Industry slams finance ministry for blocking letter of credit

Industry slams finance ministry for blocking letter of credit

KARACHI: The industry has strongly criticized the ministry of finance for directing banks not to open letters of credit for essential machinery, equipment and spare parts.

“Pakistan’s industrial sector is gradually heading towards doldrums because of the adamant attitude of Ministries of Finance and Commerce to block banks from opening Letters of Credit or remitting advance payments for imports of essential machinery, equipment and spare parts,” this was stated on Tuesday in a press statement by Ismail Suttar, President Employer’s Federation of Pakistan.

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Ismail Suttar further said that such blanket refusal under HS 84 and 85, which are for imports of machinery, spare parts, electrical and electronic equipment, vehicle CBUs and CKDs, and other essential items, is detrimental to the functioning of any industry, especially when a particular item is not manufactured in Pakistan.

EFP, which is the apex body of industries, is daily receiving frantic messages from member companies who are unable to maintain their production or adhere to delivery schedules. Moreover, a decrease in production eventually increases the cost of the product.

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EFP President added that the industrialists fully understand the compulsions under which this embargo has been instituted but the government has to be pragmatic in its policies and must take cognizance of the ground realities. He advised the Ministers of Finance and Commerce to take private sector into confidence regarding the time frame of this embargo.

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Ismail Suttar also said that EFP has information that over 6,000 applications are pending before the SBP and this figure is not only mind-boggling but also a manifestation of the economic crisis faced by the country. The policy of refusal is negatively impacting on exports as well as affecting industries that are playing a prominent role in import substitution.

He added that the recent catastrophic floods have further compounded the already dire straits through which the industries are facing. He said his message is quite clear. Save industries before they close down and retrench workers thus creating a major social crisis.

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