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Smuggling: Government's action plan

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Besides depriving the national exchequer of billions of rupees in revenue it has badly hampered the growth of local industry

From Shamim Ahmed Rizvi, Islamabad
Jan 24 - 30, 2000

Though belated the Present Government has decided to take on the smuggling mafia in the country which has caused colossal loss to the national economy. While announcing the decision the Minister for Interior Moinuddin Hyder admitted that goods worth over Rs. 100 billions were annually being smuggled into Pakistan from different channels causing a loss of over 30 billion annually to the national exchequer.

Unveiling government plans to deal with the menace of smuggling and evasion of customs and excise duty, Interior Minister said in Islamabad 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. We have, in fact, been consistently pleading with the past governments for action to regulate the baramarkets, in accordance with law and rules. Smuggling has, over the decades, assumed an alarming proportion and turned out to be a parallel economy, which is depriving the country of its rightful levies including excise and customs duty worth over 100 billion rupees as per independent estimate. Thousands of industrial units have been rendered sick, due to the availability of smuggled goods in open markets. 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 snuggled goods including cloth, crockery, electronic gadgets etc. Ironically, a variety of the Indian goods is also on display in these bara markets. At times, the smuggling mafia enjoyed official patronage, which had made it so powerful and brazen that 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 a 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.

Shops' shelves across Pakistan are flooded with smuggled goods of any and all descriptions. The markets of Pakistani towns 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.

Similarly, a number of medicines produced in neighbouring India by multinational pharmaceutical companies are being smuggled into the country to undermine the same products produced by the same multinational in Pakistan due to a huge price difference. Contrary to the popular belief that smuggling helps provide such quality products at much lower prices at the benefit of the users is however remains untrue in Pakistan. This is primarily due to the fact that though the prices of such medicines are one tenth in India than in Pakistan are nevertheless are sold by the unscrupulous elements at par with the going prices in Pakistan. This is due to the fact that hardly ever a buyer look at the packing to note that the product he has just bought was made in the neighbouring country.

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 televisions VCR, VCP, hi-fis; household items such as blenders. mixers, juicers, radio cassette players, air conditioners, refrigerators, irons; garments, cloth and a wide range of toiletries, 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. Instead, a smuggled good is proudly flaunted.

The banes that the dirty trade of smuggling has been inoculating in the veins of the society in different ways and forms are immeasurable. Besides depriving the national exchequer of billions of rupees in revenue every year, it has badly hampered the growth of local industry and trade of indigenous products. Money makers in this trade escape customs duty, income and wealth tax and grow wealthier while the government has been getting poorer day by day. Coupled with illicit trade of narcotics and rampant corruption at almost all leves, it has been one major cause of economic ruins besides creating a parallel economy in the country.

Government in the past have been making tall claims to eradicate smuggling mafia from the country. Some of them took half hearted measure but soon succumbed to the powerful lobby of smugglers mafia. Let us hope that the programme announced by the Interior Minister for curbing the menace of smuggling will be pursued in right earnest, rather than succumbing to the mafia's pressures like the previous governments.