LAHORE - The State Bank of Pakistan (SBP) has withheld a payment against export of rice to Iran without any reason, as the government has no clear stance on trade with Iran in the aftermath of trade embargo by the US.

Local banks are no more opening letter of credits (LC) for export of goods, especially rice, for Iran in the light of economic sanctions by the US though the government has not issued any clear stance on Pak-Iran legal trade, observed Samee Ullah Ch, vice chairman of the Rice Exporters Association of Pakistan (REAP).

“We need to take some measures immediately to continue this trade, including Currency Swap Arrangements, Barter Trade Arrangements and LC Transaction Arrangements with Iran, as rice exports have plunged significantly due to ban on exports to Iran.”

“SBP is not releasing export proceeds to our members against the dispatch of rice to importers in Iran,” stated Samee Ullah Ch. He further said that Pakistani traders exported 6,774 tons of basmati rice to Iran in the first week of March and hoped that SBP would release all the payments as soon as it (SBP) received them from importers. If there is any ambiguity in exports to Iran, it should be removed as soon as possible as Iran is a big buyer of Pakistani rice.

He said that Amir Rice Traders from Gujranwala has recently exported 240 tons of basmati rice (worth 166,175 euro) to Iran in the near past with the consent of the central bank.

The importer took delivery of the commodity successfully and SBP received the payment against the export in its account as well. However, the bank is not releasing the payment to the exporter.

Samee said the exporter submitted ‘e-form’ to the bank, which means that the export was made with the consent of the bank. “If exports to Iran were prohibited then why the bank had not stopped the exporter from exporting the commodity, and how did export proceeds of previous two consignments successfully transfer into bank account of the exporter,” he questioned.

He said that Association had also written a letter to the governor SBP in this regard and sought an appointment to meet and discuss the issue with him. But, the governor did not respond to the letter, nor did he give an appointment till date.

Pakistan exported around 30,000 tonnes of rice, worth $21 million, directly to Iran in the second half of 2012, a sharp fall from the 12 months to the end of June 2012 when sales approached 140,000 tonnes, he said. Pakistan’s rice sales to the UAE, the main shipping route into Iran, also dropped sharply to less than 52,000 tonnes in the second half of 2012, compared to nearly 228,000 tonnes in the previous 12 months.

“The new payment mechanism has been helping Indian rice exporters. Competitors in Pakistan don’t have any such facility,” he said.

Last year India had a lot of currency issues and then Pakistan was selling at around a $150 premium over India because India could not sell to Iran directly.