitive in the international market thus making a big dent on the exports which have shown growth in the first quarter of the current fiscal.
The exporters are complaining of unavailability of funds under EFS through commercial banks, either being entitled under EFS-2 or for having Pre-Shipment finance EFS-1. This will ultimately result in obtaining loans with higher markup, in turn, making exports uncompetitive in the international market whilst giving higher margins to commercial banks at loss of exporters. Unavailability of finance at a time when the paddy procurement season is in full swing will damage the rice exports and achieving the target of taking these exports to US five billion dollars from present US two billion dollars.
Rice Exporters Association of Pakistan (REAP) in a recent meeting raised this issue with the Prime Minister's Advisor for Commerce, Textile, Industry and Production Abdul Razak Dawood.
REAP Chairman Shahjahan Malik while talking to Business Recorder here on Tuesday said that Export Refinance is a scheme under State Bank of Pakistan (SBP) to promote Pakistani exports. Under this scheme, an exporter may avail finance from any scheduled bank at a concessional rate in two separate schemes called EFS-1 and EFS-II. In part one, an exporter can get finance for six months against a specific contract and has to bring back the export proceeds to Pakistan within the stipulated period. EFS-II make an exporter eligible an exporter for fifty percent of the export it exported within a fiscal year but the exporter has to double its exports.
He alleged that textile sector is being given priority while disbursing funds under EFS scheme. He said that we raised the issue with the advisor that the rice sector is not claiming subsidies on account of gas or any other head, but they deserve funds under the Export Finance Scheme. He said that they will leave no stone unturned to secure this facility for their members and will soon meet the State Bank of Pakistan (SBP) Governor too, to resolve this issue at the earliest.
Sami Ullah Naeem a progressive exporter and former REAP chairman said that exporters are not being allotted funds under the ERF-II scheme. He said that exporters instead of having finance on 3 percent they have to obtain loans on 16 percent. He said that exporters because of unavailability of funds are reluctant to buy the paddy. He said that if the entitlement of exporters is not restored at the earliest then it will dent the exports by 30 percent.
The Association in its submission to the Advisor also claimed that it had increased rice exports from $300 million to $2 billion due to the condition of mandatory REAP membership. Unfortunately, a few years back Government vide public notice withdrew this condition. Requesting restoration of mandatory membership condition, the REAP delegation observed that without mandatory membership, the interest of members will be lost and they may not follow the instructions from REAP in true letter and spirit.
Copyright Business Recorder, 2019