Foreign investors urge controlling Afghan transit trade

Foreign investors urge controlling Afghan transit trade

KARACHI: Foreign investors have urged the authorities to control Afghan Transit Trade to avoid incidence of smuggling and protect local industry.

Overseas Investor Chamber of Commerce and Industry (OICCI), representative body of foreign investors and multinational in Pakistan, in its proposals for budget 2020/2021 recommended the authorities to control the Afghan Transit Trade.

The OICCI made the following recommendations in this regard:

i. Revise the ATTA based on current reality protecting the revenue base of Pakistan without hurting the real spirit of such agreements. Please engage key stakeholders from OICCI and business community in Pakistan in such re-negotiation.

ii. Pending above, harmonize duty and tax rates to remove the incentive for evasion.

iii. Fix quantitative limits for imports based on genuine Afghan needs and size of population.

iv. Establish a basis of collecting duty/taxes at the point of entry into Pakistan for the account of the Afghanistan Government.

v. Fix import value in consultation with the brand owner in Pakistan.

vi. Containers coming back from Afghanistan should be checked by customs to ensure they are empty.

vii. There should be a negative list of items which are not utilized in Afghanistan; yet are imported and make their way into Pakistan.

viii. Streamlining of border crossing procedures on financial guarantee by banks and anti‐corruption measures.

ix. Export to Afghanistan be facilitated with simplified procedure by FBR and border control authorities.

The OICCI also recommended the introduction of stringent controls for illicit trade:

i. Introduce tighter penalties (e.g. criminal liability) for illicit trade across categories across the whole value chain – retailers, distributors and manufacturers.

ii. Introduce a special division/ task force to raid retailers and manufacturers to confiscate and destroy illicit stocks.

For tariff rationalization, the OICCI recommended:

i. Elimination of additional custom duty and regulatory duty on essential raw materials, which are either not locally available or in limited supply, used for local manufacturing.

On the basis of survey conducted by OICCI amongst its members, losses to the government exchequer due to Illicit trade (business in products which are either smuggled, counterfeit, under-invoiced imports, sold by unregistered manufacturer/seller, etc.) is estimated at Rs200 billion (tobacco alone estimated at Rs63 billion only).

The OICCI recommended following structural reforms in the Customs

i. Custom valuation should be done on modern lines through online search and matching international and regional pricing and taking local legal importers of items on board.

ii. Unauthorized imports of counterfeit products should be effectively checked through registration of brands with the custom authorities in coordination with the original brand owner/ registered in Pakistan.

iii. The data of import should be public property (restrictively) to ensure transparency and this will also help in taking over of goods under section 25A of the Custom Act, 1969.

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