LAHORE - The Lahore Chamber of Commerce & Industry has demanded of the government to cub the menace of smuggling by lowering duty tariff on smuggling-prone items.

In a statement issued here, LCCI President Sheikh Muhammad Arshad said that smuggling has become a big threat for economic growth and any sector has hardly left untouched by this menace. He said that not only the trade is industry is loser to the smuggling but it is also causing loss of billions to the national exchequer.

The LCCI President urged the authorities to stop harassing businessmen the markets. He said that smuggled goods through the borders of Afghanistan, Iran China, India and the Afghan Transit Trade form a chunk of the informal economy volume of which ranges between 50 to 60 percent of the formal economy.

He said that it is costing the national exchequer in billions. Markets across the country are flooded with smuggled goods and local industries are struggling for survival as smuggled goods are not only easily available everywhere but are also attracting the buyers who prefer foreign merchandise.

The LCCI President said that smuggling is being done in a number of shapes like under invoicing, undervaluation of goods, misclassifications, falsification of documents, mis declaration of country and short landing transit or re export of goods.

“The causes of smuggling are actually the incentives which motivate people to engage in smuggling.

 These causes basically arise from the desire of consumers to satisfy their needs. People who use smuggled goods satisfy their need to purchase desired goods. On the other hand, people who supply the illicit smuggled goods seek to satisfy their income needs”, the LCCI President added.

Sheikh Muhammad Arshad said that Smuggling is also encouraged by the large tax rates difference between neighbouring countries. This means that goods are cheaper in one country than another, resulting in enactment of import duties to protect the local industries. This scenario encourages smuggling. Administration associated with the excise tax can also be complicated and costly, adding an extra burden on the importer.

The LCCI President demanded of the government to review Afghan Transit Trade agreement as it has become the main source of smuggling into Pakistan. He said that its annual volume has been estimated at about 5 to 6 billion dollars. He said that under the cover of Afghan Transit Trade, the Afghan imports are back smuggled into Pakistan with the help of Afghan traders. It has been estimated by World Bank that in the time period 2001 to 2009, total revenue loss due to smuggling in Afghan transit trade alone is US$ 35 billion.

He suggested that in order to control the cross border smuggling, scanners should be installed at the border checkpoints and crackdown should be launched in the Bara Markets. Once sale of smuggled goods is strictly prohibited, the incentive to engage in the smuggling would be minimized.

He said that the consumer items should be divided into a number of categories. Specific FBR or Customs inspectors should be designated to look after each category, making sure that the products are distributed and sold only by registered companies. Using the data generated by the invoices and warranties of the registered companies, the officials will be able to make sure that only tax and custom duty paid items are sold in all the shops.

He said that a lot of smuggling is done on the land routes of Chaman and LandiKotal under the cover of transit trade. Effective checking at the Customs check posts can play an imperative role in curbing the smuggling on these routes. The checkposts should be established on every 50 to 100 km distance on the roads heading into the country from Chaman and LandiKotal. Multiple check posts would hinder the easy flow of various smuggled items e.g. tyres, hence discouraging easy smuggling of items on these routes. To minimise the risk of connivance, the duties of the collectors should be rotated after short intervals.

Sheikh Muhammad Arshad said that only honest and upright officers should be posted at Pak-Afghan and Pak-Iran borders. There should a proper mechanism, using the intelligence department to monitor the honesty of the officers. He said that extremely strict punishment should be given to the officials involved in directly and indirectly assisting the smugglers. There should be a process for rapid and effective prosecution of such officers and they should be banned from holding office in the future.