How to import in Pakistan?

Written by Shamsher Ali

The import procedure starts with the purchase inquiry that which companies in the world are producing the required goods (getting a quotation from the supplier; RFQ (RequestForQuote). The importer may acquire all the main details from trade directories, and trade associations (http://www.dgto.gov.pk/). When obtaining the specified data, the importer communicates with the firm that is exporting goods to understand their rates and terms of delivery. Then the supplier issues “Proforma Invoice” against the request for a quote. A Pro forma invoice is a preliminary bill of sale sent to the importing company (buyers) in advance of a shipment or delivery of goods. The invoice will typically describe the purchased items details, rates, delivery time, shipping weight, and transport charges, etc.

Order Placement: After discussing all the valid points, and agreeing on terms, and conditions from both sides of the parties the sale/purchase legal contract is formed. Importer prepares the Purchase Order. The importer must obtain the foreign exchange rates (from the national bank or from the bank through which payments will be done afterward) for the payment purpose. The importer places the order for the product from the exporter of the foreign country. The order details contain quality, price, color, quantity, etc. of the product all the terms, and conditions (like mode of delivery, shipment By Sea or By Air / Payment terms / Expected Delivery date / Origin / Port of Discharge), etc.

Logistics is to decide the terms of shipment with your buyer. Usually, FOB (Freight on Board) is the common method in which the seller will deliver the goods up to the port of departure in the exporting country, and hand them over to the buyer's shipping agent. Then from there, the importer will have to bear all the freight and shipment costs of the goods. Another possible arrangement could be EXW (Ex-works/Ex-factory) in which the customer would pick up the goods from the supplier’s factory, and all the costs of delivery up to his country will be borne by the buyer; and CIF (Cost, Insurance, Freight) in which all the cost, insurance, and freight of the goods will have to be borne by the exporter until the goods are received by the importer in his warehouse. In Karachi, the export through sea route is from Port Qasim, Kemari, and West Wharf, and for air route export is done through Jinnah International Airport.

Letter of Credit: After the order placement, and agreement of the payment term between the buyer, and seller, then the importer should acquire the letter of credit from his bank. This letter shows the credibility of the payment. For opening a letter of credit, the documents required include an agreement between Importer & Exporter, Proforma invoice, purchase order, details of exporter’s bank, and insurance policy with a premium payment receipt. The importer has to keep a certain amount of money in his account for payment to the exporter’s bank. Once the Letter of credit is opened it will be transmitted to the exporter's bank through SWIFT (Society for International Financial Telecommunication) which then forwards it to the exporter so that he manufactures the goods. Once the goods are shipped, the exporter provides the documents to the exporter’s bank which includes a bill of lading, commercial invoice, packing list, certificate of origin, etc. The exporter’s bank forwards these documents to the importer’s bank. Once the importer’s bank gets the documents it will make the payment from the importer's account through SWIFT to the exporter's bank. After making payment, Importer’s bank provides those documents to the importer so that he can take the delivery of the goods from the port.

Following are the other methods of payments available for importers

• Cash in advance/prepayment: Wire transfers and credit cards are the most commonly used cash-in-advance options available
• Documentary collections/drafts/bills of exchange: A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of payment to the exporter’s bank (remitting bank), which sends documents to the importer’s bank (collecting bank), along with instructions for payment.
• Open account: An open account transaction is a sale where the goods are shipped, and delivered before payment is due, which is usually in 30 to 90 days. This option is the most advantageous option to the importer in terms of cash flow, and cost, but it is consequently the highest risk option for an exporter
• Consignment: Under the consignment method, a retail merchandiser acts as a consignor for goods supplied by the consignee. The consignor doesn't pay in advance for the consignee's goods. Instead, the consignor pays the consignee after the sales of goods and keeps a percentage of the proceeds.
• Arranging payment: The importer needs to arrange all the payment before the arrival of the product at the port.

Note: No advance for any product except health instruments, and health medicine, and it is limited to a maximum of 10,000 $ only.

The advice of Shipment, and other documents: It is the letter from the exporter to the importer informing about the complete details of the shipment like a packing list, vessel number (in case shipment by ship) or airway bill number (in case of air freight), the port of export, description of the product, bill of lading, and invoice number, insurance, and warranty certificates, certificate of origin to his banker for their forward transactions to the importer when he receives the bill of exchange drawn by the provider.

After product shipment, the exporter compiles the important documents, and provides it to the banker for further transfer, as mentioned in the letter of credit. Coordinate with the bank to get imports registered under Bank Contract / Collection, and generate the EIF (Electronic Import Form) required for both bank, and Pakistan Customs in WEBOC portal.

