KARACHI, May 30, 2025 — The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has voiced strong concern over the increasing misuse of the Export Facilitation Scheme (EFS), warning that unchecked exploitation of the policy could devastate small and medium enterprises (SMEs) and severely impact government revenues.
In a detailed statement, PCDMA Chairman Salim Valimuhammad called on Prime Minister Shehbaz Sharif and Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial to take immediate corrective measures. He alleged that many importers are illegally diverting raw materials—originally brought in duty-free under the EFS for export-related production—into the local market, bypassing taxes and violating the scheme’s core intent.
“The EFS was introduced to support export-oriented industries by allowing duty-free imports of raw materials, provided they are used for value-added manufacturing. Unfortunately, the system is now riddled with loopholes and insufficient oversight,” said Valimuhammad.
The PCDMA chief emphasized the need for real-time audit and verification mechanisms. “Current post-import audits are weak and reactive. Why can’t we have real-time digital checks to ensure the legitimacy of these transactions?” he asked.
To curb misuse, PCDMA has proposed a number of reforms, including mandatory linkage of raw material imports to verified Export Letters of Credit (LCs), and the introduction of fixed import-to-export ratios to prevent excessive or unnecessary imports. He also recommended revising the duty structure on high-tariff goods often abused under EFS, warning that failure to address these vulnerabilities would only worsen the issue of illicit trade.
Valimuhammad stressed that the continued misuse of the scheme is distorting fair market competition and compromising the viability of compliant industries. “Without immediate reforms, the EFS is doing more harm than good,” he said.
The PCDMA believes that if proper regulatory frameworks are established, the EFS can still be a powerful tool to drive export growth. However, without swift action, PCDMA warns that the scheme may need to be scrapped altogether to protect the integrity of Pakistan’s industrial and fiscal systems.