ATHER SYED
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By SHABBIR H. KAZMI
July 12 - 18, 2004
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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.

PAGE: What are the factors affecting growth in Pakistan's exports?

ATHER SYED: 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 non-traditional products.

PAGE: What was the rationale behind establishment of PEFG?

ATHER: The 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.

PAGE: What role PEFG is playing in boosting exports?

ATHER: The 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.

 

 

PAGE: What is PEFG's niche market?

ATHER: The 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.

PAGE: How does PEFG operate?

ATHER: The 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.

PAGE: Does the cost being charged by PEFG justify availing the facility?

ATHER: PEFG 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.

PAGE: What has been the success of PEFG?

ATHER: 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.