Role of Commercial Banking, Merchant Banking in Trade and Trade Facilitation

2. Names of Presenters :
Shams Amlani (Roll no. 73)
M.Umair Khan (Roll no. 41)

4. The World Trade Organization (WTO)
defines trade facilitation as
‘The simplification and harmonization of
‘International Trade
Procedures’ where trade procedures
are the ‘activities, practices and
formalities involved in collecting, presenting
communicating and processing data.
In ‘International Trade’, The Role Of Commercial
Procedures, BANKS and other financial institutions has
been acknowledged in International Trade Operations.
Occasionally, ‘Trade Facilitation’ is also used literally to
mean The Improvement of transport infrastructure,
removal of Government Corruption, reduction of Customs
Tariffs, Export Marketing and Export Promotion.

5. The United Nations Centre for Trade Facilitation and
Electronic Business recommends these areas to cover better
and transparent International Trade:
oTrade Procedures.
oCustoms and Regulatory Bodies.
oProvisions for official control procedures applicable to
import, export and transit including: General Arrangement
Customs Controls, Official Documentation, Financial Securities.
oProvisions relating to payment procedures.
oProvisions relating to the use of information and
communication technologies.
oProvisions relating to the commercial practices and the use of
international standards .
oLegal aspects of trade facilitation.

7.  Commercial Banks Doing International Business are also
called merchant banks because they finance trade between
companies & Customers Located In Different Countries.
 This is done by issuing Letter of Credits (LOCs) that indicate
the customer has deposited the full amount due on an order with a
company located in a different country.
The seller company can then feel assured of being paid if it ships
goods to its offshore customer.
 Without LOCs, companies would face considerable expense
in investigating their foreign customers to make sure they
are legitimate and creditworthy, and complying with laws
and regulations of the different countries in which they
do business.

8. Trade Facilitation Status in Pakistan

9. • Trade facilitation has been a priority area for Pakistan government
since August 2001 when National Trade and Transport Facilitation
Committee (NTTFC) was formed and work was initiated on a World
Bank Funded Trade and Transport Facilitation Project (TTFP) with
technical assistance of United Nations Conference on Trade and
Development (UNCTAD).
NTTFC has been working in coordination with the concerned ministries
and public/private stakeholders for adoption of various trade and
transport facilitation measures.
IT based standardized Goods Declaration (GD) has gradually been
introduced since 2001 that enables electronic submission of the Goods
Declaration at all Customs stations in Pakistan, although hard copies of
the documents are still required.
Therefore, for the accomplishment of all these procedures and
documentation, Banking and other financial institutions are involved
in most of the cases.

10. •In 2005, PAKISTAN CUSTOMS COMPUTERIZED
SYSTEM (PACCS) was introduced under the CARE
programme and is in place at the 3 container
terminals which has introduced IT based paper free
environment (Pakistan Ministry of Commerce 2008).
“PACCS replaced the former manual clearance
system”

11. •After the introduction of PACCS, traders have a
dedicated login for accessing PACCS which is
comprised of FOUR essential components:
I. Firstly, TARIP (Tariff & Integrated Policy) that provides complete
information of regulations for import or export of cargo to & from Pakistan.
II. Secondly, INTRA (Integrated Regulatory Authorities) which is an online
nationwide network connecting all stakeholders including Government
Ministries & Depts, All software for all stakeholders is provided by PACCS.
III. Thirdly, ECHO (Enhanced Cargo Handling & Port Optimization) which is
online connectivity between the carriers, PACCS and Terminal Operator.
IV. Finally, the ACCESS (Automated Customs Clearance System) that covers
Advanced Screening For Risky Cargo, Goods Declaration with Off-Line
Support, Payment Management System, Risk Management System,
Assessment Management System, Clearance Management System,
Status Reporting System, Auctions, Warehousing, Licensing, Transits
And Transshipments.

12. Role of Banks in Import/Export
Without Commercial Banks, The International Finance
and Import-Export Industry would not exist.
Commercial Banks make possible the reliable transfer
of funds and translation of business practices between
different countries and different customs all over the
world.
The global nature of commercial banking also makes
possible the distribution of valuable economic and
business information among customers and the capital
markets of all countries.
Commercial banking also serves as a worldwide
barometer of economic health and business trends.

14. Foreign Exchange
In order to facilitate international trade and development, commercial
banks convert and trade foreign currencies. When a company is doing
business in another country it may be paid in the currency of that
country. While some of these revenues will be used to pay workers in
that country and for administrative expense such as office rent, utilities
and supplies.
Foreign Branch Banking
Some small commercial banks limit their reach to the local business
community; but as business has gone global, so have Commercial Banks.
Large banks such as Citigroup, Bank of America and Chase are retail banks
that also maintain full commercial banking activities in the United States
with branches in many countries. U.S based multinational companies can
consolidate their financial business at a single bank that handles their
Trade Finance, Currency Transactions, Project Loans, Cash Management
Investments And Deposit Accounts t h r o u g h o u t t h e w o r l d .

