7.1 Export Procedures, Payment Terms & Documentation

Two rulebooks on one export file

Every Pakistani export file answers two different questions. May these goods leave Pakistan? That is the Ministry of Commerce under the Imports and Exports (Control) Act, 1950, through the Export Policy Order (EPO). How is the full export value declared and received through an Authorized Dealer? That is the State Bank of Pakistan under section 12 of the Foreign Exchange Regulation Act, 1947 (FERA 1947) and Chapter 12 of the Foreign Exchange Manual.

This independent OpenExamPrep section opened the current Chapter 12 PDF at https://www.sbp.org.pk/assets/document/Chapter-12-foreign-exchange-manual.pdf and the Export Policy Order, 2022, S.R.O. 544(I)/2022 dated 22 April 2022, at https://www.commerce.gov.pk/wp-content/uploads/2022/04/EPO-2022-SRO-544-2022-dt.22.4.22.pdf. Ministry of Commerce later lists amending SROs (including an amendment catalogued as S.R.O. 561 dated 15 May 2023). When a later SRO is in force, the desk reads the Order as amended, not a frozen 2022 photocopy.

Chapter 12 paragraph 1 restates the 1 July 1948 Federal Government notifications I(6)-ECS/48 and I(7)-ECS/48: goods may not be exported, by post or otherwise, unless the exporter declares to Customs (or a person SBP specifies) that foreign exchange representing the full export value has been or will be disposed of in the manner and period SBP specifies. Paragraph 3 then locks the two-rulebook split: nothing in the foreign exchange regulations relieves exporters from complying with the EPO, including the need for an export licence, permit, NOC, or certificate wherever the Order requires one. A clean Goods Declaration does not, by itself, discharge the FERA duty to realize proceeds. An EPO licence does not, by itself, satisfy Chapter 12.

Paragraph 2 carves FE-regulation exemptions: exports to Afghanistan to the extent of paragraph 13(i), and goods exempted from the EPO as notified by the Ministry of Commerce from time to time. Chapter 12 footnotes point to paragraph 4 of the EPO for that exemption list. EPO paragraph 4 is the published “this Order shall not apply to” list — stores and equipment of outgoing vessels, bona fide crew and passenger baggage (banned or restricted items still need authority), trans-shipment cargo manifested as such, and the other carve-outs printed there. Humanitarian commodities exported or re-exported by agencies specified by the National Disaster Management Authority may move without bank Form-E subject to the Order’s published conditions.

EPO paragraph 7 still allows specified goods to Afghanistan against Pakistan currency on regular shipping bills without Form-E (fruits, vegetables, dairy, meat, rice, fish, poultry, listed processed foods, salt, cement, pharmaceuticals, matches, textiles, building stone, surgical instruments, and the other named lines). Chapter 12 paragraph 13(i) restates that PKR Afghanistan path. Other Afghanistan exports settle in convertible currencies with Form-E / PSW declaration like any other country; cash notes brought over the counter still need export documents plus a Customs passenger declaration and S-6 reporting.

Customer due diligence of exporters (paragraph 4A)

Paragraph 4A is short and examinable. Authorized Dealers shall conduct CDD of exporters on a risk-based approach. At onboarding, capture trade-related activity and fold it into the customer’s risk profile, giving due weight to risk factors in the Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing. Chapter 12 does not reprint the TBML annex here; the 12 August 2025 revision of that framework is the current TBML text elsewhere in this guide. On an export desk that means: identify the exporter, map products and corridors, score buyer and country risk, and refuse to “just certify the form” for a newly incorporated shipper with no trade history and a first-time buyer in a high-risk corridor.

