Exporters of goods and services, including IT based services, are allowed to retain a certain portion of their export proceeds in their Special Foreign Currency Accounts (SFCA).
The fund from these accounts, however, could be utilised for specified purposes only. Over time the types of payments that exporters need to make have increased as exports are becoming more diversified. In order to facilitate the exporters, State Bank of Pakistan (SBP) has now broadened the purposes for which the funds retained in these SFCAs can be utilised. Banks are allowed to make payment from the accounts for a number of new purposes in addition to existing ones. However, there is no change in the percentage of export proceeds allowed to exporters for retention in these accounts.
Exporters will be able to use SFCAs to make payments abroad for a number of additional purposes including advertisement, promotion, marketing, brand building, subscription fee for participation in foreign exhibitions and fairs; payment for foreign consultant’s fee; travel expenses, warehousing services, insurance expenses and shelf space expenses, lab testing charges, audit/inspection/certification charges, logistics charges, refund of advance payment received against goods or services, payments for registration of patents, copyrights, drug registration, license fee etc. Moreover, payment for acquisition of digital services from abroad, operational expenses of liaison/ marketing/ representative offices etc, and investment in subsidiaries or joint ventures abroad can also be made using the funds held in above mentioned accounts subject to applicable regulatory framework.
It is expected that the revised instructions would help exporters in promoting their products and brands abroad, which would not just increase their footsteps in foreign jurisdiction but would also increase their exports. The SBP would continue its resolve to facilitate the business community, particularly the exporters, through creating an enabling regulatory environment conducive to fulfil their legitimate needs.
Relevant provisions of Chapter 12 of Foreign Exchange Manual have been updated in this regard.
