KARACHI (August 16 2003) : With a view to further liberalise the foreign exchange regime, the State Bank has made certain amendments and additions in the Foreign Exchange Manual (Eighth Edition-2002) after incorporation of the facilities extended to importers and exporters under Trade Policy 2003-04.
The State Bank issued a circular on Friday saying that the Ircoterms 2000 introduced by ICC have been adopted and the limit for retention of export proceeds in Special Foreign Currency has been enhanced to 10 percent.
The limit on imports, without opening letters of credit, by actual/end users (USD 5,000) has been abolished and the limit on imports, without opening letters of credit, by industrial users (USD 30,000) has been abolished.
Accordingly, following amendments have been made in respective chapters of FE Manual (8th Edition, 2002):
The para 1 of Chapter XII of FE Manual (8th Edition, 2002) may be re-numbered. as 1(i) and following para may be added as para 1(ii):
“The Incoterms introduced by ICC for: exports to provide a set of international rules to avoid uncertainty of different interpretation of the' most commonly used trade terms in foreign trade may be adopted.”
Likewise, existing para 5 of Chapter XIII of SE Manual (8th Edition, 2002) may be replaced by the following para:
“The Incoterms introduced by ICC for imports to provide a set of international rules to avoid uncertainty of different interpretation of the most commonly used trade terms in foreign trade may be adopted. However, prior permission of the State Bank shall be obtained for import of sugar and food grains (cereals) en CFR free out basis.”
Para 32 (1) of Chapter XII FE Manual (8th Edition 2002) may be replaced by the following paragraph:
“Authorised Dealers are permitted to allow payment of commission/brokerage/discount due to foreign importers/or agents by exporters in Pakistan at the following rates:
Maximum rate of Commission etc are (a) Books, journals and magazines Up to 33 percent, (b) Engineering goods (Electrical and Non-electrical) Up to 10 percent ; (c) Sports goods, surgical instruments, cutlery, leather goods, ready-made garments and other textile made-ups, carpets and plastic manufactures Up to 10 percent; (d) Cotton Up to 2 percent and (e)All other goods except cement Up to 10 percent.
To further facilitate the exporters to utilise the funds retained in the special foreign currency accounts (opened for retention of commission from export proceeds under paras 32(iii) and 33 of Chapter XII), it has been decided to allow the exporters to utilise these funds for any other legitimate purpose including purposes as stated in para 32(iii) of Chapter XII. Accordingly, para 32(iii) may be replaced by the following para:
'In cases where the exporter is not required to pay commission or where he is required to pay an amount less than the maximum permissible limits for commission, such amounts of commission/differential not exceeding the limits as stated in paras 32(i) and 33 of the FOB value of goods realised and net foreign exchange earnings respectively can be retained in foreign currency account with Authorised Dealers in Pakistan.
The funds held in such foreign currency accounts can be used by the exporters for promotional publicity, collection of commercial intelligence, purchase of designs/patterns, market studies, bona fide export claims, shortfall in realisation of export proceeds and any other legitimate purpose, without any approval from the State Bank.
The foreign currency accounts so opened will be fed exclusively with the maximum allowable/differential for commission from export proceeds/net foreign exchange earnings and no other deposits, whatsoever the nature, will be accepted for credit to such foreign currency accounts.
The facility is also available where export proceeds are realised under ACU Arrangement.”
Sub paragraph (I) of para 17 of Chapter XIII of Foreign Exchange Annual (8th Edition, 2002) has been amended as under:
“In terms of the Import Policy, importers are permitted to make imports without opening of letters of credit or registering the indents/pro forma invoices or orders with the Authorised Dealers, and make remittances there against.
The importers are free to make remittances in respect of such imports either in advance or after receipt of goods in Pakistan.
The remittances can be made through demand draft/telegraphic transfer/mail transfer, In such cases where the importers make advance payments for such imports, they will be required to furnish to Authorised Dealers at the time of making a request for remittance, an undertaking to produce invoice and bills of lading/airway bill within the period of four months from the date of advance payment.
The Authorised Dealers will pursue the matter with the importers and report those cases to the area offices of Exchange Policy Department where the requisite documents are not produced within the prescribed time limit.
In cases where remittances are made after receipt of goods in Pakistan, the importers can approach the Authorised Dealers for remittances on the basis of invoices and original bills of lading or airway bill.
The Authorised Dealers have general permission to make advance payments or arrange remittances against the prescribed documents on receipt of goods in Pakistan.”
Moreover, para 14 of Chapter XVI of FEM has also been replaced by the following:
Authorised Dealers may approve applications on Form 'M' in connection with import of any importable item or items by actual users on production of the following documents:
Pro forma invoice/debit note in original.
1) Declaration of the applicant that the amounts remitted by him during the current fiscal year including the amount of the present application.
iii) Declaration that the item/items so imported are for his personal use only.
Sub paragraph (ii) of para 17 of Chapter XIII of FEM (Eighth Edition) 2002 should be replaced by the following para:
At the request of industrial establishments as importers, Authorised Dealers may issue foreign currency demand draft for import of spare parts/machinery, without opening of letter of credit, provided such imports are made by air or by courier.
Authorised Dealers will maintain a record of such drafts issued by them.
They will also obtain Exchange Control copy of Bill of Entry and evidence to the effect that the import was made by air/courier.
These records will be retained till the next inspection of the concerned bank branch by State Bank's Inspectors”.