October 28, 2001	Sunday	Shaba'an 10, 1422

KARACHI, Oct 27: Many of the scheduled bank officials are somehow unaware of the State Bank of Pakistan’s (SBP) export finance facility in dollar available since early this year.

Some exporters who approached their bankers for dollar financing of their exports were shocked when told that, “no such scheme exists,”a representative of Small and Medium Sized Rice Exporters, Zulfikar Thaver told Dawn here on Saturday.

Confusion prevails as ignorant bankers were not ready to finance exports in US dollar, whereas the SBP wants exporters to avail of this facility, he maintained.

Last week, the governor of State Bank Dr Ishrat Husain had advised a group of bedlinen exporters to opt for dollar financing, available at a lower mark-up rate of 5.5 per cent against the rupee financing at 12 per cent.

“Even then, most of the scheduled banks are still ignorant about the facility and are denying exporters the much needed funds available at lower mark-up,” Thaver asserted.

The foreign currency export finance (FCEF) facility under which loan to exporters in US dollar is available, had been intimated to the scheduled banks by the State Bank through an F.E. Circular No.4 Dated March 28, 2001.

The government had negotiated a foreign currency loan with the Asian Development Bank for FCEF.

For the last seven months, the FCEF had been running parallel to the existing Export Finance Scheme (EFS) of the SBP as an additional and alternative facility.

Initially, $250 million were available under the FCEF but now it has been reduced to $150 million which is being strongly protested by exporters who feel that the amount is too little to meet even a single day’s finance requirement for exports.

The export finance mark-up rate in India is at 5 per cent. In Pakistan it is at 12 per cent. Similarly, exporters say that rebate rate for Indian exporters is between 20 to 25 per cent, but in Pakistan it is being reduced and presently it stands at around 7 per cent.

A leading exporter Mahmood A Ghaffar told Dawn that if the government did not reduce the front-load of exporters by reducing export finance (rupee facility) mark-up rate to at least 7 per cent, get ‘war risk charges’ removed and cut withholding tax to 0.5 per cent, the country’s exports would become uncompetitive in the world market.

He said that US banks were withholding “our transfers coming from other countries against export proceeds on the pretext that some are designed to promote terrorist activities in the world.”

Ghaffar said that the clearance of bonafide transfers and remittances should not be delayed at New York clearing house, as it disturbed exporters’ cycle of financing, a badly needed requirement for subsequent consignments.