KARACHI: The State Bank of Pakistan (SBP) has asked authorised dealers (banks) to start processing applications for sugar exports.
The SBP issued a circular on Aug 11 that said the process will begin as per the instruction given by the Ministry of Commerce on July 2 for the export of 300,000 tonnes of sugar.
Sugar mills are not satisfied with the limit of 300,000 tonnes set by the Economic Coordination Committee of the cabinet. They claim there is a glut-like situation in the domestic market. They demand that the limit on the export volume of sugar should be enhanced. Sugar prices recently increased in the domestic market as some parts of the country suffered shortages of the commodity.
The SBP advised the authorised dealers to forward the requests of sugar mills to the director of the central bank’s Foreign Exchange Operations Department (FEOD) for approval.
Sugar exporters will have to provide irrevocable letters of credit or advance payment voucher, swift message and reporting schedule or credit advice.
“The FEOD will allocate sugar export quotas to sugar mills on a first-come-first-served basis,” said the circular.
The authorised dealers will ensure receipt of a minimum 15 per cent of total contract value as advance payment (evidenced by advance payment voucher, swift message and reporting schedule or credit advice) or obtain an irrevocable letter of credit from the buyer, said the SBP.
“All exports, including those destined for Afghanistan and Central Asian Republics, will also be subject to receipt of export proceeds by wire transfer through the banking channel,” it added.
The SBP circular made it clear that there will be no export subsidy or cash support for the export.
Published in Dawn, August 13th, 2017