The trade policy of Pakistan has been liberalised and the foreign exchange
control system has been dismantled. Most of the
products have been removed from the negative and restricted lists and various
facilities have been provided to the exporters
including a better system of duty drawbacks, bonded warehousing, establishment
of export processing zones and introduction
of export processing unit schemes.
The Export Promotion Bureau has been established on a new pattern to help the exporters in an effective way.
Resident and non-resident Pakistanis have been allowed to hold foreign exchange in the external accounts.
Foreign Currency Bearer Certificates have been introduced. These certificates
carry a rate of interest one quarter per cent
higher than LIBOR.
The government has largely de-regulated, de-controlled and simplified the import
procedures. Now import of all free
importable items (only 80 categories are banned for import of religious, national
security, health, and safety considerations)
have been allowed, without going through any bureaucratic procedure. Moreover
it is allowed to open Letters of Credits, with
authorised foreign exchange dealers/banks without prior government approval.
With a view to encouraging exports, Pakistan provides duty-free status to the
exporters, export financing and rebates in income
tax on export earnings. Duty-free status is ensured to the exporters through
four schemes, viz., Standardised Rebates, Bonded
Warehousing, Export Processing Zones, and Export Processing Units.
In order to ensure adequate supply of credit to small and medium exporters,
a scheme of Export Credit Guarantee has been
introduced. The capital base of the scheme has been increased from Rs. 60 million
to Rs. 130 million which will be sufficient to
extend insurance cover to loans amounting to Rs. 2.6 billion. The scheme will
function on the basis of one window operation
and the exporters will be provided both the insurance cover and loan at the
designated bank branches.
Pakistan provides credit to exporters at 6 per cent for a period of 180 days.
The concessionary export financing is extended to
almost all the exports. However, the period of concessionary export financing
for export of engineering goods has been fixed at
365 days.