October 15, 2002	Tuesday	Sha'aban 8, 1423

KARACHI, Oct 14: Are you an exporter of hosiery and knitwear or rice or hand-knotted carpets? If you are...then you can get concessional export financing during this fiscal year equivalent to two thirds of your exports in last fiscal. Earlier exporters of hosiery/knitwear; rice and hand-knotted carpets were to get during this fiscal year a concessional export financing equal to 50 per cent of their exports in the last fiscal.

This has become possible through a recent relaxation made in the rules of export financing by the State Bank of Pakistan. The central bank announced this and some other relaxation in export financing rules through a circular (BPD no. 28) issued on Monday.

In plainer words if you exported say $1.5 million worth of hosiery/knitwear or rice or hand-knotted carpets in July/June 2001/02 then you can get a million dollar export financing in July/June 2002/03. Had the SBP not relaxed the rules you would have got a million dollar export financing only if your exports last year stood at $2 million.

“This would particularly help those exporters whose export orders were cancelled by the buyers after 9/11,” says Anis Marfani, chairman of Pakistan Knitwear & Sweaters Exporters Association.

Chairman of Rice Exporters Association of Pakistan A. Rahim Janoo too believes that the relaxation in export financing rules will help rice exporters do better in the coming season.

“This is a timely move,” he says referring to the expected pickup in rice exports next month. “Better access to export financing may encourage us to compete vigorously with Indian exporters.”

Pakistani exporters of coarse rice say they have lately lost some of their market share to Indians who they say are getting an indirect subsidy from their government. “The Indian exporters can buy coarse rice from state-run Food Corporation of India at Rs5,000 per ton whereas the government is buying this rice from the growers at Rs8500 per ton,” claims A. Rahim Janoo.

Pakistan earns $1.5 billion or one sixth of its total export earning of $9 billion through exports of hosiery/knitwear; rice and hand-knotted carpets.

The exports of these commodities fell in fiscal 2001/02 for a host of reasons — the post 9/11 reluctance of the buyers included.

The banks offer export loans to the exporters of eligible items at a concessional markup rate tied with the cut-off yield on six-monthly treasury bills. Currently export financing is available at 8 per cent against average normal lending rate of 12 per cent plus. The State Bank provide refinancing to the banks against their export loans at 6.5 per cent thus allowing them to earn a spread of 1.5 per cent.

The SBP circular says that the relaxation made in performance criterion for availing export financing for the above-listed items is valid for fiscal year 2001/02 and 2002/03 only. In fiscal 2003/04 the exporters of these items will get export finance equal to 50 per cent of their exports in fiscal 2002/03.