KARACHI, Dec 26: The State Bank of Pakistan (SBP) is making necessary changes in the foreign exchange system for the benefit of exporters. SBP Governor Dr Ishrat Hussain announced on Wednesday that the process of changing the foreign exchange system would be completed before the end of this year.

Speaking at a luncheon gathering of the businessmen, organized by the North Karachi Association of Trade and Industry (NKATI), the SBP Governor made it clear that there was no ceiling fixed for the bank credits for the private sector.

“There is a credit ceiling for the government for borrowing from the banking system,” he pointed out, while stressing that private sector can obtain as much as it wants from the banks.

“The only condition is that businessmen should pay back their loans to banks so that others could also make use of bank credits for expansion of their business,” he remarked.

He said the central bank was vigorously pursuing the recovery of bank loans so that rates of return on export refinancing may further be reduced in January.

The SBP chief agreed with an observation that tariff of the KESC and Wapda were too excessive, which force the consumers to steal electricity.

“We have suggested to the government to enforce an industrial electricity tariff, which is lower than domestic consumer rates,” he disclosed. He said that this arrangement of levying lesser electric charges on the industry is being practised in many countries.

“Unless the electric tariff on industry is brought down, the production cost cannot be reduced and we will not able to compete in the export market,” he observed.

Dr Ishrat conceded that no significant industrialization has taken place in the country during the last six years. “Only the private power operators made investment in last decade, while there was no investment in the manufacturing sector,” he added.

He said that real industrial progress could be achieved by small and medium investors. The big business, he said, enjoyed all clout and connections to get loans from the banks and then default on payment. The small and medium industrialists are the ultimate hope for the progress, he added.

Captain Moiz, a leader of the NKATI, in his remarks took exception to the SBP’s policy of offering its residential flats to the Rangers on book value.

He said that if the SBP had auctioned all these properties it would have generated enough resources for industrial investment.

He said the Karachi businessmen felt that the city was being ignored and deliberately pushed back on path of de- industrialization. Others who spoke were Syed Osman Ali and Zahid Maqbool.

APP adds: The SBP Governor said the government was considering to extend export refinance facility to the marble industry.

Replying to the demand, the SBP Governor said the representatives of all the trade associations of the city will be accommodated on the Credit Advisory Committee of SBP.

He said container held up in the US was an interim arrangement due to recession in America and Europe.