Karachi, November 18, 2024 – A recent abrupt change in the Green Channel parameters by the Pakistan Customs Department has thrown the nation’s import system into disarray, leaving thousands of containers stranded at ports and causing severe financial repercussions for importers.
The new enforcement-driven approach has resulted in significant delays in the clearance of legitimate goods, with potential disruptions in the supply of essential items, including medicines, medical devices, steel, and pulses.
The business community has raised serious concerns over the Customs Department’s decision to tighten regulations and shift focus towards enforcement, which has led to an unprecedented drop in Green Channel clearance rates. Previously, over 47% of containers were cleared through the Green Channel, but this rate has now plummeted to less than 26%. As a result, an overwhelming number of containers are being marked for examination and further assessment, overwhelming terminal operators and customs officers. This has significantly increased the processing time, with legitimate imports now facing delays of up to four days just for grounding containers, followed by an additional two to three days for the examination and clearance process.
This delay in clearance has sparked a cascade of consequences, with importers incurring extra costs. The most significant of these is the exorbitant demurrage fees charged by private terminal operators and shipping companies. Importers are forced to pay additional charges every five days in addition to the container rents. These costs continue to accumulate, leading to serious financial losses for businesses already facing the challenges of a difficult economic climate. This increase in operational expenses not only strains the importers but also affects the larger economy, as the cost of doing business rises across the board.
Khurram Ijaz, former Vice President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and Chairman of the Customs Advisory Council, has voiced strong concerns about the changes in Green Channel parameters, which were implemented without prior notice. He stated that the sudden shifts in customs practices have created a bottleneck at the ports, with significant delays in clearing import containers, leading to a growing backlog. He criticized the lack of communication from Pakistan Customs, highlighting the need for proper advance notice when making such critical changes.
Ijaz emphasized that if any alterations were to be made to the Green Channel system, they should have been communicated transparently to importers to ensure smooth processing of goods. He further noted that the number of officers responsible for assessments should have been increased to handle the extra workload and prevent unnecessary delays. He pointed out that enforcement-heavy measures had inadvertently targeted legitimate importers who were already compliant with regulations and relied on efficient processes to keep their businesses running.
The FPCCI official called on the Chairman of the Federal Board of Revenue (FBR) and the Chief Collector of Customs to strike a balance between enforcing customs measures and facilitating trade. He highlighted that more than 90% of importers adhere to regulations and should not be penalized with burdensome delays, as such actions harm the broader goal of encouraging trade and investment.
To address these issues, Ijaz recommended a review of the Risk Management System (RMS) criteria to improve Green Channel clearance rates. He also called for the creation of a dedicated department to handle examinations and assessments, separate from litigation matters, in order to streamline operations and reduce delays. A more efficient, risk-based approach to customs clearance, he added, would benefit both importers and the country’s economic stability.
Ijaz concluded by urging the relevant authorities to promptly address the concerns of the business community and restore a balance between enforcement and facilitation to ensure the smooth flow of legitimate trade.
