KARACHI: In meeting with Ministry of Commerce to deliberate upon banking issues while transacting with Afghanistan despite relaxation in OFAC restriction, it was mentioned that still commercial banks and corresponding banks are not supporting the payments, leading to significant losses to businesses while affecting exports of Pakistan mainly.
Keeping foreign exchange dearth and stagnant banking structure at Afghanistan, it is but evident that transactions via land route will be processed more either in rupee to rupee trade or barter (once mechanism is in place).
The limitation in Export Policy Order on Sales Tax and Duty Drawback once transactions are conducted via land route is becoming major obstacle as mainly highlighted by Pharmaceutical and Cement Sectors to PAJCCI, as a result exports of which has declined in these sectors creating tilted Balance of Trade. It was therefore suggested that in presence of effective WeBoC system at each border crossing whereas banking system would not be supportive under current regime and land route transactions will enhance hence waiver in context of land routes whereby Sales Tax refund and Duty Drawback may be given without any further requirements.
Keeping in view reluctance of banking sector and policies of State Bank of Pakistan in view, it was urged that either we should revert back to previous system of Cash on Counter facility or consider further extension of waiver of EIF and E-Form till any stable process is in place. PAJCCI proposed at least extension be done till 6 months so that new system or alternative mechanism may be deliberated aptly during that time.
In the meanwhile, for enhancement in Pkr trading, Ministry asked to suggest categories where export proceeds are more than imports or support domestic manufacturing, as these can be considered for addition. Afghan side nominated committee for barter trade whereby PAJCCI’s Co-Chairman Khan Jan Alokozai is leading the committee, on the same lines it was unanimously agreed to nominate PAJCCI as the lead chamber from Pakistan whereby Zubair Motiwala will lead the private sector committee.
Motiwala specified that once this committee will be notified PAJCCI will hold grand meeting to deliberate barter trade mechanism with all relevant chambers and associations so as to develop a system incorporating wider concerns. It will also hold a joint meeting across the border for finalizing the ToRs
