ATHER SYED is
currently working at Pakistan Export Finance Guarantee Agency Limited (PEFG)
as Chief Manager Credit & Legal Affairs. He has over 26 years of
experience working in the financial sector and the privilege of working
with institutions such as Industrial Development Bank of Pakistan,
Grindlays Bank, Pak Gulf Leasing Company and PIBL prior to joining PEFG.
He has done BBA (Hon.) and MBA from Institute of Business Administration
(IBA), Karachi and B.Sc. from Punjab University. He also acquired
professional banking qualification of DAIBP and completed advanced
training programme from the training centre of Citibank in Lewisham, UK.
What are the factors affecting growth in Pakistan's exports?
At the best Pakistan can be called an exporter of textiles and
clothing, constituting over 65% of total exports. It may be true that
Pakistan has an elaborate textiles and clothing manufacturing
infrastructure but unless exports are board-based it would be difficult
to take a quantum leap in exports. The factors affecting growth of
exports are limited availability of funds, particularly pre-shipment and
post-shipment financing, finding new markets and exporting
What was the rationale behind establishment of PEFG?
rationale behind establishing Pakistan Export Finance Guarantee Agency
Limited (PEFG) is to complement and reinforce the range of services
offered by commercial banks. In more than fifty countries of the world,
including all major G-7 members, Export Credit Agencies (ECAs) are in
operations. Therefore, the GoP with the assistance of Asian Development
Bank decided to establish a similar institution in Pakistan.
What role PEFG is playing in boosting exports?
PEFG commenced its operations in July 2001. It was established with the
help of Asian Development Bank and its founder members comprise of 13
Pakistani commercial banks. The company also offers other non-member
banks reciprocity of business. The objectives of PEFG are to assist
Pakistani exporters in marketing their products and services at
competitive rates. PEFG provides pre-shipment export finance guarantee
to member banks to provide pre-shipment as well as post shipment
financing. Perception of banks regarding implicit risk often imposes
limitations on access to credit for exporters, especially the small and
the new entrants.
What is PEFG's niche market?
PEFG's niche market is small and medium size exporters and sectors
enjoying growth potential. Development of the SMEs as self-sustaining
entities is the key to revolutionize industries and overcoming the
menace of unemployment in the country. Responding to the SME business
needs, the 'special niche' reflects PEFG's belief that the SMEs are
capable of marking a significant contribution in exports, given the
narrower transaction times, willingness to fill small orders, and quick
turnaround time. This also enables the member banks as well PEFG to
achieve dissipation of risk.
How does PEFG operate?
PEFG assistance is offered in two forms, pre-shipment finance guarantee
and post-shipment coverage. Under the first part, PEFG issues financial
guarantees to the participating banks as per the finance agreement
between the exporter and the bank. The scheme has been especially
developed for SMEs and encourages them to avail bank finance facility
with less collateral and on softer terms, thus supporting reduced asset
based lending. Post-shipment coverage helps exporters in exporting goods
on D/A, D/P and open letter other than those under letter of credit. In
order to provide post-shipment cover, PEFG has made arrangements with
international intermediaries from Saudi Arabia, UK and USA. Under an
arrangement with ICIEC the PEFG provides post-shipment facility to
Pakistani exporters for more than 83 countries around the globe.
Does the cost being charged by PEFG justify availing the facility?
is a private sector company and the resources available to it do not
allow too much maneuverability. By allowing the customers a basket of
acceptable collateral, which in the normal course would not be
acceptable to the banks, help the customer to get the finances. If the
client uses the funds for the purpose intended it grows rapidly and
after two to three guarantees has sufficient collateral to launch itself
without PEFG's assistance and support.
has been the success of PEFG?
has so far issued more than Rs 500 million in guarantees most of which
have been successfully retired and either rolled over or have gone on to
the greener pastures as per our predictions. PEFG has gone into areas
and products, which have almost never been exported from Pakistan such
as Skins of fish, Bones of sharks, Seashells, fenugreek etc. PEFG has
helped in identifying overseas customers/buyers and helped the client
making correct export decisions.