SBP Unveils New Initiative to Streamline Import of Input Goods

In a significant move, the State Bank of Pakistan (SBP) has introduced an innovative "Export Facilitation Scheme" as an addition to the Customs Rules 2001. The latest scheme incorporates an International Toll Manufacturing (ITM) procedure, allowing the import of input goods without the necessity of foreign exchange remittance. The circular issued by SBP sheds light on the key features of this development.

International Toll Manufacturing involves a collaborative arrangement where a foreign principal supplies input goods to an exporter for the production of finished goods intended for subsequent export. To facilitate this, Pakistan Customs/WeBOC has developed a dedicated module for Export Facilitation Scheme transactions, encompassing both import and export activities under ITM.

To streamline the process, a specific checkbox labeled "EFS toll manufacturer" has been added to the GD type "Export Facilitation Scheme." Once the relevant formalities are completed, license holders can leverage the EFS ITM facility. The SBP has provided comprehensive instructions for Authorized Dealers (ADs) in this regard.

According to the outlined instructions, the import and export of goods under ITM are to be conducted through a single Authorized Dealer for reconciliation and reporting purposes. During the import phase, ADs are mandated to furnish a financial instrument (FI) on a 'remittance not involved from Pakistan' basis in PSW before filing 'EFS import GD.' This is a prerequisite for local importers-cum-exporters availing the Toll Manufacturing facility for importing raw materials or input goods from the foreign principal.

Upon export, ADs are required to submit an FI in PSW equivalent to the service charges/value added before filing 'EFS export GDs' under the Toll Manufacturing facility. These service charges will be received as foreign remittance from abroad. SBP emphasizes that ADs must submit a bank credit advice (BCA) against the respective FI in PSW, confirming the receipt/realization of service charges from abroad for the release of security submitted to Customs by the local importer-cum-exporter during the import stage.

To ensure transparency, ADs are also advised to report the realization of foreign exchange equivalent to the service charges to SBP on Form-R under the code '9236 – Processing fees on goods owned by others' in Schedule J/O-3 of ITRS. In cases of non-realization or delays in realizing export proceeds, ADs are instructed to follow existing procedures outlined in Paras 33 and 33A of Chapter 12 of FE Manual.

Furthermore, ADs are urged to uphold the highest standards of Know Your Customer (KYC) and Customer Due Diligence (CDD) for applicants, ensuring compliance with the EFS scheme parameters and all relevant rules and regulations, including the Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing, as amended from time to time.