LAHORE: The Ministry of Finance, together with the Ministry of Commerce and the State Bank of Pakistan (SBP), is working to establish Export and Import (Exim) Bank in the country, which is set to start operations in 2020.
The bank will assist export and import of unconventional goods to many countries of the world with which Pakistan does not have regular trade relations. For the purpose, the Ministry of Finance has constituted a high-level committee, which is currently drawing up a legal and regulatory model. The State Bank will regulate the new bank.
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Lahore Chamber of Commerce and Industry (LCCI) former president Mian Anjum Iftikhar told The Express Tribune that the establishment of Exim Bank would greatly benefit export sector of the country. “The government should launch this project as soon as possible and a regional study should also be undertaken by the SBP to focus more on promoting exports,” he said.
The idea of setting up the bank was floated in 2015, and in 2017, the central bank conducted a survey to study the legal frameworks under which similar banks were running across the globe and see how the operations were conducted. These included banks in Canada, Germany, Malaysia, Turkey, Denmark, India and the United States.
Last year, a consultant of the Asian Development Bank (ADB) and a local consultant were taken on board tasked with making recommendations for the services to be provided by the bank.
Vacancies for the chief executive officer of the bank, the federal bank officer and a permanent bank president have already been advertised by the central bank’s Lahore office. However, no suitable candidate has been appointed yet. The ADB has provided $500,000 for preparing the bank’s legal framework under which the business plan, overall setup and the bank’s working process will be decided.
Initially, the bank will facilitate small and medium enterprises (SMEs) before extending its operations to other business areas.
According to sources in the Ministry of Finance, besides providing trade financing and insurance facility to the exporters, Exim Bank will also offer re-financing facility while following the central bank’s model.
The head office of Exim Bank will be established in the SBP Lahore building while the bank’s regional offices will be set up in eight cities, including Sialkot, Karachi, Faisalabad and Multan.
The Ministry of Finance has allocated Rs10 billion for the project and since the bank has not started its operations yet, investment is being made through treasury bills – an investment instrument issued by the government of Pakistan and sold through the State Bank via fortnightly auctions.
According to the Ministry of Finance, soon after the bank starts its operations, the regulatory authority will monitor its working and will also help enhance its assets so that the bank becomes financially stable and plays a better role in increasing the country’s exports. The government has voiced hope that the bank will provide critical support for Pakistani exporters, who will enjoy better facilities and will also be able to conduct business in a risk-free environment.
Citing example of the United States, the former LCCI official added that Washington had imposed tariffs on $300 billion worth of Chinese export goods, therefore, Pakistani exporters could immensely benefit from the situation.
“[Even though the situation is ripe for Pakistani exporters], in order to achieve the goal, the Ministry of Finance needs to do more homework.”
When contacted, the SBP spokesperson said work on Exim Bank was under progress. However, the Ministry of Finance did not respond to questions about the bank.
Published in The Express Tribune, October 4th, 2019.