Traders ask SBP to stop sending notices for non-realisation of export proceeds
LAHORE-The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) regional chairman Adeeb Iqbal has appealed the State Bank of Pakistan to stop sending show cause notices to the exporters for not realising their exports’ proceeds due to global outbreak of COVID-19.
In a statement issued here on Monday, he observed that the show cause notices by the SBP have created a lot of resentment and unrest among the value-added textile exporters, who are already facing severe liquidity crunch owing to non-payment by the international buyers for indefinite period amidst post-corona worldwide economic slowdown.
The central bank has to make amendments in Foreign Exchange Regulations in the wake of the emerging circumstances due to global outbreak of COVID-19, allowing extension in the realization period beyond six months from the date of exports shipment, he demanded.
“We request the SBP governor to formalise new policies in consultations with the exporters, including PRGMEA, making new policies in this regard in view of the post-corona economic crunch when the foreign buyers have either held their payments or making partial payments,” he added.
Adeeb Iqbal said that presently, the exporters are not receiving regular payments from the clients abroad. Some buyers have stopped the whole payments while several are paying in instalments to Pakistani exporters due to worldwide slowdown in economic activity. And in this scenario, sending such show cause notices along with the threat of taking penal action by the government against its own exporters just for non-realization of their exports’ proceeds is very surprising and unfortunate, he said.
PRGMEA regional chief said that the apparel industry has the status of Pakistan’s top national industry, providing jobs to millions of workers directly or indirectly, earning billions of dollars precious foreign exchange for the national kitty. It is feared that thousands of SMEs might close down in next few months with downfall in the country’s exports and foreign exchange earnings, resulting in un-employment of hundreds of thousands of workers, as only textile sector earns 60 per cent of total exports in Pakistan, he said. He said the already businesses are limited, as most of the orders were cancelled or put on hold during the period of global pandemic. As a result, majority of industrial units were running at lower capacity, but still they continued to retain the workers on jobs with full wages. To keep the industry live major problem is cash flow and the government will have to step forward to support the export-oriented industry, he added. He also urged the State Bank of Pakistan to announce another incentive package to help those exporters who had avoided layoffs during corona lockdown period, directing the banks to provide refinancing at zero per cent to also SMEs. He said that these SBP had announced the additional incentives including relaxations in collateral requirements, reduction in end-user rate, reimbursement of wages, special accounts for employees to receive wages, borrowing from banks other than maintaining payrolls, simplification of application form for small and medium enterprises and bank’s exposure limits, but these directives were never implemented and no SME unit could avail these schemes.
Earlier in April 2020, the central bank had announced an incentive scheme entitled Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns, enabling provision of concessional credit for payroll finance to businesses but big industrial units could only get benefit of this scheme.