LAHORE – SALMAN ABDUHU - Legal importers across the country are constantly facing troubles as they have to pay up to 65 percent duty on import of every tool of hardware sector while the same goods are being brought into country without paying a single penny as tax under the guise of Afghan Transit Trade, causing billions of rupees loss to national exchequer.

This was stated by Chief Executive of Shan Group Corporation Zeshan Khalil.

He said commercial importers have to pay 35 to 40 percent duties even on import of zero-rated items from China, though there is Free Trade Agreement between Pakistan and China.

Talking to The Nation Zeshan Khalil, who is also executive committee member of LCCI and Hardware Merchants Association, said that cross border smuggling, disguised as Afghan Transit Trade, has fuelled the black economy, which mounted from Rs15 billion in 70s to over Rs1.5 trillion by now, with its share in GDP increasing from 20 percent to about 50 percent.

He said that local manufacturers, by producing several quality and cost effective goods in hardware and light engineering sectors, have stopped the import of these items from China.

He said that currently, at around 60 per cent of GDP, the underground economy in Pakistan has acquired enormous proportions, inflicting heavy losses to trade, industry and the State, while it deprived the nation of badly needed revenues in hundreds of billions rupees every year. Since the under-ground economy has continued to flourish over the years, its share in GDP now might have crossed 60 per cent mark, he added.

He said that the present government has played havoc with public sector institutions like PIA, Pakistan Railways, Steel Mills, NICL, and OGDC. Pakistan Steel Mills was an organisation running in profit when this government took over and now it is recording losses in billions. He said we are wasting our most of foreign exchange on import of hardware goods after petroleum products, as all working parts in light engineering sector are imported.

He said we are facing a phenomenon of de-industrialisation in Pakistan. The energy crisis has hit the domestic sector hard after closing down of the industry in Punjab following the suspension of gas supply. Loadshedding of gas to the industrial sector in other provinces is also causing grave problems. Instead of creating employment, unfortunately, the already employed workforce is being sent home.

He said that solar energy offers an instant and simple solution for the production of electricity but there is no strategy to make solar energy available to domestic consumers at reasonable rates. If tax incentives and subsidies are provided in this sector, both the domestic and industrial sectors can get benefit from solar energy, which is a low cost option to produce energy in the long-term.

The government is impelled to meet its growing expenditure by borrowing, new taxation measures and deficit financing which, in turn, leads to inflation, price hike and poverty. But the government could easily meet its financial needs without resort to borrowing, imposing new taxes or deficit financing if it displays determination to curb corruption, smuggling, piracy and tax theft instead of over-burdening the already tax-paying segment of the population.

The failure of governance has exposed the hidden intentions and priorities of the federal government, which boasts of its successes concerning the NFC Award, Balochistan Package and 18th Amendment to hide its total failure on the economic front. He said that gas supply being given to domestic sector is insufficient to allow for daily household cooking and heating during the peak hour in winter season. The routine inflation bomb is regularly hurled at the population in the garb of petrol, gas and power hike, food prices, which then have a trickledown effect on all other commodities in the market. In the last four years, this government has failed to alleviate energy crisis.

He said that the Rental Power Plant (RPP) project was not a feasible solution, as established by the Asian Development Bank (ADB) report, but was pursued to the benefit of a bunch of beneficiaries causing huge losses to the national exchequer.