August 6, 2021 (MLN): State Bank of Pakistan (SBP) on Thursday notified changes in Foreign Exchange Manual for local and foreign companies operating in Pakistan. These amendments will promote FDI and export digital services and will contribute to Ease of Doing Business (EoDB), said Abdul Razak Dawood.
Taking to his Twitter account, the Adviser to Prime Minister of Pakistan for Commerce and Investment expressed his gratitude to Governor SBP, DR Raza Baqir for taking initiatives.
SBP made significant changes in its FX manual such that revising the policy on remittance of Royalty, Franchise & Technical (RFT) fees for the manufacturing sector. The threshold for remittance of such fee has been revised upwards to cater to the needs of the business community. Now, entities belonging to the said sector, through their designated bank, can remit USD 1 million as upfront payment and up to 8% of net sales (excluding taxes and cost of imported components).
Moreover, a new category, i.e., royalty on export-related manufacturing has been introduced, under which Pakistani entities collaborating with the foreign counterparts, can remit recurring royalty payment of up to 10 percent of the net export sales, i.e., excluding taxes and cost of imported components.
In view of the increasing reliance of businesses on digital services procured from abroad, the central bank enhanced the per year limit assigned to 62 whitelisted digital service provider companies from USD 200,000 to USD 400,000 per annum.
With the intention to facilitate the business community of Pakistan in making the payment of charter costs directly to the owner of the ship/aircraft, the banks have been authorized to process such payments without prior regulatory approval of the SBP.
SBP issued specific instructions on logistics-related cross-border payments such as container detention charges, port demurrage charges, etc. with an aim of harmonizing the foreign exchange regime with the current business environment.
The facilitative measures taken by SBP will help the business community grow their businesses.
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