PIAF asks govt to support industry for demand-supply balance amid pandemic

By: News Desk      Published: 01:42 AM, 29 Mar, 2020
PIAF asks govt to support industry for demand-supply balance amid pandemic
PIAF Chairman Mian Nauman Kabir chairs a meeting.–File photo

The Pakistan Industrial and Traders Associations Front has appreciated the State Bank of Pakistan for announcing new measures to help boost exports, asking the central bank to also take steps to improve the ease of doing business environment for local industry, giving them more confidence for smooth production amidst slowdown triggered by the coronavirus fear.

PIAF Chairman Mian Nauman Kabir, in a joint statement with Senior Vice Chairman Nasir Hameed and Vice Chairman Javed Iqbal in Lahore on Saturday, said that it is right step of the central bank for a further cut of 150 basis points in the policy rate on March 24 after reducing it by 75 basis points earlier on March 17. However, there is also need for announcing some incentives for the local industry, as steps for exporters have not benefitted in present scenario due to cancellation of orders by the foreign buyers. At this time the government should support the domestic industry so that demand and supply balance could remain intact in the country.

Mian Nauman Kabir said that central banks all over the world are using various kinds of instruments to avoid recessionary tendencies and stimulate growth in their economies because of the spread of the devastating coronavirus.

There is no doubt that the new measures have been taken because Pakistani exporters are facing problems due to declining demand for their products in the international market and difficulties in executing existing orders due to rapid spread of coronavirus in the global markets. These measures will prevent liquidity problems and exporters will continue their operations, he added.

The PIAF chairman said that facilitation measures cover almost all aspects of export business and include relaxation in matching amounts under EFS, extension in time period to ship goods, relaxation in conditions for LTFF, realization of export proceeds and extension in the time period for import of goods.

PIAF Senior Vice Chairman Nasir Hameed said that realizing that Temporary Economic Refinance Facility was too little under the circumstances, the State Bank announced another relief package to support exporters affected by the loss of demand due to the COVID-19 threat and avoid liquidity crisis in the export sector. The SBP had already offered Export Finance Scheme and Long-Term Financing Facility to banks worth Rs660 billion for extending cheap credit lines to exporters.

Nasir Hameed observed that the latest announcement was largely meant to ease the conditions under these schemes. According to the latest circular, exporters availing the EFS could now export one-and-a-half times of the borrowed funds, down from two times as was previously the case. Time period to meet performance was also extended from end of June to December 31, 2020. Exporters benefiting from EFS could now also ship their goods within 12 months of availing credit, from the previous half year timeframe.

PIAF Vice Chairman Javed Iqbal said that with a view to avail credit through LTFF, SBP has also reduced the eligibility condition for exporters to 40 percent or dollar 4 million of total sales from all the borrowings between Jan-Sept, 2020 from 50 percent or dollar 5 million, which is a good step. Moreover, in order to facilitate importers, time period for import of goods into Pakistan against advance payment has been extended to 210 days from existing requirement of 120 days, which will also benefit the industry. The SBP has also assured the exporters that it stands ready to take additional measures as the situation related to COVID-19 and its impact on the economy evolves.

The PIAF leadership said that the assurance by the SBP will give the exporters more confidence to execute their orders and earn the much-needed foreign exchange for their country.