35pc L/C margin on imports flayed

KARACHI - Tanvir Ahmad Sheikh, the President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has criticized the imposition of 35 percent margin on Letter of Credit on imports.

President FPCCI said that the industrial sector is already in deep crisis due to high cost of all inputs, in addition to several other problems such as shortage of electricity and gas, raw material prices, inflation and high cost of doing business, now the requirement of 35 percent LC Margin on import will result in severe liquidity crunch which will increase the probability of default in payment of their short term liabilities.

He said that industrial growth was already on the decline while the GDP growth is also likely to remain below the target and in these circumstances such steps will further increase the cost of production which would made our products uncompetitive both in national and int'l markets.

Mr. Tanvir emphasized that all industrial raw material, including Iron & Steel scrap for steel melting units, Petrochemical products, Food item including Tinned fmit and vegetable,Pulses and Spices of all sorts should be exempted from the requirement of L/C Margin.

He further suggested that finished products should be subject to 15pc LC margin, while luxurious goods includes home appliance should be subject to maximum LC margin of 35pc.

Governor State Bank has repeatedly announced in monetary policy statement speech that 35 percent J.C margin will be implen,ented from 1st June, but according to the circular issued by the State Bank this policy has been implemented with immediate effect, which affect the planning and activities of the business circles.