It has been decided by the Government to allow private parties in Pakistan to enter into Commodity Exchange Arrangements (CEA) with foreign parties (including undertakings controlled by foreign governments and public sector agencies but excluding foreign governments). The Ministry of Commerce will prescribe, from time to time, a negative list of commodities which cannot be exported under this scheme.
Applications for conducting transactions through Private Commodity Exchange Arrangement may be submitted to the Foreign Exchange Department (Policy Division, Central Directorate, Karachi) through banks authorised to deal in foreign exchange, for approval alongwith copies of Export / Import Registration Certificates, the past performance showing the value of exports made by the applicant in each year during the preceding three financial years duly certified by their bankers, and the recommendation of the bank whether in view of its past dealings, the party may be given permission to conduct business through private Commodity Exchange Arrangement. Exporters having less than three continuous years export performance would not be eligible. A copy of the agreement entered into between the party in Pakistan and the counter-party in the concerned country abroad will also be required to be submitted. In the case of both exports and imports by the party in Pakistan, the normal laws, regulations, rules governing such export / import will continue to be applicable barring the exemptions granted through this Circular. The approvals will be given by the State Bank in the format attached with this Circular as "Annexure A".
The party permitted to undertake business transactions under such arrangement will be exempted from the existing requirement of drawing the document of title to export cargo to the order of an Authorised Dealer in case of export, and it can also receive the import documents from the counter-party direct. Authorised Dealers shall also be required to certify Form 'E' in the modified form as indicated in the Annexure A. The parties will ensure that imports at least equal to the value of exports are made by them within four months from the date of export, failing which the value of exports should be repatriated in convertible foreign currency within the prescribed period of four months from the date of export. However, if the imports exceed exports, no remittance in convertible currency would be allowed for settlement of the adverse balance.
The party will nominate an Authorised Dealer to maintain proforma account in its name for the purpose of accounting the trade transactions. Separate proforma account will be maintained in respect of each Commodity Exchange Arrangement. The concerned Authorised Dealer will be required to submit a monthly statement in duplicate in the enclosed form (Annexure 'B') in respect of each CEA showing:-
the value of goods exported, alongwith the copies of invoice and Triplicate 'E' Forms;
the value of goods imported from abroad alongwith copies of the invoices, non-negotiable copies of bills of lading and photocopies of triplicate copy of Customs Bills of Entry evidencing import of the goods into the country;
the opening and closing balances.
While forwarding the above statements to State Bank of Pakistan, the Authorised Dealer will code the items exported / imported.
It is clarified that no forward exchange facility either for export or import transactions shall be admissible. Export under this scheme is not negligible for the purpose of Export Refinancing Scheme.
The withholding tax leviable on the export as per Notifications issued by the Central Board of Revenue from time to time will be recovered by the Authorised Dealers at the time of passing the entry in the account in respect of exports from Pakistan.
Please bring the above to the notice of your constituents.
