KARACHI: Pakistan Business Council (PBC) in its budget proposals 2019/2020 has said that smuggling through Afghan Transit Trade is the biggest threat for economic growth of the country.
“Smuggling through Afghan Transit Trade has always been the biggest threat for economic growth and hardly any sector has been left untouched by this menace,” the council said.
Smuggled goods through the borders of Afghanistan, Iran, China, India and the Afghan Transit Trade from a chunk of the informal economy, volume of which ranges between 50-60 percent of the formal economy, the PCB said.
“It is costing the national exchequer in billions. Markets across the country are flooded with smuggled goods and local industries are struggling for survival as smuggled goods are not only easily available everywhere but are also attracting the buyers who prefer foreign merchandise,” it said.
The PBC suggested that goods moving under Afghan Transit Trade (ATT) from Pakistan to Afghanistan should be charged with duties and taxes under the Pakistani laws and the same should be transferred to Afghan government.
Secondly, the duties and taxes so paid should be deposited with the State Bank in the US Dollar. Further, a quantitative restriction should be applied on goods moving under ATT on the basis of consumption.
Giving rationale of the proposal, the PBC said that it would allow industry to fairly compete with unscrupulous imports, government to benefit from increased revenue.
The PBC also suggested rationalizing import tariff to promote domestic manufacturing.
The council said that the tariff structure had been distorted due to constant changes in the duty rates, the tariff structure was originally designed to support domestic manufacturing, however, changes in rates of import duties coupled with imposition of regulatory duty had led to situation where the tariff on finished products was less than that on the raw or intermediate goods.
It said that a detailed tariff exercise with the objective of rationalizing the duty structure to promote domestic manufacturing was underway. Therefore, industry needs to be taken into confident in this matter.