Pakistan is missing the opportunity to tap a $500 million rice market in Iran even though the sanctions have been lifted, primarily because of commercial banks’ reluctance to open letters of credit (A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase).
This was stated by Rice Exporters Association of Pakistan (REAP) Chairman Mahmood Moulvi who further added that the matter had been brought to State Bank of Pakistan and the Trade Development Authority of Pakistan’s notice. The issue had also been taken up with the finance minister in October last year.
REAP urged the government to direct the National Bank of Pakistan (NBP) to help restore the country’s share in the Iranian export market if the private banks are reluctant to cooperate.
Pakistan ceased to trade with Iran after the imposition of sanctions even though there was no food embargo on Iran. Consequently, Indian exporters captured the Iranian market and now export basmati rice worth $1b to the country.
