September 21, 2003	Sunday	Rajab 23, 1424

KARACHI, Sept 20: The proceed realization certificates (PRCs) issued by the exchange companies in case of home remittances or money sent back home by overseas Pakistanis are not being treated at par with similar certificates issued by the banks. This has made it almost impossible for more than half a dozen foreign exchange companies in operation to persuade overseas Pakistanis to send foreign currency back home through these companies.

That is also a reason for a big 34 per cent fall in remittances from the US and the UAE in the last two months. “We have taken up this issue with the government and will continue our efforts to ensure that this anomaly is removed,” said president of National Bank Syed Ali Raza whose bank owns NBP Exchange Company. “I am sure the exchange companies will soon be provided a level playing filed,” he said while talking to Dawn. A senior official in the ministry of finance also said the ministry would ensure that this is done. “The ministry does understand there is no difference between the money sent back home by overseas Pakistanis through banks and that coming in through exchange companies,” said the official.

Under the law tax authorities are not supposed to ask overseas Pakistanis sending foreign currency back home through banks to disclose their source of earning. Officials of exchange companies say the CBR must issue a notification to clarify that the same amnesty from disclosure of source of income would be available to those who send money back home through these companies. “We will not be able to get remittances unless this is done,” says head of a foreign exchange company.

A State Bank official told Dawn that the SBP has also taken up this issue with the government and it might be finalized soon.

Home remittances from the US and the UAE combined fell to $257m in July-August this year from $391 million in a year-ago period as hundiwalas or those involved in illegal transfer of money hit back after having been cornered by banks and foreign exchange companies. They took advantage of increasing gap between the official and open market price of the dollar due to currency smuggling by money changers and under-reporting of export of non- dollar currencies by some exchange companies. The dollar became dearer in the open market primarily due to over-invoicing by some exporters who were buying greenbacks from the local kerb market to make up for the shortfall in the stated value of their exports and the actual inflow — and thus qualify for higher rebates and refunds.

NBP President Syed Ali Raza said he did not view the fall in home remittances from the US and the UAE as unusual. A senior official of the ministry of finance contacted over telephone in Islamabad made a similar statement. But both admitted that the remittances would increase if exchange companies start handling foreign currency inflows from overseas Pakistanis. “It could be that Pakistanis in the US and the UAE are now sending money just to support their families and not for investment purposes,” said Syed Ali Raza explaining what could have lowered the remittances from these two countries.

The ministry of finance official said whereas the remittances from the US and the UAE have fallen by an apparently big margin “what is still important is that we are getting a monthly average of $300 million or so in remittances.”

Pakistan received $588.1m workers remittances in July- August this year down slightly from $591.5m, according to a SBP press release issued earlier this week. But the latest home remittances figures posted on the SBP website shows that the amount of $588.1 million also includes $10.7m encashment and payment of profits on foreign exchange bearer certificates and foreign currency bearer certificates. So in actual terms workers remittances totalled $577.4 million. The SBP figures posted on its website shows that in July-August 2002 workers remittances totalled $699.85 million including $5 million coming through encashment and profits on FEBC and FCBCs (and not $591.5 million as mentioned in SBP press release).

When an official of the central bank was asked to explain this he said the amount of $591.5 million mentioned in SBP press release as workers remittances in July-August 2002 was truly the workers remittances alone — i.e. the money sent back home by overseas Pakistanis. It did not include the foreign exchange received by the affectees of Kuwait-Iraq war of 1990s or the foreign exchange coming through Haj remittances. People in Saudi Arabia sometimes bear the Haj expenses of resident Pakistanis intending to perform Haj. This inflow of foreign currency is treated as Haj remittances. Even if this explanation of the SBP official is accepted, workers remittances in July-August this year show a fall of $14.1 million ($591.5 million minus $577.4 million) over the same period of 2002.