Paragraph 8(iii) then lists what the AD must have satisfied itself of before undertaking the export:

• Arrangements exist for realization of the proceeds of that shipment.
• Bona fides of the foreign importer/consignee have been verified under TBML instructions, with discreet correspondent enquiry where needed. Greater care on T.R. or D.A.
• Arrangements exist to receive documents of title (bill of lading, airway bill, railway receipt, truck receipt).
• A charter party is genuine where a charter-party bill of lading will be used; take the charter-party agreement if needed.
• A manual Form-E is signed by the exporter or an agent holding a valid power of attorney that makes exporter and attorney jointly and severally responsible for repatriation.
• Letters of credit for Asian Clearing Union member countries travel under the ACU arrangement unless an IBRD/ADB-style loan takes payment outside ACU in convertible currency.
• Re-export of imported goods complies with the current EPO.

Paragraph 8(i) is the Form-E certification language: the exporter is known, bona fide, and has made arrangements to realize on the due date or within 120 days from shipment, whichever is earlier, in accordance with Notification No. F.E. 1/2022-SB dated 5 January 2022. Paragraph 8(ii) puts the same realization duty on the AD for Pakistan Single Window exports even though there is no paper Form-E to stamp.

Payment terms the current Manual still publishes

Teach the terms Chapter 12 still prints. Do not revive a retired “consignment sale / six-month account sale” clock from a pre-2022 Form-E certificate.

Advance payment (paragraph 27). Receive funds first. Issue an Advance Payment Voucher (Appendix V-14) with a Unique Identification Number in four hyphenated parts: bank code, branch code, YYYYMM, and chronological serial. Obtain the firm contract, purchase order, proforma, or indent. Shipment of goods against that advance must follow within one year of receipt, matching the voucher. If the remitter is not the consignee, verify by SWIFT or the underlying contract and address under- and over-invoicing risk. If shipment cannot meet the year, the exporter approaches FEOD, SBP-BSC Head Office, Karachi through the AD with documentary justification. On PSW, the AD shares the Financial Instrument when the advance is received. Report the voucher and its utilization through ITRS.

Irrevocable letter of credit. Documents travel through banks. Paragraph 21: for commodities that may be exported only against advance payment or an irrevocable LC, Customs ships only on the AD’s certificate / Financial Instrument that advance or LC has been received covering the goods declared.

Documents against payment / cash against documents / sight (DP / CAD / sight). The buyer pays in order to obtain documents. The realization clock in section 7.2 is 45 days from shipment, not the 120-day default.

Documents against acceptance / trust receipt (DA / T.R.). The buyer accepts a tenor bill or trust receipt and takes documents. Paragraph 8(iii)(b) and paragraph 29 require extra care: sound financial standing and good repute of the foreign buyer before certifying Form-E or sharing the FI. If the buyer later refuses the goods, ship them back or find an alternate buyer with SBP-BSC approval, unless the original or an alternate buyer finally takes the goods at not less than 90% of original value minus actual demurrage. If the buyer takes delivery and then defaults, the AD considers legal action. Take a suitable undertaking from the exporter at certification / FI-sharing so counsel is not blocked later.

Open account (paragraph 11A). This is a published exception to the title-document drawing rules in paragraph 11. The AD may allow documents in the foreign importer’s name and direct dispatch by the exporter, issuing Appendix V-12A to carriers, only if published gates hold: export overdues with all Authorized Dealers not more than 5% of the previous year’s exports; consignment value limits that tighten as the overdue ratio rises (no limit at the lowest overdue band with strong three-year proceeds, stepping down to USD 1,000,000 and USD 500,000 bands as overdues rise); new or low-history exporters (under USD 250,000 proceeds in the past three years) capped at USD 100,000 per shipment. Obtain a valid contract or proforma, copies of shipping documents within 10 working days of shipment, and an undertaking to realize on time. Directors’ personal guarantees are at the AD’s discretion. On PSW, obtain an undertaking that shipments stay inside those limits, and discontinue the facility if the exporter breaches them. This is not a free-for-all “send the bill of lading to the buyer.”

B2C e-commerce courier (paragraph 39). The courier files the declaration in the WeBOC e-commerce module. Each HAWB consignment is identified by a unique house airway-bill number and must not exceed USD 5,000, at the actual invoice price. Realization is the 60-day clock in section 7.2, not the goods default.

