KARACHI: The State Bank of Pakistan (SBP) on Thursday announced more facilities for exporters regarding the import of inputs required for finished products without any outflow of foreign exchange.
In a circular, the SBP said a procedure of International Toll Manufacturing (ITM) within the Export Facilitation Scheme (EFS) has been rolled out for the import of input goods directly or indirectly from foreign principals without involving any remittance of foreign exchange subject to the terms and conditions mentioned therein.
International Toll Manufacturing is an arrangement wherein a foreign principal provides input goods to an exporter to produce finished goods for subsequent export.
In this regard, a module has been developed by Pakistan Customs to facilitate import-cum-export transactions under ITM. A checkbox “EFS toll manufacturer” has been added in EFS.
No remittance of foreign exchange is involved in new procedure
After completion of relevant formalities, the licence holder can avail ITM facility under the EFS.
The central bank has issued instructions to banks to implement the new directions.
The import and export of goods under ITM will be undertaken through a single authorised dealer (bank) for reconciliation and reporting purposes, said the SBP.
At the time of import, banks will be required to provide a financial instrument (FI) on a ‘remittance not involved from Pakistan’ basis before the filing of EFS import GD (goods declared) availing ITM facility by the local importer-cum-exporter, for import of raw material or input goods from the principal abroad.
Goods declaration
At the time of export, banks will provide FI in PSW (Pakistan Single Window) equivalent to the service charges or value added, before filing of EFS export GDs availing ITM facility by the local importer-cum-exporter. These ‘service charges’ will be received as foreign remittances from abroad.
The banks will submit bank credit advice (BCA) against respective FI in PSW confirming receipt or realisation of service charges from abroad for release of security submitted to Customs by local importer-cum-exporter at the import stage.
Banks have been advised to report realisation of foreign exchange equivalent to the service charges [processing fees on goods owned by others], as per the contract, to the SBP.
In case of non-realisation or delay in realisation of export proceeds, banks will report such cases as overdue as per the existing procedures.
The banks will continue to perform the KYC [know your customer] of the applicants and ensure compliance with the EFS parameters and all other applicable rules and regulations including the Framework for Managing Risks of Trade-Based Money Laundering and Terrorist Financing, as amended from time to time.
Published in Dawn, December 29th, 2023
Dear visitor, the comments section is undergoing an overhaul and will return soon.