KARACHI, April 2: The process of opening letters of credit (LCs) by importers for some essential items like pulses, milk powder, tea, spices, etc., has slowed down by 20-30 per cent as a result of cautious approach adopted by the importers in placing fresh orders owing to war jitters.

However, in other items like industrial raw material, oil and machinery, etc., — no negative impact has been seen in opening of LCs after the US attack on Iraq.

A senior official at the Muslim Commercial Bank, Jodia Bazar branch, said the bank had witnessed a downfall in the process of opening LCs by the importers of edible oil, pulses, tea, spices, etc.

“There is an average 25 per cent drop in the process at the Jodia Bazar branch after the US invasion of Iraq,” the official said, adding at present around five to eight LCs are being opened daily as compared to 10 to 12 in normal days.

“Importers are a bit hesitant these days and they feel some problem in making decision whether to import more or watch the situation,” the bank official said.

Chief manager, Habib Bank Limited, Jodia Bazar branch, Khair Mohammad, said his branch was experiencing a decline of 20 to 25 per cent in the process of opening LCs these days.

“Traders are opening around nine LCs a day currently as compared to 12 a day prior to the US attack on Iraq,” he said referring to imports of pulses, spices and milk powder.

However, senior executives of the leading banks have ruled impact of war on the LCs opening, both by importers and other traders.

Assistant vice-president and manager import, Habib Bank Limited, Corporate Centre, Nayyar Abbas Naqvi, said the war in the region had not impacted negatively on daily opening of LCs by the importers and even by the industrialists.

“Around 20-30 LCs are being opened daily in his branch these days for oil, raw material and machinery imports. There may be some slowdown in specific edible items, but so far imports are being undertaken at a swift pace,” he said.

He said his corporate centre had processed around Rs7 billion of import document in March alone.

A spokesman for the MCB also ruled out any adverse impact of the war on the opening of LCs by the importers. However, some bank executives said importers pulses, spices and milk powder were aware that the existing stocks of these items were enough to meet the consumption of two months, and it was better to adopt a lukewarm approach towards the imports till the war went on.

A palm oil importer said the placement of fresh orders had partially come down owing to higher imports of edible oil during March 1-25 to 70,255 tons as compared to 37,740 tons in the same period of February. There are now ample stocks of 80,000-100,000 tons, and as a result imports are likely to remain thin. Pakistan imports 1.3 million tons of edible oil mainly from Malaysia to meet the annual demand of 1.9 million tons.

Chairman standing committee on milk powder of the Pakistan Commodity Traders Association (PCTA), Abdul Rahim Janoo said importers of milk powder had virtually stopped placing fresh orders and they were thinking of importing the commodity after the war.

“Market will be hit by shortage of milk powder in case war drags on,” he said, adding Pakistan imports 6,000 to 8,000 tons every year from Sweden, Ireland, Holland and Poland.

The Karachi Wholesale Grocers Association (KWGA) spokesman said pulses importers had adopted a wait-and-see formula in opening LCs in the wake of long war. Wholesale markets are quite these days owing to dull session in selling and buying.

Around nine items that include milk powder, tea, spices, pulses, sugar, edible oil, dry fruits and wheat unmilled cost around one billion dollars in annual import account of food group, out of total import bill of $10 billion.