Press Release

LCCI wants proper mechanism for chapter 84-85

The Lahore Chamber of Commerce & Industry has expressed its profound concern over the issue of approval of Import Documents under chapter 84-85 and urged the Federal Finance Minister, Governor State Bank of Pakistan and Federal Commerce Minister to take a serious note of this problem.

“A proper mechanism should be devised in order to make chapter 84-85 business friendly”, LCCI President Kashif Anwar, Senior Vice President Ch. Zafar Mahmood and Vice President Adnan Khalid Butt said in a statement. They said that many of LCCI esteemed member companies have contacted us regarding difficulties they are facing with imports as a result of the State Bank of Pakistan's recently issued EDP Circulars No. 09 and No. 11, which demand prior approval from the Foreign Exchange Operations Department (FEOD) before initiating transactions for imported goods (Chapter 84 and 85).

They said that as a result, there is a long delay in the release of shipping documents from the commercial banks, leading to delays in the processing of cargo at the port, for which importers have to pay exorbitant demurrage and detention charges, which add to their landed cost.

The LCCI office-bearers said that the shipping lines are charging container rent, which ranges from US$ 80 to US$ 150 per day, including holidays, if a cargo is not released within the 7 or 14 free days, as per arrangement.

They said that when the shipping lines transfer the money to their head offices abroad, there is a considerable foreign exchange loss for the nation, and it raises the cost of doing business. The State Bank of Pakistan's current system, which includes the portal procedure for approval of shipping documents, is delaying the release process of the shipping documents, resulting in additional demurrages.

“We are aware that the Government is experiencing a liquidity crisis due to   shortage of dollars caused by the exponential growth in the current account and trade deficits”, they said and recommended some action in the overall benefit of the business community.

The LCCI office-bearers said that in the case of Documents Presentation (DP), as soon as Bill of Lading (B/L) is issued by the shipping line at the port of loading, importers should be allowed to submit their case for approval against copy B/L to SBP through their banks. This will help to get approval timely and get the documents before the consignment arrives at port.

They said that as the Letter of Credit (L/C) is backed by the guarantee from the State Bank, no prior approval be required. They said that in case the shipping documents are received on a deferred payment, DA basis, same should be released by the commercial banks without approval immediately. When the maturity time is reached, if needed, approval may be applied by the bank to the SBP. An In-bonding facility should be made available to the importing companies, regardless of the approval for the consignments in order to avoid extra port and detention charges.

The LCCI office-bearers said that if the imports are not made competitive, this will pave the way for smuggling, which will again be a huge loss to the economy, as in the case of imports there is a percentage of custom duties and taxes which are deposited to the exchequer.

They said that under the current conditions, the business community supports the government, and recommends that for all the pending approvals, documents be released immediately by the commercial banks.

They said that in the wider interest of the business community and to promote the ease of doing business in the country, LCCI hope that due consideration will be given to its proposals.