Karachi, November 25, 2023 – Pakistan has declared a relaxation period for Afghan transit goods, alleviating some of the conditions previously imposed, including the requirement for bank guarantees.
The Federal Board of Revenue (FBR) issued Statutory Regulatory Order (SRO) No. 1709(I)/2023 on November 24, 2024, to provide relief against the restrictions introduced through SRO 1402(I)/2023 on October 7, 2023.
The latest notification from the FBR specifies that the provisions of SRO 1402(I)/2023 will not be applicable to Afghan Transit Trade containers that arrived (berthed) at Pakistani ports during the period from October 3, 2023, to November 16, 2023.
The initial move to collect bank guarantees for goods intended for Afghan transit trade was initiated through Notification 1402(I)/2023. The FBR amended Customs Rules, 2001, using the statutory regulatory order to implement these new conditions. The objective behind these measures is to address instances of pilferage and the re-entry of Afghan transit goods into Pakistan, resulting in significant economic losses.
Previously, Pakistan had a revolving insurance guarantee system in place for Afghan goods. However, the FBR has opted for a more robust approach by mandating a bank guarantee system to enhance security measures.
Under the outlined procedure, authorized customs agents, brokers, or transport operators in Pakistan are required to provide financial security in the form of a bank guarantee for goods destined for Afghanistan. This guarantee, issued by a scheduled bank, must adhere to the prescribed format, be valid for at least one year, and be encashable in Pakistan. The goal is to ensure the fulfillment of any obligations arising from customs transit operations between Pakistan and Afghanistan.
The FBR emphasizes that the amount of the bank guarantee for transit operations will be determined by the Customs Computerized System or assessing officer at the departure office, covering all import levies. The designated customs officer at the office of departure will verify the bank guarantee’s details and ensure its conformity with the consignment particulars.
The bank guarantee is expected to cover the duty and taxes related to vehicles or goods accurately, aligning with the system’s or assessing officer’s calculation. Deputy or assistant directors of securities at the departure office have been assigned the responsibility of fortnightly reconciliation, encashment, revalidation, or physical release of bank guarantees, ensuring timely compliance.
This strategic move is anticipated to fortify the integrity of the Afghan transit trade route, safeguarding the economic interests of both nations. The implementation of bank guarantees introduces an additional layer of financial accountability, aiming to minimize the risk of goods pilferage and enhance the overall efficiency of the transit trade process. As Pakistan strikes a balance between facilitating trade and ensuring security, stakeholders will be closely monitoring the impact of these measures on the Afghan transit trade in the coming months.
