The State Bank of Pakistan (SBP) is making importers pay demurrages to the tune of $10,000 while it refuses to clear half that in invoices for the same shipments, according to importers.
In a viral video, importers in Shah Alam Market, Lahore, can be seen desperately trying to convince counters at a local bank to clear their dollar payments as their containers carrying their merchandise have been stranded at port terminals for more than three months.
One enraged trader said, “We have gone so far as to write to the State Bank requesting that our payments be cleared after 365 days. If SBP so desires, we are willing to sign an affidavit stating that we will not send money abroad for the next two years. Despite our assurances, why does the central bank continue to make business and our lives so difficult?”
He further mentioned that the invoice for one container is $5,000 with a demurrage of $10,000. The State Bank doesn’t care that it is indirectly forcing importers to pay $10,000 demurrage charges while at the same time refusing to clear invoices valued at $5,000. “Where’s the logic in all this?” he asked rhetorically.
Foreign companies, he added, will not try and convince SBP for wired transactions. “We can state unequivocally that Chinese companies will not pursue telegraphic transfers (TTs). We beg the authorities to assist importers in getting us out of this jam,” he said.
Highlighting the severity of the situation faced by businesses, the trader warned of another spike in unemployment if the issue isn’t timely resolved. He said, “Each importer represents thousands of shops where an even larger labor force is employed. Factories have already been shut down. Is the government planning to close shops as well?”
It is no secret that banks are refusing to issue new letters of credit (LCs) to importers. Resultantly, shipping containers are stranded at ports awaiting payment guarantees.
What are demurrage charges?
Demurrage is a charge applied to containers that are left at the port longer than their allotted free time. Shippers usually begin incurring this fee the day after the last free day and it is charged per container per day until the container is picked up.