Goods Arrival at Port: After the shipment of the loaded goods arrives at the port, an ANF (Arrival Notification) is sent to the consignee (nominated in the bill of lading). The ship in charge informs and provides the documents regarding goods, and import general manifest to the dock officer. Once the consignee receives the ANF, they can then start the customs clearance process to file a Bill of entry. Once this Bill of entry is filed and stamped by customs, the consignee can approach the shipping line for the release of the cargo upon arrival of the ship.

Customs Clearance: The Endorsed Original Shipping documents are forwarded to the Clearing agent to get the clearing process started, file the bill of entry, and get the goods clear from Customs inspection.

Import General Manifest (IGM) number to the shipment is generated which helps to locate the shipment in customs. After issuing this number, the shipment is offloaded.

Note: Customs duties are paid to the customs office to get the goods released. Then Logistics is arranged to transport the goods to the warehouse. If the goods are not cleared within 14 days then detention and demurrage charges are applied by port authorities depending on the size of the container.

The consignee passes on this release document to his nominated haulage (the commercial process transportation of goods) contractor for the container to be delivered at their nominated destination for unpacking. In the case of carrier haulage, the shipping line automatically does the movement once the above docs have been received.

Once the container has been delivered to the nominated destination, and the cargo unpacked, the consignee has to return the empty containers to the depot nominated by the shipping line within the specified free days allowed. The shipping lines monitor the incoming stock into their depots daily and charge demurrage (fine on late return of container as per the individual lines tariff) to the consignees that deliver the empty containers to the depot later than the free days.

Goods arrival at Site: On Shipment receipt in Warehouse, the attendant checks, and verify, and Quantity, and Type of items present in the packing list.

After successful verification, the GR of the said consignment entered in System, and Landed Cost for the same then executed to record the items received.

Documents used in an import transaction:

Packing list: A packing list is a document that includes details about the contents of a package. The packing list is intended to let transport agencies, government authorities, and customers know the contents of the package. These details help each of these parties handle the package accordingly.

B/L – Bill of Lading: A document issued by a carrier, or its agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted for transportation and must be presented for taking delivery at the destination. Among other items of information, a bill of lading contains: 

(1) Consignor's, and consignee's name,
(2) Names of the ports of departure, and destination,
(3) Name of the vessel,
(4) Dates of departure, and arrival,
(5) Itemized list of goods being transported with packages, and kind of packaging,
(6) Marks, and numbers on the packages,
(7) Weight, and/or volume of the cargo,
(8) Freight rate, and amount.

Invoice of shipment: When products are shipped internationally, the shipper will have to provide the buyer with a Commercial Invoice document. The buyer (importer) will use this invoice, and other shipping documents to get the products cleared through customs in the country of import.

To import goods, the following prerequisites are required:

• National tax number (NTN) registration from the federal board of revenue (FBR)
• Copy of CNIC/ Passport of Individual 
• One Page of Business Letter Head Pad (crossed as X),
• Bank Account Certificate issued by the bank for the account maintained in the name of the business
• Incorporation certificate by Securities, and Exchange Commission of Pakistan (SECP) in case of a company
• Visit the Regional Tax Office along with documents
• Sales tax number(STN) registration from the regional tax office
• The bank account of the applicant
• Chamber of commerce registration from the district or city office
• A written application on business letterhead addressed to the Secretary-General LCCI/KCCI/ICCI/SCCI etc for grant of membership
• Filled in Membership Form, and Signature / ID Card Form
• Photocopy of C.N.I.C of the Proprietor
• Photocopy of Sales Tax Registration Certificate
• Photocopy of National Tax Number Certificate of the Proprietor
• Original bank certificate in the name of business applied for membership.
• Copy of a previous utility bill (gas/electricity/phone) paid from the business premises.

WEBOC registration (web-based one customs): It is a web-based system for filling Goods Declaration for Import cargo. Therefore for all the Importers WEBOC registration is MANDATORY.

• Sales Tax Number Copy
• National Tax Number Copy
• NTN Verification Copy
• CNIC Card Copy
• CNIC Nadra Verification
• ATL (Active Tax Payer) Copy
• Office Registry or Rent Deed Copy
• Bank Statement for the last three months. Original
• Bank account maintenance letter. Original
• One Utility Bill of Office
• Letterhead x 3 Copies

All the above documents are submitted to Deputy/Assistant Collector WEBOC USER ID SECTION: 

• Personal appearance of the applicant before the Deputy / Assistant Collector User-ID Section with original CNIC.
• Process of taking a digital picture, and thumb impression of the applicant upon personal appearance.
• he appraisers also visit the office premises for inspection, and after that, they approve for WEBOC.

Bank Account: Current Account is needed for import procedure and documentation.

Getting Import License: Not all goods require the import license; just a few of them are subject to the import license. So, the importer must get all the knowledge about the import-export policy to know about the policy of the goods whether it requires an import license or not.