SBP urged to rescue textile industry by removing restrictions on LCs

KARACHI: Yarn merchants have urged the State Bank of Pakistan (SBP) to remove restrictions on opening of letters of credit (LCs) to rescue the textile industry.

In a letter to SBP Governor Jameel Ahmed, Pakistan Yarn Merchants Association (PYMA) Senior Vice Chairman Sohail Nisar said that the polyester filament yarn (5402.4700), polyester textured yarn (5402.3300), pre-oriented yarn (5402.4600), polyester spun yarn (5509.2100 and 5509.5100), polyester sewing thread (5402.6200), viscose filament yarn (5403.3100), nylon filament yarn (5402.4500), nylon textured stretch yarn (5402.3100 and 5402.3200) were the basic raw materials of textile and without which the manufacturing segment cannot operate.

“There were numerous specifications within these HS codes that were either not domestically manufactured or not produced in significantly large quantities to meet the domestic demand. Consequently, the only way to fulfil the requirement of the raw materials of downstream users is through imports,” it said.

The letter also said that the raw materials covered in the abovementioned HS codes were not only used for the production of domestic goods but also in the export sector, which cannot fully finance itself; therefore, the PYMA members were the ones who facilitate this manufacturing segment.

In this regard, the PYMA members were facing undue delays from commercial banks in the opening of new letters of credits.

Further, the banks were also delaying the processing of shipping documents for long periods, resulting in high detention and demurrage charges for the PYMA members, while also creating a shortage of the raw materials in the local market.

Nisar requested the SBP governor to treat the abovementioned items as essential goods and to instruct the commercial banks to facilitate all the transactions related to these HS codes on an expedited basis.

In this matter, the PYMA members will highly appreciate the central bank’s cooperation.

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