APIC '08: Pakistan petchems oppose credit rule

28 May 2008 05:34  [Source: ICIS news]

SINGAPORE (ICIS news)--Pakistan's polymer producers, traders and converters are seeking to forestall an imminent government regulation which will hit imports, market players said on Wednesday.

The market players have already petitioned the government to exempt petrochemicals from the regulation, which would impose a 35% cash payment on letters of credit (LCs) for imports of all items except food, a producer said on the sidelines of the Asia Petrochemical Industry Conference (APIC) in Singapore.

"Our liquidity will be severely restricted if this regulation comes into effect," a Pakistani polymer producer said. "We understand the government's intention to stem speculative trading, but think petrochemicals and other basic industries should be exempted."

A Pakistani converter said that its margins were already under pressure from high polymer prices, and would be further squeezed if it had fork out the 35% advance before signing an LC for imports.

"I foresee several small converters shutting down their operations if they are subject to this regulation, as inflation is already high," the converter said.

However, a Karachi-based polymer trader said he expected the government to respond positively to the petition to exempt polymer players. "I think the government will be reasonable, as the petrochemical industry contributes quite significantly to the economy," he said.

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By: Prema Viswanathan
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