KARACHI, Nov 25: Exporters have taken strong exception to State Bank’s decision to only allow Research and Development (R&D) support for shipments made between June 26 and 30, 2008.

The fixation of shipment date by the State Bank (Circular No FEOD/44270/DIR-2008 dated November 22, 2008) has created an ambiguity because this would mean that those cases of shipment made prior to June 25, and their proceeds realised after July 1, 2008, would not be eligible to get the R&D support, they observed.

Pakistan Readymade Garments Manufacturers and Exporters Association chairman Dawood Usman Jakhura said that the operative SRO (No 437 dated May 18, 2005) allows R&D to all shipments made up to June 30, 2008.

These shipments, he said, could get the support of R&D within 90 days of realisation of export proceeds.

However, the SBP’s circular of Nov 22, 2008, has created serious ambiguity by barring cases of shipments made prior to June 25, 2008, and their proceeds received after July 1, 2008.

Pakistan Apparel Forum (PAF) chairman M Naqi Bari said that the SBP circular should be amended immediately and all shipments made prior to June 25, as well as shipments made during June 26 to 30, 2008, be made eligible for R&D support as per the SRO (No 437).

Since R&D claims pertaining to shipments made on or before June 25, 2008, were to be submitted within 90 days of the date of realisation of export proceeds, these cases, he said, must be accommodated in the circular.

Shaikh Manzar Alam, former chairman of Korangi Association of Trade and Industry (KATI), said that the instructions issued by SBP to banks restricting them to accept claims only in respect of shipments made during June 26 to 30, 2008, are contrary to approved provisions of the relevant SROs and have created panic and harassment amongst exporters.

He said apparel and home textile industry was already passing through its worst period of crisis as they are over-burdened due to multiple factors of input costs, such as raw material, chemicals and dyes, high power and gas tariffs and mark-up rates.

The SBP circular of Nov 22, 2008, is carrying a lot of other deficiencies, particularly when it says that claims would be filed by exporters to banks (authorised dealers) within 30 days following the realisation of export proceeds.

Factually, exporters said that realisation of export proceeds normally takes 120 days, but the SBP has fixed 30 days in its Nov 22 circular which is not justified.

Furthermore, the State Bank has made no commitment towards payment of the R&D support and instead suggested it would only be disbursed once budgetary issues are finalised in consultation with the Ministry of Finance, they added.