KARACHI, May 11: Pakistani exporters of perishable items—mainly fruits and vegetable—have virtually become hostage in the hands of their foreign buyers because of State Bank of Pakistan’s decision to exclude banks from the system.
The system, according to a number of businessmen in local market, gives ample room of malpractice to the unscrupulous exporters in Pakistan. “The exclusion of banking system from the transaction means proceeds are being received through havala and hundi,” a leading exporter said who revealed that under invoicing is order of the day in fruits and vegetable exports.
Exporters are encouraged to send goods without a firm order causing over supply, a virtual dumping in the export market which brings down the prices. Losses are always suffered by the Pakistani exporter.
Under this system, the foreign buyer of Pakistani fruits and vegetables enjoys the benefit of getting direct delivery of the goods. The exporter is not supposed to send original documents through bank for payment.
The foreign buyer receives the good on presentation of documents at the port of his country. Once, the goods come in possession of the foreign buyer, he enjoys the discretion of telling his fruits and vegetable supplier in Pakistan of how much quantity of goods was stale and unfit for consumption. This gives him the leverage of deciding the price and amount of proceeds to remit.
In last four years there is a virtual cut throat competition among the fruits and vegetable exporters. In a bid to outdo each other, every exporter is offering all incentives and concessions to their buyers mostly in Far East—Malaysia, Indonesia—and Middle East mainly Dubai.
As a consequence, the volume of fruits and vegetable export is reported to have increased, but the value has remained stagnated around 100 million dollars a year. It shows a sharp drop in the average unit price of Pakistani fruits and vegetables.
The average unit price of vegetables and fruits in export was 28 cents/kg in 1998-99 which came down to 26 cents/kg in 99-00 and 25 cents during 00-01. Exporters say that the same trend of decline in average unit price is visible in the current fiscal.
Vegetables have been hit harder by this cut throat competition as average unit export price was 24 cents/kg in 98-99, which came down to 17 cents/kg in 99-00 and finally to 15 cents/kg in 00-01.
Masoom Akhtar, a leading citrus exporter has taken up this issue with the commerce minister and the State Bank of Pakistan to bring in line the export of perishable items with those of other items.
Trade circles recall that in eighties, the SBP on recommendation of the Commerce ministry allowed bill of lading for perishable goods to be made in the name of consignee rather than in the name of authorized dealer.
“This was done to facilitate quick clearance of goods on arrival at the port of destination for the benefit of consumer,” a trader recalled. He said that the Commerce Ministry at that time made this recommendation after late military ruler General Zia-ul-Haq had visited Malaysia and some other countries and instructed to push up marketing of Pakistani edible items in those countries.
Traders say that countries like China, Malaysia, Indonesia and India allow export of fresh fruits from their countries against letters of credit. “Pakistan may continue to allow export of fresh fruits and vegetables on the basis of documentation presentation, but the documents should be routed only through the bank and the facility of direct delivery of goods should be withdrawn in the new trade policy,” Masoom Akhtar suggested.
Masoom’s presentation on the fruits and vegetable export procedure is reported to be receiving attention of the commerce minister and the State Bank of Pakistan.