Karachi, July 1, 2025 – The Pakistan Chemical and Dyes Merchants Association (PCDMA) has raised serious concerns over the rampant misuse of the Export Facilitation Scheme (EFS), claiming that fraudulent practices under the scheme have inflicted a staggering Rs25 billion loss on the national exchequer.
In a strongly worded statement, PCDMA Chairman Salim Valimuhammad revealed that the EFS, which was introduced to bolster exports, has been grossly exploited, turning into a vehicle for duty evasion and tax leakage. He cited shocking data indicating that while imports under Chapters 27 to 32 – especially Chapter 3204 – surged by 80% between 2023 and 2024, there was no proportional increase in exports, suggesting that goods imported duty-free under EFS are being diverted to the local market instead of being used in export manufacturing.
The PCDMA chief explained that the government should have collected approximately Rs6 billion in customs duty and Rs18 billion in sales tax under EFS-covered imports, yet the actual revenue remained dismally low. “This clearly highlights a massive systemic failure,” Valimuhammad stated, emphasizing that EFS loopholes are bleeding the treasury dry.
He proposed a series of urgent reforms, including restricting EFS benefits only to exporters with verified Letters of Credit (LCs), and ensuring immediate disbursement of sales tax rebates and duty refunds. These steps, he argued, would ease liquidity pressure on genuine exporters and close the doors to fraudulent operators.
According to PCDMA, the unchecked misuse of EFS is also destroying fair competition. Many legitimate importers are being driven out of business as certain industries continue to enjoy tax-free imports under EFS while others are burdened with full customs and tax obligations. “We’ve seen a 25% drop in PCDMA membership, and dozens of small importers have shut down entirely,” he said.
Despite submitting comprehensive budget proposals to FBR pinpointing EFS weaknesses, PCDMA has yet to receive any official response. Valimuhammad has now made an urgent appeal to Prime Minister Shehbaz Sharif, Finance Minister Muhammad Aurangzeb, and FBR Chairman Rashid Mahmood Langrial to intervene immediately.
He warned, “If the government fails to act, EFS abuse will continue devastating formal trade and draining public revenue — a crisis PCDMA refuses to ignore.”