Mr. Arif Iftikhar, Director, Hameed Automation
Hameed Automation are Authorized Distributors of Schneider Electric, Hioki & Weidmuller. Alhamdulillah all three brands we are importing are through proper banking channel without under invoicing of single penny hence paying full custom duties to the government of Pakistan. We enjoy credit facilities with our vendor and most of our documents are on collection basis of 60 / 90 days after the invoice. Hameed Automation is in low voltage switchgear components business from over three decades.
The 5thJuly notice by State bank for prior approvals on all chapter 84/85 fell as a bomb on our business. It halted the business flow which was just picking up momentum after covid-19 subsided. All our components which we are imported under HS Codes 8536.2020, 8536.2010, 8536.9030, 8536.4190 and few others come under essentials as they are raw material for all kinds of industry be it power generation companies, textile, cement, food & beverages, automobile etc. Moreover, none of these items under these codes are manufactured locally in our country.
With the term “prior approvals” it is understood that after evaluation they shall be allowed to import. However, no approvals are coming since the issuance of the 5th of July SBP Notice thus all the shipment held at port are facing heavy detention and demurrage. Detention amount is ultimately going out of country to shipping lines and neither government nor importers will be benefiting from them. To add fuel to fire USD is climbing upwards constantly since July 2022.
Last month government allowed the import of luxury items, however, to our utter surprise didn’t speak a word about chapter 84/85 which is inevitable for all kinds of industry. Policy Makers should evaluate that do we need dog food, imported chocolates and other luxury items or the switchgear components which are imperative for industry.
Interestingly, this all is creating issues importers who are legitimately importing through proper banking channel and paying 100 percent duties to government which in turn contributes to reasonable government revenue.
This situation has already led and will further lead to serious consequences. Firstly, due to shortage of material and currency devaluation the cost of material has increased more than 50 percent leading to increase in the cost of production. In case of exporters, they will become uncompetitive as their cost has substantially increased.
Secondly, our principals send us collection document of 60/90 days on mutual trust. As bank stopped making payment of these collection documents the trust of the foreign vendors has been deeply hampered. They are now reconsidering extending any kind of credit lines to us which puts not only puts us in embarrassing situation but also adversely affects country global image.
Furthermore, this policy is directly targeting genuine legitimate importers, hence for their survival either they will wrap up their investment or will be inclined towards illegitimate way for his business.
Therefore, I take this opportunity to request relevant policy makers in the ministry that before taking such grave steps relevant HS Codes should have been studied in detail. I agree that chapter 84/85 include some luxurious home appliances which may not be imported given low foreign reserves however these includes some items which are inevitable for industry and those should have been provided an exception.
Lastly, I request the relevant authorities to urgently take up this matter and remove this prior approvals which implicitly is ban on electrical and switchgear components which are serving as back bone for industry.