Role of Banking in Customs & Trade procedures

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Role of Commercial Banking, Merchant Banking in Trade and Trade Facilitation

Role of Commercial Banking, Merchant Banking in Trade and Trade Facilitation

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  • 1. Names of Presenters : Shams Amlani (Roll no. 73) M.Umair Khan (Roll no. 41)
  • 2. The World Trade Organization (WTO) defines trade facilitation as ‘The simplification and harmonization of ‘International Trade Procedures’ where trade procedures are the ‘activities, practices and formalities involved in collecting, presenting communicating and processing data. In ‘International Trade’, The Role Of Commercial Procedures, BANKS and other financial institutions has been acknowledged in International Trade Operations. Occasionally, ‘Trade Facilitation’ is also used literally to mean The Improvement of transport infrastructure, removal of Government Corruption, reduction of Customs Tariffs, Export Marketing and Export Promotion.
  • 3. The United Nations Centre for Trade Facilitation and Electronic Business recommends these areas to cover better and transparent International Trade: oTrade Procedures. oCustoms and Regulatory Bodies. oProvisions for official control procedures applicable to import, export and transit including: General Arrangement Customs Controls, Official Documentation, Financial Securities. oProvisions relating to payment procedures. oProvisions relating to the use of information and communication technologies. oProvisions relating to the commercial practices and the use of international standards . oLegal aspects of trade facilitation.
  • 4.  Commercial Banks Doing International Business are also called merchant banks because they finance trade between companies & Customers Located In Different Countries.  This is done by issuing Letter of Credits (LOCs) that indicate the customer has deposited the full amount due on an order with a company located in a different country. The seller company can then feel assured of being paid if it ships goods to its offshore customer.  Without LOCs, companies would face considerable expense in investigating their foreign customers to make sure they are legitimate and creditworthy, and complying with laws and regulations of the different countries in which they do business.
  • 5. Trade Facilitation Status in Pakistan
  • 6. • Trade facilitation has been a priority area for Pakistan government since August 2001 when National Trade and Transport Facilitation Committee (NTTFC) was formed and work was initiated on a World Bank Funded Trade and Transport Facilitation Project (TTFP) with technical assistance of United Nations Conference on Trade and Development (UNCTAD). NTTFC has been working in coordination with the concerned ministries and public/private stakeholders for adoption of various trade and transport facilitation measures. IT based standardized Goods Declaration (GD) has gradually been introduced since 2001 that enables electronic submission of the Goods Declaration at all Customs stations in Pakistan, although hard copies of the documents are still required. Therefore, for the accomplishment of all these procedures and documentation, Banking and other financial institutions are involved in most of the cases.
  • 7. •In 2005, PAKISTAN CUSTOMS COMPUTERIZED SYSTEM (PACCS) was introduced under the CARE programme and is in place at the 3 container terminals which has introduced IT based paper free environment (Pakistan Ministry of Commerce 2008). “PACCS replaced the former manual clearance system”
  • 8. •After the introduction of PACCS, traders have a dedicated login for accessing PACCS which is comprised of FOUR essential components: I. Firstly, TARIP (Tariff & Integrated Policy) that provides complete information of regulations for import or export of cargo to & from Pakistan. II. Secondly, INTRA (Integrated Regulatory Authorities) which is an online nationwide network connecting all stakeholders including Government Ministries & Depts, All software for all stakeholders is provided by PACCS. III. Thirdly, ECHO (Enhanced Cargo Handling & Port Optimization) which is online connectivity between the carriers, PACCS and Terminal Operator. IV. Finally, the ACCESS (Automated Customs Clearance System) that covers Advanced Screening For Risky Cargo, Goods Declaration with Off-Line Support, Payment Management System, Risk Management System, Assessment Management System, Clearance Management System, Status Reporting System, Auctions, Warehousing, Licensing, Transits And Transshipments.
  • 9. Role of Banks in Import/Export Without Commercial Banks, The International Finance and Import-Export Industry would not exist. Commercial Banks make possible the reliable transfer of funds and translation of business practices between different countries and different customs all over the world. The global nature of commercial banking also makes possible the distribution of valuable economic and business information among customers and the capital markets of all countries. Commercial banking also serves as a worldwide barometer of economic health and business trends.
  • 10. Foreign Exchange In order to facilitate international trade and development, commercial banks convert and trade foreign currencies. When a company is doing business in another country it may be paid in the currency of that country. While some of these revenues will be used to pay workers in that country and for administrative expense such as office rent, utilities and supplies. Foreign Branch Banking Some small commercial banks limit their reach to the local business community; but as business has gone global, so have Commercial Banks. Large banks such as Citigroup, Bank of America and Chase are retail banks that also maintain full commercial banking activities in the United States with branches in many countries. U.S based multinational companies can consolidate their financial business at a single bank that handles their Trade Finance, Currency Transactions, Project Loans, Cash Management Investments And Deposit Accounts t h r o u g h o u t t h e w o r l d .
