KARACHI, Nov 4: Exporters have asked the State Bank to make certain modifications in Export Refinance scheme to ensure more funds for the export trade presently on decline.

Leaders of several exporters associations have drawn attention of SBP Governor Dr Shamshad Akhtar to the fact that the cost of financing borne by value-added textile sector under the scheme has rendered exports uncompetitive in the world market.

Pakistan Apparel Forum chairman M Naqi Bari in a letter to the SBP said that under the scheme the commercial banks are required to provide 30 per cent of refinance, which they are reluctant to provide because of rising KIBOR rate.

Mr Bari suggested that the 100 per cent of the export refinance should be provided by the SBP, which will not only ensure funds for export trade but will also help commercial banks to improve their liquidity position.

The forum, which represents five leading exporters’ bodies of hosiery, readymade garments, home textile, knitwear and fashion apparel, also demanded cut in mark-up rate from 7.5 per cent to 4 per cent. The refinance on reduced rate should be given to the exporters, who succeed to double their exports within six months and meet their specified targets well in time.

Pakistan Bedwear Exporters Association (PBEA) chairman Shabir Ahmed said that exporters needed finance under Part-II of the export refinance scheme as they have to hold inventories for a longer period.

He said that after the culmination of textile quota regime since 2005, the situation changed suddenly in the world market and today “we are working in a buyers market and not in a seller’s one”.

Therefore, Mr Shabir said that the buyers had transferred all their financial and inventory cost to the suppliers (exporters). They have minimised their inventory by lifting stocks weekly, and also cut their warehousing by keeping their inventory with the suppliers.

The entire inventories of the buyers now have to be maintained by the exporters at a high cost, which is only possible with funds available under export refinance Part-II of the SBP scheme, he maintained.

Exports of all value-added textile goods, he said, are on decline and the commercial banks are reluctant to provide funds under the refinance scheme of the SBP. He urged the SBP to take back the entire funding for the export refinance as was the practice in the past.

The PBEA chief said that Part-I of the refinance scheme may be applicable only to occasional or seasonal exports linked with firm letters of credit. But value-added textile export, which is a twelve months continuous processing, manufacturing, marketing and shipping process, needs uninterrupted and firm funding from the SBP.

He said that if there was any misuse of the export refinance scheme under Part-II, it should be plugged and the entire export trade should not be penalised for not fault of their. After all, he said, exporters pay cost for getting funds under export refinance scheme of the SBP.