KARACHI: The International Air Transport Association (IATA) has asked Pakistan and Bangladesh to release airline revenues amounting to $720 million, saying the two countries were holding it in contravention of international agreements.
IATA, an international organisation representing the global airline industry, asked Pakistan to simplify the “onerous” repatriation process involving audit and tax exemption certificates in a statement, pointing out such procedures caused “unnecessary delays.”
Bangladesh, it said, had a more standardized system, though aviation needed to be a higher central bank priority to facilitate access to foreign exchange.“The situation has become severe with airlines unable to repatriate over $720 million ($399 million in Pakistan and $323 million in Bangladesh) of revenues earned in these markets,” the statement said.
IATA’s regional vice president for Asia-Pacific Philip Goh emphasised that the timely repatriation of revenues to different countries was critical for payment of dollar denominated expenses such as lease agreements, spare parts, overflight fees and fuel.
“Delaying repatriation contravenes international obligations written into bilateral agreements and increases exchange rate risks for airlines,” he said. “Pakistan and Bangladesh must release the more than $720 million that they are blocking with immediate effect so that airlines can continue to efficiently provide the air connectivity on which both these economies rely.”
Goh maintained that his organization recognized the two governments were facing difficult challenges, making it necessary for them to determine how to utilize foreign currencies strategically.
IATA said airlines in Pakistan are required to provide an auditor’s certificate with each remittance showing the amount to be remitted. “This can happen as frequently as twice a month, which can be time consuming and adds to the operating cost in Pakistan.”
Moreover, airlines in Pakistan are also required to obtain a Tax Exemption Certificate from the Commissioner of Income Tax, said IATA. The certificate is redundant since airlines operating to Pakistan are covered by avoidance of double taxation, which further prolongs the fund repatriation process, it added.
“Airlines operate on razor-thin margins,” he continued. “They need to prioritize the markets they serve based on the confidence they have in being able to pay their expenses with revenues that are remitted in a timely and efficient fashion.”
He pointed out reduced air connectivity limited the potential for economic growth, foreign investment and exports, adding such large sums of money involved in the Pakistani and Bangladeshi markets necessitated urgent solutions.
“We recognize that governments have a difficult challenge in how foreign currencies are used strategically... The timely repatriation of revenues to their home countries is critical for payment of dollar denominated expenses such as lease agreements, spare parts, overflight fees, and fuel,” Goh said.