by: Dr. Mirza Ikhtiar Baig:
On the directives of the apex committee of the Special Investment Council (SIFC), it has been decided to ban the import of 5 luxury items, including tea, tiles, fabrics, cosmetics, electronic equipment, through Afghan transit trade to prevent smuggling in the country.
And luxury vehicles are included and to discourage the import of luxury goods, the FBR increased the customs duties on them, due to which they are now being imported through the Afghan transit trade from Torkham, Panjgur, Nushki and Mashkhel, neighboring areas of Pakistan and Afghanistan.
They are being smuggled and sent to Pakistan and Pakistan is losing 3.3 billion dollars annually from this illegal trade. The trade of goods imported through Afghan transit for Pakistan has increased from $4 billion to $6.7 billion in the fiscal year 2022-23. Unfortunately, 74% of mobile phones sold in Pakistan, 53% of diesel, 43% of engine oil, 40% of tires and 16% of auto parts are smuggled. Apart from this, 150 million dollars are smuggled from Pakistan to Afghanistan per month, i.e. 2 billion dollars per year.
The diesel and petrol used in Pakistan are being smuggled from Iran in large quantities due to which Pakistan’s refineries are forced to produce less than their capacity.
Due to smuggling, there has been a decrease in Pakistan’s imports of silk cloth by 48%, electronics equipment by 62%, vehicle tires by 42%, tea by 51%, machinery by 34%, vegetables and fruits by 46%, while During this period, the Pak-Afghan transit trade has increased by 67% because these goods are being smuggled into Pakistan in the name of Afghan transit trade.
According to Caretaker Prime Minister Anwarul Haq Kakar, Pakistan is losing 310 billion rupees annually due to Afghan transit trade and smuggling of petroleum products, which economic experts have described as the main cause of Pakistan’s undocumented economy, which is having negative effects on the country’s economy. . Another major problem is the smuggling of Iranian oil through Balochistan. Pakistan sells smuggled Iranian diesel and petrol worth about $2 billion annually, accounting for 30 percent of domestic demand.
Apart from this, the annual smuggling of gold, diamonds, gems and precious stones is also included. 90% of the country’s gold and more than 80% of betel nut, dry fruits, hot spices come from shipment or smuggling instead of being imported, while thousands of vehicles, opium, poppy and weapons are being smuggled into Pakistan without paying customs duty. .
The annual consumption of tea in Pakistan is 225,000 tons, a large part of which comes to Pakistan through smuggling through the Afghan transit trade, which is causing a loss of 35 billion rupees to the national exchequer in terms of customs duties and taxes. And 80 billion rupees are being lost from illegal smuggling of cigarettes, 90 billion rupees from tires and engine oil, 45 billion rupees from medicines and 60 billion rupees from real estate, which makes a total of 310 billion rupees annually.
Pakistan’s gold market is worth Rs 2,200 billion ($7.1 billion), of which only 1.32 percent (Rs 29 billion, $94.5 million) of gold is legally imported, while the rest is smuggled. Small and medium scale industries of Pakistan are affected due to non-competitiveness due to smuggling.
The Ministry of Commerce has proposed that a bank guarantee and insurance of 100% value equal to duties and taxes be taken on Afghan transit trade imports of luxury goods and a 10% processing fee on transit trade is also imposed so that these goods can be re-entered in Pakistan. Don’t be so easy to smuggle.
According to the international laws, the countries which are deprived of sea and ports, neighboring countries are obliged to give land corridors for trade. As Afghanistan does not have a sea route, it needs its neighboring countries Pakistan and Iran to import its goods through the ports of these countries and access the markets of Central Asian countries through Pakistan.
During the PPP era, in the presence of US Secretary of State Hillary Clinton, a new Pak-Afghan Transit Trade Agreement was signed, according to which Afghanistan will give Pakistan a land route to access the markets of Central Asian countries, and Afghanistan’s goods will also reach India through Pakistan. India will not be able to export its goods to Afghanistan through Wagah border through Pakistan.
Unfortunately, the Afghan transit trade facility has been used for smuggling to Pakistan instead of importing genuine goods for Afghanistan, which is causing serious damage to the national economy. Recently, I had a meeting with the DG Rangers Sindh Major General Azhar Waqas along with businessmen, in which the smuggling of diesel through the hub in Karachi, the seizure of thousands of sacks of sugar and luxury goods worth more than 3 billion rupees, by demolishing illegal water hydrants.
Strict measures like arresting the responsible, raids on dollar hoarders and deportation of illegal Afghans and the law and order situation in Karachi were briefed. It is a matter of concern that Pakistan’s undocumented and illegal economy has reached 60 percent of the country’s total GDP and steals 6 percent of GDP (Rs. 310 billion) every year in taxes and customs duties in just 5 sectors. is going on which the economy, national industry and national treasury cannot bear.
My Commerce Minister Gohar Ijaz has suggested that the global Afghan transit trade should be established to stop smuggling.