A genuine concern of Pakistani business community
Nov ,12 - 18, 2001
Pakistan's cargo both imports and export comes to
700,000-800,000 containers per year. The levy of $200 per container as
an average of War Risk levy, currently being paid by the importers and
exporters is certainly going to seriously hit the business in Pakistan.
Although the business community has raised hue and
cry over the levy of this uncalled for surcharge, nothing tangible has
come into force to save the economic activity on account of US-led war
in Afghanistan. It is amazing that on one hand Pakistan being an ally to
the UN efforts against terrorism, it is being punished through
imposition of this funny surcharge on Pakistan cargo. On the other
Indian cargo has been spared from levy of this surcharge despite the
fact it is located on the similarly coast of Indian Ocean. Business
community feels it a blind discrimination against Pakistan.
Though a delegation of Lloyds Insurance of London had
visited Pakistan, but their visit seems to be a joy ride despite of
their promise to take up the matter seriously nothing positive has come
out so far and the business in Pakistan continues to suffer.
It may be recalled that an unprecedented war risk
insurance premiums and War Risk Surcharge have been imposed on all cargo
shipments to and from Pakistan. Shipping companies are charging War Risk
Insurance @ $150 per 20 ft container of #300 per 40 ft container of
refer or dry cargo from October 5. Imposition of War Risk Insurance is
totally unjustified as there is no Naval War which could pose any threat
to the coming or outgoing ships from Pakistani ports.
The government has however assured the business
community that it is preparing a case to present before the War Risk
Committee in London against the levy of war risk insurance on Pakistan.
The war risk related levies are implying double edge
effects on Pakistan's economy in the shape of making the imports and
exports expensive while enhancing the cost of end products rendering
them out of economy of the scale.
The levy is costing heavily both on public and
private sectors leaving no option but to pay extra charges on their
cargoes. It may be noted that following the terrorist attacks in New
York and Washington on September 11, the International airline and
shipping lines had stopped their operations for Pakistan. Though some of
the airlines and shipping companies have resumed their operations but
with the charges of war risk insurance.
As a result of these levies and overall prevailing
conditions, Pakistan's exports have reduced by 45 per cent after the
imposition of war risk insurance. Both the public as well as private
sector is of the view that imposition of war risk insurance is
unjustified as neither its territorial waters nor the air space were
declared as the war zones.
The business community is of the view that the
government should take serious notice of the uncalled for levy adversely
affecting economic activity in this country. The government should take
note of the situation and should give its sovereign guarantee to the
international insurance companies and shipping lines in order to reduce
the landed cost of imported raw materials for the benefit of export
industries. The government should sort out with insurance companies the
cases where surcharges on consignments arriving before October 1, 2001
are being collected.
The Karachi Chamber of Commerce and Industry (KCCI)
has urged for complete withdrawal of the War Risk Insurance Surcharge
through the War Risk Committee in London.
KCCI has argued that neither Pakistan was engaged in
any war nor did war-like situation exists in Pakistan, hence there is no
justification for imposing the War Risk levy.
According to an estimate, the imposition of war risk
surcharges would cost Pakistan about $90 million. This would partially
offset the favourable impact of the financial relief being contemplated
KCCI pleaded that if there was any reservation on the
part of shipping lines, the government can resolve the issue by giving
This surcharge has raised the cost of imports as well
as exports manifold rendering particularly our exports uncompetitive in
the world market.
Imran Saeed, Convenor, Tajir Action Committee (TAC),
has urged the Federal Finance Minister to take appropriate measures to
get rid of war risk surcharge at the earliest. He said neither Pakistan
is at war with any country nor it is in the war zone and added that the
imposition of war risk surcharge has no justification. He said that the
war risk surcharge makes Pakistan goods not competitive in international
markets and places its competitors in advantageous position.
He pointed out that the importers are already
cancelling orders and placing no new orders for Pakistani goods.
Meanwhile, the minister of communications Lt. Gen.
Javed Asharaf Qazi has said that the government will provide sovereign
guarantee to the Lloyds Insurance of London if it does not withdraw what
he called the unjust and unfriendly war risk surcharge imposed on
shipping in Pakistan. He said that surcharge is adversely affecting the
economy which cannot afford to have its exports hurt by the surcharge.