  • 11. IMPORT/EXPORT DOCUMENTATION & PROCEDURES (IN PAKISTAN)
  • 12. B r i e f Pe r s p e c t i ve o f “Export” Documentation 1)NTN: National Tax Number Certificate, which is issued by the Income Tax Department. 2)Sales Tax Registration: Commercial exporter is not required to register with Sales Tax Department. 3)Bank Account: Current Bank Account is required for export proceedings and documents. 4)Chamber Membership: Membership certificate of Chamber of Commerce and Industries or any relevant trade association is required. 5)Documents For Clearing Agent: Once the consignment, to be exported arrives at the port, usually a clearing agent services are sought. 6)Submission of Export Documents to the Bank: All shipping documents covering goods exported from Pakistan and declared on form “E” must be passed through the medium of bank within 14 days from the date of shipment.
  • 13. B r i e f Pe r s p e c t i ve o f “Import” Documentation Documents required to import into Pakistan are: 1) NTN: 2) Sales Tax Registration: Sales Tax Registration is required to import into Pakistan. 3) Bank Account: Current Bank Account is required for import proceedings and documents. 4) Chamber Membership: 5) SALES TAX ON IMPORT: Every importer is required to pay sales tax on taxable goods at the rate of 15% at the time of importation. "Taxable Goods" means all goods other than those which have been exempted from Sales Tax. Thus Every importer is required to get himself registered with the sales tax department.
  • 14.  Standardized trade documents have been introduced that include Goods Declaration, Quality Certificate and Certificate of Origin which are now in regular use. However, the Standardized Commercial Invoice has not yet been adopted by the TRADE AND INDUSTRY.  In accordance with the Convention on Facilitation of International Marine Traffic, 1965; Ships General Declaration, Crew List, Crew’s Effects Declaration, Passenger List, Ships’Store Declaration has been introduced.  The same forms can be used for submission to all the concerned organizations like Customs, Mercantile Marine Department, Port Immigration Department,Port Health Department and the Port Authorities.  Increasingly all the rules and regulations are being kept on internet for wider access. The in place arrangements meet almost all the requirements of Articles V, VIII and X.
  • 15. Difference between Corporate & Commercial Banking Corporate Banking Commercial Banking
  • 16. Corporate Banking Corporate banking is defined as custom-tailored financing and banking services for corporations. Corporate banking is typically offered by commercial banks, and entails all the services that can be extended on a financial level to corporate entities to ease day-to-day operations. Cash management, working capital loans and commercial mortgages are just some of the products available in this form of banking. Commercial Banking Commercial banking is a provision of banking and other related services for profit. Commercial banks are incorporated companies with the main activities of accepting deposits and disbursing loans, or of exercising fiduciary rights similar to national banks. They also open personal and checking accounts and offer mortgages and business loans.
  • 17. CONCLUSION By resolving the existing trade barriers, transit trade by road can be improved between the ECO member States and other region. The following sets of Recommendations have been given by the ECO Secretariat (2011).
  • 18.  Enhancement of the implementation of the related international and regional conventions, particularly TTFA, TIR, and CMR.  Streamlining national rules and regulation in line with the international convention.  Modernization and Standardizing of transit fleet.  Modernization of road networks with emphasis on transit routes.  Updating the data and statistical information on transit transport with providing facilities to be accessed by each concerned authority of member.  Streamlining national rules and regulation in line with the international convention.
  • 19.  ECO countries except Pakistan and Afghanistan are increasingly making use of TIR Carnets for promoting intraregional and inter-regional trade. The TIR Carnet is a customs transit document used for the international transport of goods in transit and is established by the guaranteeing association.  The Carnet contains a variable number of pages according to the number of borders which will be crossed during the transport. According to the TTFA the TIR Convention 1975 has been recognized as underlying transit system among the member States.
  • 20. “The ECO has a mandate to strengthen the implementation of the TIR system in the region and facilitate the operation of this system in the Member States. All ECO Member States, except Pakistan are Contracting Parties to the TIR Convention.” Hence, Pakistan needs to utilize the TIR Carnets properly to facilitate the International Trade.
  • 21. Thank You !!! References: http://smallbusiness.chron.com/difference-between-corporate-commercial-banking62835.html Bashir, Shahid, 2007; Trade Facilitation: Experience of Pakistan, Ministry of Commerce, Pakistan, Islamabad. Baldwin, R 1994; Towards an Integrated Europe, Centre for Economic Policy Research, London. Ministry of Commerce, 2009; Export Policy Order 2009, Government of Pakistan, Islamabad. Ministry of Finance, 2011; Economic Survey 2010-2011, Government of Pakistan, Islamabad. Ministry of Textile Industry, 2009, Textiles Policy 2009-2014, Government of Pakistan, Islamabad. OECD & WTO 2007, Aid for Trade at a Glance, 1st Global Review (Executive Summary), WTO, Geneva.