Inside Financial Markets
Govt set to allow export of 14 items to Kabul - Inside Financial Markets

Govt set to allow export of 14 items to Kabul

– Business Recorder

ISLAMABAD: The government is all set to allow export of those 14 items whose major raw materials/components are imported in Pak rupees and remove 45 Regulatory Duty (RD) on import of pine nut (Chilghoza) from Afghanistan as a goodwill gesture, which was opposed by the State Bank of Pakistan (SBP), well informed sources told Business Recorder.

The Commerce Ministry, in its summary to the Prime Minister, who is also Minister In Charge Commerce, stated that in order to facilitate the export of perishable goods to Afghanistan, export of fruits, vegetables, dairy products and meat are allowed against Pakistani currency on filing of regular shipping bills without the requirement of E-form under Export Policy Order.

Keeping in view the precarious situation owing to freezing of Afghan funds abroad, Ministry of Commerce had proposed adding rice and pharmaceuticals to the list of items allowed to be exported to Afghanistan against Pakistan currency. The proposal was supported by the FBR, and a summary was placed before the ECC in this regard, but was deferred due to reservations of the SBP.

Due to the situation in Afghanistan and absence of any formal banking infrastructure in the country, exports from Pakistan to Afghanistan have declined from $ 517.24 million during July-December FY 2020-21 to S 328.25 million during same time period of FY 2021-22.

In an inter-ministerial meeting on Foreign Currency Reserves held on January 4, 2022 Finance Minister had desired Ministry of Commerce to examine the pros and cons of Afghan trade in Pak Rupees.

Ministry of Commerce held a meeting on with FBR and SBP to deliberate on the matter. FBR supported the proposal of allowing exports in Pak Rupees, while SBP opposed the proposal.

In this respect, one option is to allow trade with Afghanistan in Pak Rupee (PKR) without specification of items. However, it would not be appropriate to allow export of those items whose major raw materials/components are imported as this is likely to adversely affect the current account deficit.

A more appropriate option would be to allow export of those items to Afghanistan against Pakistan currency which constitute a significant part of exports to Afghanistan and are not likely to affect Pakistan’s import bill. Besides, the items already allowed for export against PKR under EPO, 2020 form a major component of exports to Afghanistan, covering over 60% of overall exports.

The proposed list is as follows: (i) cereal goats, meal, pellets etc; (ii) animal & vegetable fats and oil; (iii) malt extracts, food preparation ;(iv) food preparations n.e.s; (v) organic chemicals;(vi) essential oils, perfumes; (vii) soaps; (viii) plastic and rubber; (ix) iron and steel; b(x) aluminum and products; (xi) wooden/fiberboard and plywood; (xii) paper and paperboard; (xiii) machinery/electronics and; (xiv) tanning, dyeing extracts and pigments.

The overall export of these items was $ 186.48 million during July-December 2020 whereas their share in overall export to Afghanistan was $ 36.6 million in the comparable period last year.

Syed Zaki Hussain

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