B2B2C warehousing (paragraph 41). Goods move to a marketplace, own warehouse, or third-party warehouse consignee who may not be the ultimate buyer. Document drawing follows the open-account certificate path (Appendix V-12A) plus the warehousing contract. Realization 180 days from shipment is that published framework. Do not borrow it for ordinary B2B or for B2C courier.

“Consignment” in older Manual language meant goods shipped for sale abroad against a later account sale. The current Chapter 12 PDF opened for this guide does not reprint a standalone consignment-sale paragraph with its own clock. If the facts are marketplace warehousing, use paragraph 41. If the facts are ordinary open account, use paragraph 11A and the ordinary realization clocks. Do not invent a six-month consignment period.

Title documents (paragraph 11)

Under FERA section 20(3), SBP has directed carriers. For land or sea exports, railway receipts, bills of lading, truck receipts, and other title documents must be drawn only to the order of the designated Authorized Dealer, unless the exporter produces the AD’s Appendix V-12 certificate. That certificate is issued only for 100% advance payment or an irrevocable LC that calls for documents to the order of the opening bank, the importer, the exporter, or to order and blank endorsed. Carriers deliver title documents to the AD’s authorized agent holding an authority letter — not to the shipper’s driver.

Seaway bills, Forwarder Cargo Receipts, and similar may be accepted only against advance payment or an irrevocable LC opened or confirmed by a reputable bank abroad that envisages payment on those documents.

For air exports, airway bills are drawn to the order of a bank in the country of import nominated by the Pakistani AD, unless 100% advance or an irrevocable LC names the importer or its bank — then Appendix V-12 again. If 100% is realized after shipment but before dispatch of documents, the AD may release documents to the exporter, endorsed in the importer’s favour, for direct dispatch, with TBML-grade due diligence.

Drawing-rule exceptions: goods exempted under EPO paragraph 4, and exports of fresh fish, vegetables, fruits, poultry, and other goods of perishable nature. If an LC requires one original of three bills of lading to go to the buyer, the AD may allow dispatch of the first or second original only after documents have been presented to the AD.

Paragraph 15: the AD endorses title documents to the order of its foreign correspondent. No blank endorsement, and no endorsement to the consignor, except merchanting with 100% advance or an LC that calls for blank endorsement.

Shipping documents through the AD within 14 days

Paragraph 19 is the operations clock junior officers miss: all shipping documents covering goods declared on Form-E or with PSW must pass through an Authorized Dealer within 14 days from the date of shipment. On a manual Form-E, the Customs-sealed duplicate and the triplicate plus invoices go to the certifying AD. If another AD negotiates or collects, it must tell the certifying / FI-initiating AD so the register can be noted.

WeBOC residual text (paragraph 15A(xi)): if documents are not in within 14 days, chase immediately; if they are still missing at 30 days from shipment, report monthly to FEOD on Appendix V-11 by the 15th. PSW paragraph 15B(viii)(c) repeats the same 14-day submission duty for the exporter or authorized agent. Paragraph 20 then requires the AD to compare bills and invoices with the Form-E / PSW declaration so that value is not short of the declared amount except for legitimate short-weight, actual freight, and similar authenticated adjustments.

PSW on the export side — without becoming the PSW chapter

Pakistan Single Window replaced consignment-wise Electronic Form-E (EFE) with electronic trader profiles and Financial Instruments over Electronic Data Interchange, as PSW publishes at https://psw.gov.pk/elimination-of-eif-efe and as Chapter 12 paragraph 15B (FE Circular No. 05 dated 2 July 2021, with later Form updates) implements. Export-side facts the Chapter 12 desk must know:

