PAK-IRAN: GROWING BORDER TRADE

 

Developing a common border trade market

By AMANULLAH BASHAR
Sep 29 - Oct 05, 2003

Setting up of a Pak-Iran Common Border Market is under active consideration of the governments of the two countries. On the recommendations of Balochistan, the government has identified four places for setting up the proposed markets at the border. These areas include Taftan-Minjaveh, Ladgashtjalaq, Parome-Kuhak, Mand-Peshin and Santsar-Nobandan.

The motive behind establishment of a common border market is to sell goods at concessional rate of customs duty and other taxes for controlling growing cross border illegal trade between Pakistan and Iran.

Actually, a proposal for establishing common border market with Pakistan was moved by Iran on the pattern of other such markets already existing on the borders of Turkey-Iran, Turkmenistan-Iran and Azerbaijan-Iran. Since Pakistan did not have the experience of operating such markets in the past, a delegation consisting of representatives from Balochistan and other concerned organizations and commercial Counselor of Pakistan at Tehran had visited Iran in this regard. After the visit, Pakistan delegation was in agreement with the idea for establishing the border markets.

There was a consensual rationale for setting up the markets that would promote legal economic activity in the border areas with a view to provide economic incentives to the people in these remote areas on both sides of the border.

According to a study, people living across the border on both sides have little exposure to civic facilities especially the education facility. Normally the traders avoid in procedural obligations leading towards growing informal economy in that area. Being an arid area in terms of climate there is no concept of agriculture in these areas and the people have to depend on rain waters. In the face of hardships due to non-availability of adequate drinking water, the population is scarce which also discourage growth of industrialization in those areas. It is expected that setting up of common border market will eliminate smuggling, provide employment opportunities, strengthen cultural and historical linkages between the people of both sides having common traditions besides help promoting small and medium size entrepreneurship in the so far neglected areas.

The government of Balochistan fully agreed with the idea of developing a common border trade market and has reportedly identified location as well where the proposed market would be more viable and easy to manage.

A green signal has also been given by the Ministry of Food and Agriculture, Ministry of Industries and Production, and the Central Board of Revenue (CBR) for the idea for development of the border market. However, the Ministry of Petroleum and Natural Resources has reservations regarding expected revenue loss due to import of oil products and also raised apprehension on the import of low quality CNG cylinders. It may be pointed out that POL products are easily flowing into Pakistan especially in the province of Balochistan and are being sold at a much cheaper rate as compared to the POL prices in the remaining parts of the country. It is alleged by the petroleum dealers that tankers carrying refined oil even entering into Karachi and some of the gas stations were minting money by selling the smuggled oil at the prevailing rate in the city. Similarly, the CNG kits are the much sought after item in the urban areas of Pakistan these days as most of the vehicle owners are converting from oil to CNG system which must cost effective as compared to costly oil consumption. Hence it is feared that may affect the revenue, currently the government is getting through imports of CNG kits from various countries. Italy is the major source of import CNG kits due to its reliable quality.

The CBR has, however, proposed for concessionary tariffs of 10 per cent customs duty in addition to the normal levy of the sales tax and withholding tax on the selective items of imports through the proposed Pak-Iran common border market.

According to actual plan, maximum 10 percent duty rate should be imposed on the imports through that market and a 15 percent GST and withholding tax to be charged on selected items.

The proposed market is to be set up with an estimated cost of Rs105.405 million on experimental basis essentially to check increasing trend of smuggling and to provide employment opportunities to the local people living along side the border.

In order to specify certain items to be allowed for trade in common border market, a trade delegation may visit Zahidan to study the common markets and get the first hand information of the area and its problems that might emerge in the process.

The growing economic activity in that area would be certainly supported by the recent agreement between Pakistan and Iran through which people of the Makran area in Balochistan have started receiving electricity from Iran through a 132kv grid system. Power is being imported from Jakipur grid of Iran is now reaching Mand, Tumb, Turbat, Hoshab, Panjgur, Pasni and Gwadar town of Balochistan. The import of electricity from Iran will facilitate over 26,500 consumers in that area.