April 2, 2003	Wednesday	Muharram 29, 1424

KARACHI, April 1: Banks can now make more outward remittances against imports in advance — if the importers so desire.

The State Bank has informed all the banks through a circular that they can now remit up to 50 per cent of the C&F value of the imports in advance on the request of the importers. It has also informed them that they can do this on their own without seeking prior permission of the central bank. Previously the limit on advance remittance against imports was 33.33 per cent.

The SBP issued a circular (FE no. 6) on Tuesday to all banks informing them that it has amended the foreign exchange manual for this purpose.

Importers say this will facilitate those among them who have to pay part of the import price in advance on the demand of their suppliers.

“In certain cases the suppliers want the importers to pay part of the import price in advance,” said Chairman of Pakistan Commodity Importers Association Raees Ashraf Tarmohammad. “This increase in the advance remittances limit will facilitate such importers,” he added.

But a number of importers including Raees Ashraf and Naeem Warind said the vast majority of importers do not have to make advance remittances against import.

Bankers say the increase in the limit of advance remittances against imports would expand the avenues for employment of their foreign currency deposits — provided the importers turn up seeking to make larger import payments in advance.

They say commercial importers do not tend to make advance remittances against imports but industrial importers importing capital goods for long term use may find it feasible to do this.

“The reason is the exchange rate is in favour of rupee and business houses generally have been awash with liquidity created through increased inflow of home remittances,” explained a senior banker at a state-run bank.

But a leading textile exporter based in Karachi said industrial importers normally import capital goods and machinery against bank guarantees — and apparently need not to pay part of import bill in advance.

Pakistan attracted more than $2.8 billion in home remittances in the first eight months of this fiscal year — double the amount sent back home by overseas Pakistanis in a year-ago period.

Top bankers believe part of this amount represents the money that resident Pakistanis have placed overseas to avoid taxes. They say that most businessmen scared after the tightening of anti-money laundering rules world wide are brining back home some of these funds in the name of home remittances.

“This whitened money needs to be employed somewhere... some are using it to reduce their bank borrowing...and some might even use it in making advance payments against imports,” said a senior executive of a major local bank.

Bankers say public sector importing entities may also opt for making advance remittances against imports of capital goods and machinery etc., in cases where their suppliers demand this — or where they find it feasible on the back of improved liquidity.