KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Muffasar Atta Malik, while slamming the recent imposition of Regulatory Duty on import of 713 items, has demanded immediate withdrawal of the unjust Regulatory Duty imposed on essential items and industrial inputs.
President KCCI said that although the step has been taken to plug the rapid decline on foreign exchange reserves but it was likely to have an adverse impact on the overall industrial performance and the economy as it will clearly trigger the inflation, promote smuggling and raise the cost of many products being produced locally.
“FBR will lose a significant amount of tax revenue due to smuggling, under-invoicing, misdeclaration and pilferage through Afghan Transit Trade”, he added in a statement issued.
Muffasar Malik elaborated that Regulatory Duty in between 10 to 50 percent has been imposed on a wide range of products including essential food items used by average consumer or by domestic industry as raw material for producing various consumer products, FMCG and exportable items, which means that this move will not only escalate prices of many products being supplied to the local markets but will also make Pakistan’s exports uncompetitive due to additional costs.
He said that most of these products were either not produced in Pakistan at all or produced in insufficient quantities, leaving no other choice but to go for importing them in order to meet the demand.
Muffasar Malik was of the view that the novel idea of using the tool of Regulatory Duty is indeed an attempt to cover up the blunders of policy makers during the last few years, whereby the government has signed Free Trade Agreements with China, Indonesia, Malaysia and Sri Lanka, without consulting the affected stakeholders and representatives of trade and industry, which has resulted in historically high trade deficit and depleted the forex reserves.
“Since the government cannot walk-out of the FTAs and PTAs, it has resorted to control the damages through unconventional means and imposed RD on a large number of importable items”, President KCCI said, adding that this action is not going to have any positive impact on balance of payments because the items subjected to RD do not have a very large share in total volume of imports in Pakistan.
“Rather than doing away with exemptions and concessionary tax regime enjoyed by elite, the Ministry of Finance, Ministry of Commerce and FBR have put the burden of RD on common man and small industries and trade”, said Muffasar Malik while referring to some of the items in the RD list which include fat filled milk, betelnut, betel leaves, desiccated coconut, tamarind, groundnut (Peanut), tomatoes, soap noodles, sulphonic acid, glues, adhesives, PVC resin, surgical products, ceramics, granite, iron or steel wool, screws/bolts & nuts, and other essential raw materials used by food, dairy, textile and other important industries.
“None of these items and many others come within the definition of luxury products and it was a matter of grave concern that the list has yet again been finalized by the FBR without consulting the stakeholders and without considering the ground realities. Rather the whole process is tantamount to just fire-fighting and lacks any long term vision to overcome the mounting trade deficit and external debt”, said President KCCI.
Muffasar Malik opined that the high ups at FBR, Finance Ministry and Commerce Ministry were only focused on intensifying the hardships for common man and the industry whereas the difficult but favorable decisions to implement tax reforms, remove exemptions and concessions for favorites, crackdown on corruption, under-invoicing and smuggling through Afghan Transit Trade were being avoided by the decision makers which was the basic reasons why the economy continues to stay in hot water.
Besides demanding immediate withdrawal of RD, Muffasar Malik urged the FBR to hold meetings with stakeholders to avoid the adverse impact on consumer prices and cost of doing business for trade and industry.
