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Smuggling:   A Colossal loss to the national economy

  1. SBP guidelines for remittances
  2. IMF mission in Pakistan
  3. Doha Bank to expand its operations
  4. Smuggling: Bara Markets and ATT
  5. Rafi Group's farm housing scheme

It is expected present government does not bow to the pressures

From Shamim Ahmed Rizvi, Islamabad
Apr 10 - 16, 2000

Although the deadline (April 13) given to the traders in Bara Markets and other deadline in smuggled goods to clear stocks of smuggled merchandise is to expire within a week or so, it is business as usual at all major market and shopping centres known for dealing in uninvoiced foreign products in the twin cities of Islamabad and Rawalpindi. The report from other parts of the country are no different.

The government has announced to recover normal duties on all smuggled goods after the expiry of the deadline on April 13. No one will be allowed to deal in smuggled items without payment of duties. Owner of a big shop in the Blue Area, full to capacity with foreign products, told this correspondent that neither any official notification to the effect has been received nor any official contacted any body in the market in this regard. "We have only read some such reports in the newspapers".

They are right in a sense. The only official word available so far on the issue came from Interior Minister Lt. Gen Moinuddin Haider (Retired) during his visit to the Lahore Chamber of Commerce and Industry (LCCI) last month when he warned retailers to clear their shops of smuggled products before the deadline expired because the government was serious about solving this problem for good. He had told them that the government was not going to retreat on this issue and everyone holding stocks of unsold smuggled items would have to pay the customs duties for selling them after expiry of the deadline. The same statement was repeated in Islamabad after a few days at press conference in which the Interior Minister said that the present government had decided to take on the smuggling mafia in the country which has caused colossal loss to the national economy. According to the Interior Minister a hefty sum of over Rs. 100 billion was lost in taxes and duties every year due to the smuggling of consumer goods.

According to the reports in the newspaper the traders of Bara Markets in NWFP and FATA have formed an association titled as "United Traders Association" and resolved to resist the government move. According to a report a meeting of the association was held in Peshawar Friday March 31 to discuss the situation arising out of an impending government's crackdown on smuggled foreign goods. The traders rejected the government's policy of extending the tax and duty regime to the Bara Markets. They termed the government policy as cruel and said that it would throw hundreds of thousands of people out of their jobs and deprive them of their living. They urged the government to take into account the peculiar situation in the tribal areas where there were no industries.

Unveiling government plans to deal with the menace of smuggling and evasion of customs and excise duty, Interior Minister said in Islamabad in January last that the three-month deadline has been set for the payment of duty on the smuggled goods. Briefing newsmen after a meeting of the high powered committee, he said that all smuggled goods will be seized and sellers will be arrested on the expiry of the deadline. The number of bonded warehouses, which have played a key role in smuggling along with Afghan Transit Trade, will be drastically brought down to single digit from the existing 48.

It is certainly a welcome decision which is bound to have a positive impact on the national economy. The national press has been consistently pleading with the past governments for action to regulate the bara markets, in accordance with law and rules. Smuggling has, over the decades, assumed an alarming proportion and turned out to be a paralled economy, which is depriving the country of its rightful levies including excise and customs duty worth over 100 billion rupees per year. Thousands of industrial units have been rendered sick, due to the availability of smuggled goods in open markets and sometime at cheaper rates. Because of successive governments wilful avoidance to curb the menace despite tall claims, mushroom bara markets have sprung up almost in every major city and town, stuffed with smuggled goods including cloth, crockery, electronic gadgets etc. Ironically, a varity of the Indian goods is also on display in these bara markets. At times, the smuggling mafia enjoyed official patronage, which made it so powerful and brazen that the agencies assigned the task of checking the smuggling, were virtually crippled.

The Interior Minister has rightly identified the bonded warehouses and Afghan Transit Trade, as the major sources of smuggling into Pakistan. The present number of bonded warehouses is totally irrelevant to the requirements of the foreign missions in the country. There is, therefore, an urgent need to regulate these smuggling dens.

Smuggling harms the national economy, any national economy, in many ways. It undermines the local industry, discourages legal imports and reduces the volume of revenues collected from duties and levies at the import stage and taxes collected at the retail stage.

Shope's shelves across Pakistan are flooded with smuggled goods of any and all descriptions. The markets of Pakistani town on the borders of Afghanistan as well as those located in such far-off urban centres as Karachi, Lahore and federal capital Islamabad are flooded with smuggled goods. Even the rural areas have not remained untouched by the flow of varieties of daily-use smuggled goods. Smuggled goods are not only easily available but are also appreciated by the bulk of buyers who prefer anything which is foreign. The situation has become so bad that smuggled products such as many premium varieties of cigarettes which are either locally produced or being legally imported have to face a tough competition from their smuggled counterparts.

While the menace of smuggling has left hardly any sector untouched in Pakistan there are certain items which are more smuggling prone than the others. Electronics items such as television, VCR, VCP, household items such as blenders, mixers, juicers, radio cassette players, air conditioners, refrigerators, irons; garments, cloth and a wide range of toileteries, perfumes, cosmetics are some of the high smuggling prone items. One can easily buy a range of known smuggled cigarettes, perfumes, electrical and electronic items, and even shoe polish. In short, smuggling has become a routine part of all economic activities in Pakistan which hardly raises any eye brows nor stirs the slightest fear of the law. Different government in the past have been making tall claims to eradicate smuggling mafia from the country. Some of them took half hearted measures but soon succumbed to the powerful lobby of smuggler mafia, let us hope that the present government does not bow to the pressures and the programme announced by the Interior Minister for curbing the menace of smuggling is persued with full force and authority.