15. IMPORT/EXPORT DOCUMENTATION
& PROCEDURES (IN PAKISTAN)

16. B r i e f Pe r s p e c t i ve o f “Export” Documentation
1)NTN: National Tax Number Certificate, which is issued by the Income Tax
Department.
2)Sales Tax Registration: Commercial exporter is not required to register
with Sales Tax Department.
3)Bank Account: Current Bank Account is required for export proceedings
and documents.
4)Chamber Membership: Membership certificate of Chamber of Commerce
and Industries or any relevant trade association is required.
5)Documents For Clearing Agent: Once the consignment, to be exported
arrives at the port, usually a clearing agent services are sought.
6)Submission of Export Documents to the Bank: All shipping documents
covering goods exported from Pakistan and declared on form “E” must
be passed through the medium of bank within 14 days from the date of
shipment.

17. B r i e f Pe r s p e c t i ve o f “Import” Documentation
Documents required to import into Pakistan are:
1) NTN:
2) Sales Tax Registration: Sales Tax Registration is required to import
into Pakistan.
3) Bank Account: Current Bank Account is required for import
proceedings and documents.
4) Chamber Membership:
5) SALES TAX ON IMPORT: Every importer is required to pay sales tax
on taxable goods at the rate of 15% at the time of importation.
"Taxable Goods" means all goods other than those which have been
exempted from Sales Tax. Thus Every importer is required to get himself
registered with the sales tax department.

18.  Standardized trade documents have been introduced that include
Goods Declaration, Quality Certificate and Certificate of Origin
which are now in regular use.
However, the Standardized Commercial Invoice has not yet been
adopted by the TRADE AND INDUSTRY.
 In accordance with the Convention on Facilitation of International
Marine Traffic, 1965; Ships General Declaration, Crew List, Crew’s
Effects Declaration, Passenger List, Ships’Store Declaration has been
introduced.
 The same forms can be used for submission to all the concerned
organizations like Customs, Mercantile Marine Department, Port
Immigration Department,Port Health Department and the Port Authorities.
 Increasingly all the rules and regulations are being kept on internet for
wider access. The in place arrangements meet almost all the
requirements of Articles V, VIII and X.

19. Difference between Corporate & Commercial Banking
Corporate
Banking
Commercial
Banking

20. Corporate Banking
Corporate banking is defined as custom-tailored financing and
banking services for corporations. Corporate banking is
typically offered by commercial banks, and entails all the
services that can be extended on a financial level to corporate
entities to ease day-to-day operations. Cash
management, working capital loans and commercial mortgages
are just some of the products available in this form of banking.
Commercial Banking
Commercial banking is a provision of banking and other related
services for profit. Commercial banks are incorporated
companies with the main activities of accepting deposits and
disbursing loans, or of exercising fiduciary rights similar to
national banks. They also open personal and checking accounts
and offer mortgages and business loans.

21. CONCLUSION
By resolving the
existing trade
barriers, transit
trade by road can
be improved
between the ECO
member States
and other region.
The following sets of
Recommendations have been given
by the ECO Secretariat (2011).

22.  Enhancement of the implementation of the related
international and regional conventions, particularly TTFA,
TIR, and CMR.
 Streamlining national rules and regulation in line with the
international convention.
 Modernization and Standardizing of transit fleet.
 Modernization of road networks with emphasis on transit
routes.
 Updating the data and statistical information on transit
transport with providing facilities to be accessed by each
concerned authority of member.
 Streamlining national rules and regulation in line with the
international convention.

23.  ECO countries except Pakistan and
Afghanistan are increasingly making
use of TIR Carnets for promoting intraregional and inter-regional trade. The
TIR Carnet is a customs transit
document used for the international
transport of goods in transit and is
established by the guaranteeing
association.
 The Carnet contains a variable number
of pages according to the number of borders which will be crossed
during the transport. According to the TTFA the TIR Convention 1975
has been recognized as underlying
transit system among the member States.

24. “The ECO has a mandate to
strengthen the implementation of
the TIR system in the region and
facilitate the operation of this
system in the Member States. All
ECO Member States, except
Pakistan are Contracting Parties
to the TIR Convention.”
Hence, Pakistan needs to utilize
the TIR Carnets properly to
facilitate the International Trade.

25. Thank You !!!
References:
http://smallbusiness.chron.com/difference-between-corporate-commercial-banking62835.html
Bashir, Shahid, 2007; Trade Facilitation: Experience of Pakistan, Ministry of Commerce,
Pakistan, Islamabad.
Baldwin, R 1994; Towards an Integrated Europe, Centre for Economic Policy Research,
London.
Ministry of Commerce, 2009; Export Policy Order 2009, Government of Pakistan,
Islamabad.
Ministry of Finance, 2011; Economic Survey 2010-2011, Government of Pakistan,
Islamabad.
Ministry of Textile Industry, 2009, Textiles Policy 2009-2014, Government of Pakistan,
Islamabad.
OECD & WTO 2007, Aid for Trade at a Glance, 1st Global Review (Executive
Summary), WTO, Geneva.