Karachi, October 3, 2023 – In a bid to curb the rampant smuggling of goods, Pakistan has introduced a 10 percent processing fee for the clearance of Afghan transit trade goods passing through its territory.
The move comes as part of the country’s efforts to safeguard its economy from the surge in imports via Afghanistan, which has been negatively impacting Pakistan’s national economy.
The Federal Board of Revenue (FBR) announced the imposition of a processing fee through SRO 1380(I)/2023 on Tuesday. This fee will be levied at the rate of 10 percent ad valorem on various Afghan transit commercial goods imported into Afghanistan while in transit through Pakistan.
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The affected goods categories include confectioneries and chocolates, footwear, machinery (both mechanical and electrical), blankets, home textiles, and garments. These products have been the primary focus of the crackdown due to their high demand in the Afghan market and the belief that a significant portion of these imports finds its way into Pakistan’s local markets, impacting the domestic economy.
Pakistan has historically maintained a corridor for imported goods destined for Afghanistan, as the landlocked country relies heavily on this route for its trade. Both nations have a transit trade treaty in place that facilitates this trade relationship. However, recent developments, such as the surge in dollar smuggling and restrictions imposed by Pakistan last year, have led to a substantial increase in imports under the transit trade arrangement. Many suspect that a considerable portion of these imported goods from Afghanistan ultimately ends up being sold within Pakistan’s borders, causing economic harm.
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It’s noteworthy that the Pakistani government lifted the ban on certain imported goods a few months ago. However, official data indicates a continuous decline in imports, with Pakistan’s economy reporting a staggering 25 percent drop during the first quarter of the fiscal year 2023-24. Between July and September, the country imported goods worth $12.19 billion, a sharp contrast to the $16.33 billion recorded during the same period in the previous fiscal year.
This move to impose a 10 percent processing fee on Afghan transit goods is seen as a measure to both regulate the trade and prevent the further decline of Pakistan’s imports. Authorities hope that by discouraging the misuse of transit trade, the country can protect its domestic economy and tax revenue while continuing to support its neighboring landlocked nation.
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As this policy takes effect, it remains to be seen how it will impact the flow of goods through the Pakistan-Afghanistan transit route and whether it will achieve the desired outcomes of reducing smuggling and safeguarding Pakistan’s economic interests.
