Despite Pakistan's measures to revive letter of credit (L/Cs) flows to rekindle manufacturing output, the country's business leaders say delays in L/Cs for imports of raw materials, machinery and equipment are still badly affecting production. They are calling for more government measures to facilitate L/C flows.

Pakistan's finance minister, Miftah Ismail, said earlier this month that the government had taken steps to make L/Cs more available for imports of essential production inputs for manufacturing exporters (DC World News, 16 September 2022).

Sectors affected

Islamabad Chamber of Commerce and Industry (ICCI) is lobbying the government to address delays in essential import L/Cs for industries including food, pharmaceuticals, steel, automobiles, telecommunications and home appliances.

President of ICCI, Muhammad Shakeel Munir, concedes that the government has notionally lifted the ban on essential L/Cs for the manufacturing sector but, he says, "the business community is still facing delays in opening of L/Cs for many important items including machinery and equipment."

Businesses under threat

President of Rawalpindi Chamber of Commerce and Industry, Nadeem Rauf, has also expressed concerns over delays in opening import L/Cs and is demanding the finance minister takes action.

"Due to non-release of our import documents and consequent non-availability of raw material...manufacturing units are on the verge of closure," he said, adding that despite the government lifting the import ban, L/C difficulties were still delaying essential imports of machinery, equipment and spare parts.

Pakistan is not the only country where import L/Cs have become hard to come by. Earlier this year, Bangladesh followed Nepal's move to restrict the use of L/Cs for non-essential imports while banks in Sri Lanka have been unable to issue L/Cs since last year (DC World News, 20 May 2022).

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.