Foreign exchange policies in Pakistan have left the country’s travel industry struggling to keep up with the demands of international operations.
According to the President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Irfan Iqbal Sheikh, “The massive mismanagement in foreign exchange has prevented the remittance of airline proceeds from Pakistan for the past 10 months. This has forced some airlines to shut down operations, while others are limiting or relocating their transaction processing operations overseas.”
“The government has blocked the transfer of revenues of the international airlines in Pakistan to their respective countries of origin or to their head office accounts overseas. As a result, all international airlines have tripled their fares for international travel from Pakistan,” said the FPCCI president. The rise in fares has made it difficult for businesses to secure export orders, source raw materials for industrial production, and promote trade and B2B activities, he added.
Speaking to the Express Tribune, the President of the Union of Small and Medium Enterprises (UNISAME), Zulfikar Thaver, has proposed that to address the issue the government launch prize bonds in various denominations in US Dollars and Sterling Pounds. Thaver suggested that these prize bonds be interest-free, but hold the benefit of prizes of various denominations of lucky draws held every three to four months. The prize bonds under the amnesty would be subject to a holding period of 10 years and would be subject to a deduction for premature encashment of the bond.
The FPCCI president proposed a two-pronged strategy to tackle the foreign exchange issue of the airlines. Firstly, to clear the backlog of payments in a structured manner through well-defined instalments. Secondly, to allow airlines to remit their revenues as normal from now onwards to prevent them shifting their payment collection offices from Pakistan.
The Vice President of FPCCI, Shabbir Mansha, called for immediate action from the federal aviation minister, Khawaja Saad Rafique, to meet with stakeholders and listen to their issues and possible remedies. He added that up to 100,000 workers could be left unemployed if the travel agents cannot continue their business operations profitably.
Muhammad Raza, Vice Chairman of the Travel Agents Association of Pakistan (TAAP) for the South Zone, highlighted that the non-payment of any commission to travel agents by airlines has resulted in major job losses in the industry. “The travel agents are no longer profitable,” he said.
Pakistan is struggling with its economy due to low foreign exchange reserves. According to Arif Habib Limited Research, the country’s total reserves are $9.6 billion, which can only cover imports for 0.87 months. During the nine months of fiscal year 2023, net foreign direct investment (FDI) was down by 23% year-on-year to $1.048 billion compared to $1.353 billion in the corresponding period of last year.
Published in The Express Tribune, April 20th, 2023.
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