Contraband tsunami on the horizon as economic woes worsen

High dollar rate means markets will be flooded with illicit goods which will negatively impact traders

LAHORE:

As the federal government has put a complete ban on the imports of luxury goods to save up much needed dollars, another ugly truth has reared its head - smuggling.

Even though the economy is in bad shape, smugglers are eyeing huge pay days as they rush to take advantage of the crisis. Over the last couple of years, Pakistan Customs dismantled large smuggling warehouses of imported items in Punjab but now with the dollar and fuel prices at historic highs, smugglers are regrouping to provide anything from luxury cars, tires, auto parts, textiles, powdered milk, tea leaves, and cigarettes.

While smuggling negatively impacts the government’s revenue generation targets, it also has adverse consequences for traders, who believe that the government gives birth to the menace in the first place. Malik Zaman Naseeb, president of Azam Cloth Market, the country’s largest textile market in Lahore, told The Express Tribune that whenever a government imposes unjustified taxes or raises their rates and stops imports, smuggling will inevitably increase.

“Therefore, the government should reduce taxes and take traders into confidence before making decisions.” Shehzad Sheikh, a business leader at Shah Alam Market, held similar views, stating: “FBR and other agencies estimate that $3.3 billion worth of smuggling occurs annually. Still, however, no government will sit down with traders and find a solution against the menace.”

Sheikh’s assessment of smuggling holds weight as Pakistan Customs has so far seized smuggled goods worth Rs 61 billion. A breakdown of the mammoth number revealed to The Express Tribune that arms worth Rs 49.1 million; tea leaves worth Rs 240 million; mobile phones worth Rs 290 million; alcohol worth Rs 400 million; drugs worth Rs 410 million; Gutka worth Rs 527.5 million; cigarettes worth Rs 720 million; electronic devices worth Rs 830 million; wheat and other food grains worth Rs 837 million; tires and auto parts worth Rs 888 million; betel nuts worth Rs 2 billion; cloth worth Rs 5.89 billion; and vehicles worth over Rs 9 billion were all smuggled. Since the biggest chunk of smuggling was of non-custom paid vehicles, The Express Tribune spoke to Sheikh Yasir, a trader of Lahore Jail Road Car Market, to inquire about the effect it has on the market. “Foreign-made smuggled vehicles are very cheap which is why there is an increasing trend of people towards them. With the connivance of customs and excise staff, bogus documents are also produced for such vehicles.

Due to this double standard, legal traders like us are facing difficulties,” Yasir lamented. Babar Mahmood Butt, President of Traders Organization Service Group, had a similar bone to pick with the government stating that smuggling does not take place without government and political patronage. Butt was of the view that the government should first clean up its own house and take action against the facilitators. “Their lack of action results in a scenario like this: a trader sells an item with tax duty for Rs1,000, then the same smuggled item is being sold by another trader for Rs 500,” an irate Butt said. Collector Customs Enforcement, Basit Abbasi and Collector Customs Allama Iqbal Airport, Usman Bajwa, when asked about the plight of traders conceded that the current economic situation increased the risk of smuggling but added that the department was prepared to deal with it.

“We broke the backs of organised smuggling groups across the country before and we will do it again. In light of the current situation we have increased our surveillance and strictness,” they reassured while talking to The Express Tribune.

Published in The Express Tribune, June 21^st, 2022.