The State Bank of Pakistan (SBP) has asked federal ministries to compile a list of reputable suppliers to import solar panels and avoid money laundering or over-invoicing as some local importers have established trade entities abroad, putting them at risk of over-invoicing.
Director State Bank of Pakistan (SBP) Dr. Asif Ali sent this proposal to Tariq Bajwa, Special Assistant to the Prime Minister on Finance and Revenue, reported Business Recorder.
In response to a letter of SAPM Governance Effectiveness Jehanzeb Khan, SBP stated that previously, banks were required to seek its permission before initiating transactions/LCs for the import of items falling under HS codes Chapter 84 and 85 (including solar panels, inverters, etc.). SBP removed the requirement for prior permission, whereby all such importers must now approach their banks to initiate import transactions/LCs, and no SBP approval is required.
SBP understands that due to the current Balance of Payments (BoP) situation, banks are accommodating import requests based on their own liquidity and risk assessment and that as the BoP situation improves, banks will be in a better position to facilitate such import transactions.
Director SBP contended that the regulator had already issued the necessary guidelines to banks for one-time facilitation of shipping document release to relieve port congestion caused by stalled containers (i.e. demurrage-related cases). In this regard, banks have been advised to release shipping documents for goods shipped on or before January 18, 2023: in the case of deferment, upon receipt of a SWIFT message from the bank abroad indicating that imports are on deferred payment basis for at least 180 days; or (ii) upon receipt of confirmation from suppliers’ banks.
The central bank maintains that it understands that by issuing such instructions, the issue of stalled shipments, including those of solar panels, is being addressed to a large extent.
According to SBP, solar panels (HS code 8541.4300) have 0 percent customs duty under current Customs Regulations; thus, there is a possibility that the import of solar panels could be misused by some unscrupulous elements to launder their illicit money abroad via over-invoicing. Some of the suppliers offering deferred payment terms are related to Pakistani importers, or local importers have established trade entities abroad, which carry the risk of over-invoicing, Dr. Asif Ali said.
SBP has proposed that the relevant ministries develop a list of reputable suppliers from whom imports of solar panels could be permitted without the risk of money laundering/over-invoicing.
To reduce reliance on imported components, the federal government may consider enacting a policy encouraging domestic entrepreneurs to establish manufacturing facilities for clean/environment-friendly energy-producing equipment such as solar panels and other related components, which will also help reduce Pakistan’s reliance on imported fossil fuels.
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