With an objective to improve the timely inflow of foreign exchange from export proceeds in the market, the State Bank of Pakistan (SBP) has amended the foreign exchange regulations and directed the exporters to bring export proceeds within a maximum period of 120 days from the date of shipment.
Earlier, the exporters were required to bring their export proceeds within a maximum period of 180 days. This move also brings Pakistan’s regulations closer to international best practices.
The full export value of goods exported from Pakistan and declared to the Customs authorities should be received on the due date for payment or within 120 days from the date of shipment, whichever is earlier, through an Authorized Dealer either in convertible foreign currency, in which the Authorized Dealer maintains accounts, or in Pakistan rupee from a repatriable rupee account of a nonresident, the circular issued by SBP stated.
Where the terms of sale provide for payment earlier than 120 days, including DP/CAD/sight bills, Authorized Dealers may allow extension in the realization period if they are satisfied with the written explanation given for the delay in the realization by the exporter.
Such explanation must be supported by documents/communication from the foreign buyer and the extension must not exceed the period beyond 120 days from the date of shipment. Authorized Dealers will not allow extension in the realization period, once they have reported the case as overdue to FEOD, SBP-BSC, it further added.
The above changes will be applicable on all transactions authorized by the Authorized Dealer, including approval of electronic/manual Form-E or issuance of financial instrument in Pakistan Single Window with effect from January 6, 2022. Realization of export proceeds for earlier transactions may be undertaken as per the instructions applicable at the time of execution of such transactions.
It is pertinent to mention here that in the recent past, SBP has introduced a number of policy measures in its foreign exchange regulations to facilitate exporters. These include
i. Allowing up to 10 percent of exporters’ annual exports for equity investment abroad to establish overseas subsidiary/branch office
ii. Allowing exporters who are eligible to retain part of their export proceeds to make payments abroad from their export retention account for a number of additional purposes including marketing & promotions, purchase of design/ patterns, warehousing, consultancy service, etc.
iii. Facilitating e-Commerce by allowing exporters to sell their products directly through their own websites as well as through international digital marketplaces including Amazon, e-Bay, Ali Baba, and
iv. Allowing exports by way of dispatch of shipping documents directly to the foreign buyer, to make exporters competitive in the international market.
v. The new measure is expected to positively impact foreign exchange inflows in the market. SBP is of the view that flexible exchange rate has appropriately played its role as a shock-absorber and it is important that its role be complemented by strong exports proceed realization.
vi. The new measure is expected to positively impact foreign exchange inflows in the market. SBP is of the view that flexible exchange rate has appropriately played its role as a shock-absorber and it is important that its role be complemented by strong exports proceed realization.
Source: Pro Pakistani