• The exporter files a declaration (Appendix V-10A) that payment has been or will be received through an Authorized Dealer as SBP prescribes. All such declarations are in a convertible foreign currency only. For B2C e-commerce, the courier files.
• A valid trader profile maintained with an AD is mandatory before filing the PSW declaration. Managers, proprietors, partners, and directors are jointly and severally responsible for repatriation.
• The AD communicates Financial Instrument details on (i) receipt of advance, (ii) advising or receipt of documents under a letter of credit, or (iii) a copy of the contract or proforma invoice. No FI is required for open-account exports. PSW’s own help text repeats that rule.
• FI serial format: AD acronym, the letters EXP, a 6-digit serial, and date DDMMYYYY, with an optional three-character type suffix (LC, contract, advance). The serial resets to 000001 each calendar year.
• The exporter attaches the declaration to the FI. One FI may cover multiple Goods Declarations; multiple FIs may cover one declaration if value is short. Transfer of an FI to another AD is allowed only after association with at least one Goods Declaration.
• Negative-list match: PSW sends an exception to the AD; goods clear only after AD approval. The AD must respond within one working day of receiving the information, subject to any customer documents still needed.
• After shipment, PSW sends declaration details by EDI. The AD files Bank Credit Advice (BCA) on receipt of proceeds. Non-receipt within the prescribed time is reported under paragraph 33 (section 7.2).
• Manual / electronic Form-E remains only for ADs not yet integrated during parallel run, and for residual One Customs flows as PSW describes.

EFS and IERS — published basics only

Export Finance Scheme (EFS) and Islamic Export Refinance Scheme (IERS) are SBP refinance facilities exporters access through their banks. IH&SMEFD Circular No. 01 of 2022 digitized and centralized Part I / Part II processing at SBP-BSC Karachi. Banks upload refinance claims, shipment details, exports overdue position, limits, fines, exporter performance, and proceeds realization on the KM portal. This OpenExamPrep section does not invent current refinance tenors or end-user rates — those move by later IH&SMEFD circulars. What the Chapter 12 desk must not miss: an overdue Chapter 12 bill is not only a FERA file; it also contaminates the exporter’s refinance data. EFS approval is not a substitute for realization.

Pakistani AD desk scenarios

Scenario A — blank endorsement as a courtesy. A new Sialkot surgical exporter wants the bill of lading “to order, blank endorsed” so the buyer can warehouse. There is no 100% advance and no LC calling for that drawing. Paragraph 11: draw to the AD’s order. Offer LC or advance, or test paragraph 11A open-account gates. Do not blank-endorse as customer service.

Scenario B — thin DA credit. A Faisalabad spinning mill ships on DA 90 days. The officer certified the FI after a one-line email that “the buyer is fine.” Paragraphs 8(iii)(b) and 29 require correspondent enquiry and an undertaking for legal action. Greater care on DA is a Manual instruction, not optional credit culture.

Scenario C — documents with the forwarder. The on-board date is 1 September. Documents are still with the freight forwarder on 19 September. Paragraphs 19 and 15B: they should have been with the AD by day 14. Start the chase; at day 30, Appendix V-11.

Scenario D — open-account overdue gate. An open-account exporter with overdues equal to 6% of last year’s proceeds wants another USD 800,000 direct-dispatch shipment. Paragraph 11A: discontinue the facility once overdues exceed 5%.

Scenario E — EPO still blocked. The HS line is restricted pending a ministry NOC. Chapter 12 certification does not waive that NOC. Paragraph 3 is the sentence to quote.

Scenario F — PSW open account. The exporter files a PSW declaration on open account. Operations refuses to let the GD proceed “until we issue an FI.” Chapter 12 paragraph 15B and PSW’s published FI page: no FI for open-account exports. Realization duty remains.

Traps

• Treating EPO or Customs clearance as FERA realization
• Blank-endorsing title documents without 100% advance or an LC that calls for it
• Using a six-month consignment clock the current Chapter 12 PDF does not print
• Inventing EFS or IERS tenors and rates
• Requiring a Financial Instrument on open-account PSW exports
• Skipping paragraph 4A CDD because “we already know the group”