Group Members

Hamza Faiz
Sohail Ahmed
Adil Zaman
Durdana Salaam
Introduction: When you are selling your product at home country so you are in contact
with your buyers and you do not need to fulfill complex requirement and a lot of different
documents. But there is a big difference between sell inside the national border and
across the national border. You have to face different culture of that area or market,
different speaking languages, different customs, imports rules and regulation and
different currency. And order to make easy trade with different countries, few rules and
regulations have been made for the trading countries, which are usually used in import
and exchange.
Country Name: The country that we selected is Pakistan.
Exporter or Importer: Our group members have decided that we will work as exporter.
We will sell our product across national border.
Product: When you want to enter export and import trade, firstly you have to choose the
product which you will import or export. So we have chosen to sell rice across the
national board.
Opening of an office: The next step after the choosing product is the opening of an
office, and we name it as ------- Traders.
Registered as exporter: There was a case almost ten years earlier than now, that
anyone who wanted to begin trade, had to arrange a license issued by the
government for it, which is not the case now anymore. At that time there were very
few license holders, therefore, the bigger companies who wished to start trade, had to
take the help of the license holders in order to get their work going, and it was
compulsory because without getting in touch with the license holders they could not
trade. The license holders in order to trade the products of these companies, used to
charge commission for it. This was an immense problem for the companies because it
cost them ample resources. Due to this reason government of Pakistan has finished this
license system. Now everyone having current account in commercial bank and the sales
tax registration (STR) along with the payment of tax can participate in the process of
import and export.
Selecting a market or country: The exporter can’t go to each country in the whole
world and offer his product to purchase it. The exporter will choose the market from
which he can gain more and long term benefit. There are few aspects to select a market to
export.
i. The economic condition of the country.
ii. Market size.
iii. Growth rate for his product.
iv. Price of the product (it is less or more than other countries).
v. Market Location. Political Condition
Quoting a Price: Quoting a price is very easy for home market. Just calculate the
cost of production + transportation + packaging + profit, will be your price of that
product. But in the case of export quoting a price means to check many things like as:
• What price should charge to sustain the customer
• Before the calculating the price you have to think about all those costs included in
packing, commission of agent, insurance cost, transportation expenses, credit, custom
charges etc.
• You have to also check the price of same good which other countries also offering in
the markets.
• Now there are few steps of exporting a product.
Performa invoices: Firstly we sent Performa invoices in which we mentioned our
product’s (Rice) price. And our importer (Iran) has accept that Performa invoice and
sent back it to us.
Signing of contract: When the prices are accepted from our importer “Iran” then we
signed a contract for the supply of goods in which is contain of following documents.
• Exporter’s name ------- Traders
• Importer’s name -------- Traders
• Item for sale: (Rice)
• Price per Kg:
• Total quantity:
Shipping Terms (Incoterms): It vital to establish a clearly defined cut-off point to
show where the exporter’s responsibilities end and where the importer’s begins.
Incoterms deals with those questions which are related to the delivery of the goods
 from the exporter to the importer. Which includes the carriage of goods, imports and
exports clearance responsibilities, and who has risk for the condition of the products
at different locations within the transport process? There are 13 different Incoterms
and each of 13 terms sets the obligation of exporter/seller.
• In our contract we have been decided that we are using the term Free on Board
(FOB). Through this term our responsibility is to place the goods on board a shipment
or the container named in the contract of sale and the risk of loss of or damage to the
good is transferred to the seller as soon as the goods pass the container’s rail. Our
responsibilities are written below:
• We have to supply goods and the commercial invoice, or its equivalent electronic
message.
• Carry-out customs formalities necessary for the exportation of goods.
• Deliver the goods on board the vessel named by the buyer.
• In case of any loss or damage of goods until it passed the container’s rail we are
responsible.
• And we paid all cost related to the goods until they had passed the container’s rail.
And we also paid the cost of customs formalities which was necessary for exportation
as well as duties, taxes and other official charges payable upon exportation.
• And at the last give the buyer sufficient notice that goods have been delivered on
board.
Method of settlement: There are basically three methods for payment; 1st one is
“Advance Payment” through this method importer will paid the price of goods in
advance. 2nd one is the “Open Account” it is an arrangement between buyer and seller
in this method buyer will pay his debts to the seller at a fix future time which is
decide between them. The last procedure of the payment is through the Letter of
Credit (LC). The customer is provided a letter of credit by the bank, which is directly
proportional to the terms, so the supplier is provided the payment as long as the terms
are perfectly met. There are two kinds of LC, LC sight and LC Deferred payment.
The payment may be paid immediately at sight or at a later date.
And here we decided two arrangements for settlement one Advance payment and the
second is Open account.
 Mode of shipment: Basically there are three mode of shipment
• Sea.
• Air.
• Road
By air shipment is too expensive so mostly importer and exporter use other two mode
of shipment. Since the borders of Pakistan and Iran are so closely linked to each other
that there is no interaction through sea, so therefore, the act of import and export
could only be achieved through road.
Choosing the Currency: The contract that is signed between the importer and
exporter also involves the careful attention and selection of currency. The currency
plays a vital role because it is the medium through which the transaction is made.
USD should be used by Iran to make the payment in return of the export of rice. In
order to export a product, the following documents are obligatory and compulsory:
• Bill of lading
• Certificate of Origin
• Packing list
• Commercial invoice
• Phytosanitary certificate
• Good declaration
Bill of Lading: when the exporter hands over the goods to the transporter, the
transporter in return issues a certificate which is normally know as bill of lading. It is
very important for the exporter to receive the certificate from the transporter a mail it
the receiver. The receiver would only receive the goods when he will be able to show
the certificate to the transporter.
Certificate of origin: A certificate is issued by the Chamber of commerce and
industry from the exporter’s country which will verify that the certain goods belong
to the mentioned country. The names of the importer and exporter, and the mode of
shipment (by road) are mentioned in the certificate. This certificate is know as
certificate of origin.
Packing List: In the Packing list, following things are included:
Importer Name
Price per Unit
Description (Rice Quality)
Total weight
Total Value
Commercial Invoice: The commercial invoice is issued to the name of importer. In
the Commercial Invoice following things are mentioned:
Description (Product, Quality)
Quantity
Rate Per Unit
Total Amount
Phytosanitary Certificate: It is the certificate which guarantees that the agricultural
objects have been inspected officially and they are clear from pests.
Good Declaration: It is the certificate which includes the information regarding
contact number, fax number, e-mail address, Address, etc. about the importer as well
as the exporter. It also gives a brief about the vessel mode of transport (By Road),
port of discharge (Iran), delivery term: free on board (FOB), payment terms (Open
account, Advance payment), place of delivery, goods, number of packages, type of
package, Price per unit, Total amount.