Moaaz Manzoor

The federal government has outlined a series of banking and foreign-exchange reforms for gemstone exporters under the National Policy to Realize Pakistan’s Gemstone Potential 2026–30, aimed at improving access to finance, easing export transactions and supporting formalization of the sector.

According to the policy document prepared by the Ministry of Industries and Production, limited access to formal banking services has remained a major constraint for gemstone businesses due to informality, valuation risks and restrictive foreign-exchange regulations. The document states that most gemstone-related transactions are currently cash-based and undocumented, discouraging banks from providing trade finance and other financial services.

The policy notes that exporters have faced uncertainty regarding the requirement of advance receipt of export proceeds, low foreign-exchange retention limits and difficulties in accessing foreign currency for importing machinery and equipment required for processing and beneficiation. These constraints, the document states, have hindered investment and delayed export realization.

To address these issues, the policy proposes de-linking gemstone exports from the requirement of advance receipt of export proceeds, providing exporters greater flexibility in negotiating sales and managing cash flows. In addition, the policy calls for enhancing the foreign-exchange retention limit from the existing 10% to 50%, bringing gemstone exporters at par with the information technology sector.

The document further states that the maximum period allowed for realization of gemstone export proceeds, currently one year, will be extended to two years to account for the seasonal nature of mining and longer sales cycles associated with gemstones. These measures are intended to align regulatory requirements with the commercial realities of the sector.

Access to foreign exchange for the import of machinery and equipment required for local beneficiation is also addressed in the policy. According to the document, necessary regulatory measures will be taken to ensure the availability of foreign currency for importing cutting, polishing and processing equipment, supporting the expansion of domestic value addition.

The policy emphasizes that these concessions will be available only to gemstone businesses registered with the proposed statutory authority and exporting through the National Warranty Office framework. This linkage is intended to reinforce compliance, traceability and formalization objectives.

In addition to foreign-exchange reforms, the policy highlights the need to improve banking practices related to gemstone transactions. It notes that commercial banks currently lack trained personnel and standardized operating procedures for handling gemstone-related business, leading to delays or denial of services such as opening of foreign-currency accounts, issuance of financial instruments and trade financing.

To address this gap, the policy proposes the establishment of specialized banking desks in designated branches serving major gemstone clusters. These desks will be staffed by trained officers with expertise in gemstone transactions, foreign-exchange management and customs procedures. The Ministry of Industries and Production and the proposed authority will work with the State Bank of Pakistan and the Pakistan Banks Association to implement this initiative.

The document also outlines measures to strengthen financing options, including recognising certified gemstones as acceptable collateral, developing simplified due diligence templates for small traders, and promoting digital payments to create auditable transaction trails. Training sessions for bankers and gemstone businesses on compliance and anti-money laundering requirements are also proposed.

According to the policy, these banking and foreign-exchange reforms are intended to reduce transaction costs, improve predictability and encourage repatriation of export proceeds through formal channels. By improving access to finance and easing regulatory barriers, the government aims to support export growth, value addition and long-term development of the gemstone sector.

Credit: INP-WealthPk