Exporters of goods and services, including IT-based services, are allowedto retain a certain portion of their export proceeds in their SpecialForeign Currency Accounts. The fund from these accounts, however, could beutilized for specified purposes only. Over time the types of payments thatexporters need to make have increased as exports are becoming morediversified.
In order to facilitate the exporters, the State Bank of Pakistan (SBP) hasnow broadened the purposes for which the funds retained in these SpecialForeign Currency Accounts (SFCAs)can be utilized. Banks are allowed to makepayments from the accounts for a number of new purposes in addition toexisting ones. However, there is no change in the percentage of exportproceeds allowed to exporters for retention in these accounts.
Exporters shall be able to use SFCAs to make payments abroad for a numberof additional purposes including the advertisement, promotion, marketing,brand building, etc. abroad; subscription fee for participation in foreignexhibitions & fairs; payment for foreign consultant’s fee; travel expensesabroad; warehousing services, insurance expenses and shelf space expensesaboard; lab testing charges; audit/inspection/certification charges;logistics charges; refund of advance payment received against goods orservices; payments for registration of patents, copyrights, drugregistration, license fee, etc.
Moreover, payment for the acquisition of digital services from abroad,operational expenses of liaison/ marketing/ representative offices abroad,etc., and investment in subsidiaries or joint ventures abroad can also bemade using the funds held in the above-mentioned accounts subject to theapplicable regulatory framework.
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It is expected that the revised instructions would help a great deal to ourexporters in promoting their products and brands abroad, which would notjust increase their footsteps in a foreign jurisdiction but would alsoincrease their export business. SBP would continue with its resolve tofacilitate the business community, particularly the exporters, throughcreating an enabling regulatory environment conducive to fulfill theirlegitimate needs.
Relevant provisions of Chapter 12 of the Foreign Exchange Manual have beenupdated, in this regard. The circulars issued to banks announcing the abovepolicy measures can be accessed at the following link:link
