China seeks end to foreign exchange controls

Insists businesses in Gwadar should be allowed to maintain dollar, RMB accounts

Islamabad China has requested Pakistan to initiate a pilot project for exempting settlement in Chinese renminbi (RMB) currency for export-oriented enterprises in the Gwadar Free Zone, which will give a boost to foreign investment.

It has also proposed that businesses in the free zone should be allowed to maintain US dollar or RMB accounts without foreign exchange controls to facilitate smooth remittances of profit.

Sources said that Chinese firms were seeking exemption from the Foreign Exchange Regulation Act 1947 for RMB settlement as a pilot project in the Gwadar Free Zone.

The issue was taken up in a recent meeting of the Cabinet Committee on Chinese Investment Projects (CCOCIP).

CCOCIP was briefed that China Overseas Ports Holding Company (COPHC) had requested the State Bank of Pakistan (SBP) to initiate a pilot project for RMB currency exemption by targeting export-oriented enterprises in the Gwadar Free Zone. The objective is to boost foreign investment and further develop the free zone. COPHC also proposed that businesses in the free zone should be allowed to maintain US dollar or RMB accounts without foreign exchange controls to facilitate smooth profit remittance, creating a more attractive environment for investors.

During discussions, the cabinet committee directed the Ministry of Maritime Affairs to submit a summary after seeking comments from the FBR, SBP, the Commerce Division and the Finance Division.