PTI to take up confidential report on illegal trade in PAC meeting
Commissioned by the FBR, study reveals country losing $2.63b due to smuggling.
Commissioned by the FBR, study reveals country losing $2.63b due to smuggling. PHOTO: FILE
ISLAMABAD:
Pakistan Tehreek-e-Insaf (PTI) has decided to take up a confidential official report, which revealed that the country was annually losing $2.63 billion in revenue due to smuggling of 11 goods, at the forum of a parliamentary watchdog.
On the basis of a story that appeared in The Express Tribune last week, PTI MNA Dr Arif Alvi wrote a letter to Public Accounts Committee (PAC) Chairman Khurshid Shah demanding an explanation from the tax authorities.
The report revealed that Pakistan was losing $2.63 billion a year due to smuggling of just 11 goods that were making their way through the porous borders and more alarmingly, through high seas and containerised cargo with full support of the state machinery.
The first-ever comprehensive report has estimated the value of the 11 goods at $9.1 billion.
“The issue is very alarming, therefore, I would like to request you that a notice be sent to the Federal Board of Revenue (FBR) for explanation,” wrote Alvi. “If such a report has been written, PAC would like to have a copy as well as a response on the action taken,” he demanded.
“The negative implications of smuggling for the economy could be in the range of $6 to $7 billion annually, if the impact on industry and jobs is also calculated,” he said while talking to The Express Tribune.
Although the report also mentioned the impact of smuggling on industries, it only gave the implications for the revenue in absolute terms.
Findings of the report
The study took into account the impact of smuggling high-speed diesel, vehicles, tyres, tea, auto parts, mobile phones, garments, cigarettes, plastic, television sets and steel sheets on revenues, industrial production, investment and employment.
The FBR commissioned the study titled, ‘Ascertain the Market Demand of Goods Prone to Smuggling -Establishing the Volume of Smuggling’ but later on termed it ‘strictly confidential’.
Industry
The study finds that currently the local industry has been facing detrimental consequences of the challenge of smuggling. For industries, where the smuggling regime controls 10-60% of the market, investors have either minimised production or have been forced to shut down operations completely.
However, if law enforcement agencies, particularly customs authorities, take a proactive role to safeguard the economy, the industry would not only return to full form very quickly, but new industries would also be set up to create jobs, says the study.
“Besides the revenue implications, the impact on the industry and growth is more damaging,” remarked Alvi.
Tyres
Discussing the impact of smuggling on tyre manufacturing, the study reports that General Tyres was producing only 1.7 million tyres per annum even though its production capacity is 2.2 to 2.3 million tyres. Therefore, it is operating at only 74-77% of the capacity with a workforce of 1,800 to 2,000 people.
Mobile phones, electronics
The smuggling of mobile phones has forced Q-Mobile, which has a manufacturing factory in Hub, to shut down the unit due to its inability to compete with the smuggled phones, which flood the market, notes the report.
However, if a state-of-the-art facility which could produce smartphones with Android capabilities was set up, the total cost of infrastructure would be about $16 million, according to the study. The facility would produce 2 million units a month and employ over 2,000 people.
Leading television producers such as Samsung have moved their facilities from Pakistan to the UAE due to counterfeiting and smuggling, according to the study. If a television producing facility was to reopen in Pakistan, it would require an investment of about $200-$300 million with production capacity of 1.5 million set, employing 500-1,000 people.
Published in The Express Tribune, January 27th, 2016.
Pakistan Tehreek-e-Insaf (PTI) has decided to take up a confidential official report, which revealed that the country was annually losing $2.63 billion in revenue due to smuggling of 11 goods, at the forum of a parliamentary watchdog.
On the basis of a story that appeared in The Express Tribune last week, PTI MNA Dr Arif Alvi wrote a letter to Public Accounts Committee (PAC) Chairman Khurshid Shah demanding an explanation from the tax authorities.
The report revealed that Pakistan was losing $2.63 billion a year due to smuggling of just 11 goods that were making their way through the porous borders and more alarmingly, through high seas and containerised cargo with full support of the state machinery.
The first-ever comprehensive report has estimated the value of the 11 goods at $9.1 billion.
“The issue is very alarming, therefore, I would like to request you that a notice be sent to the Federal Board of Revenue (FBR) for explanation,” wrote Alvi. “If such a report has been written, PAC would like to have a copy as well as a response on the action taken,” he demanded.
“The negative implications of smuggling for the economy could be in the range of $6 to $7 billion annually, if the impact on industry and jobs is also calculated,” he said while talking to The Express Tribune.
Although the report also mentioned the impact of smuggling on industries, it only gave the implications for the revenue in absolute terms.
Findings of the report
The study took into account the impact of smuggling high-speed diesel, vehicles, tyres, tea, auto parts, mobile phones, garments, cigarettes, plastic, television sets and steel sheets on revenues, industrial production, investment and employment.
The FBR commissioned the study titled, ‘Ascertain the Market Demand of Goods Prone to Smuggling -Establishing the Volume of Smuggling’ but later on termed it ‘strictly confidential’.
Industry
The study finds that currently the local industry has been facing detrimental consequences of the challenge of smuggling. For industries, where the smuggling regime controls 10-60% of the market, investors have either minimised production or have been forced to shut down operations completely.
However, if law enforcement agencies, particularly customs authorities, take a proactive role to safeguard the economy, the industry would not only return to full form very quickly, but new industries would also be set up to create jobs, says the study.
“Besides the revenue implications, the impact on the industry and growth is more damaging,” remarked Alvi.
Tyres
Discussing the impact of smuggling on tyre manufacturing, the study reports that General Tyres was producing only 1.7 million tyres per annum even though its production capacity is 2.2 to 2.3 million tyres. Therefore, it is operating at only 74-77% of the capacity with a workforce of 1,800 to 2,000 people.
Mobile phones, electronics
The smuggling of mobile phones has forced Q-Mobile, which has a manufacturing factory in Hub, to shut down the unit due to its inability to compete with the smuggled phones, which flood the market, notes the report.
However, if a state-of-the-art facility which could produce smartphones with Android capabilities was set up, the total cost of infrastructure would be about $16 million, according to the study. The facility would produce 2 million units a month and employ over 2,000 people.
Leading television producers such as Samsung have moved their facilities from Pakistan to the UAE due to counterfeiting and smuggling, according to the study. If a television producing facility was to reopen in Pakistan, it would require an investment of about $200-$300 million with production capacity of 1.5 million set, employing 500-1,000 people.
Published in The Express Tribune, January 27th, 2016.