LAHORE: Small improvements in economic credentials of the country are encouraging, but ask for more efforts to wriggle out of the current economic mess. Much more is needed at the fronts that are an unnecessary burden on our economy. Luxurious style of our ruling elite and top bureaucrats at government expense is not taken kindly by our foreign friends that want to help us. The continuous bleeding state owned enterprises are crowding out our development plans.
The rampant corruption at every level has increased the cost of doing business. Elitist policies deprive the poor of their already meagre resources. When we probe the reason for flawed policy we find an influential vested interest protecting it. One wonders why Pakistan needs luxury cars, imported tiles and sanitary ware, tyres and tubes. Why do the elite avoid domestic products? Almost 95 percent of our population cannot afford these luxury products.
The elitist 5 percent manage policies in such a manner that allows free entry of these products through smuggling, managed import trade price or through under-invoicing. Actual government levies are avoided by the influential through these methods. Why cannot we ban these items totally? No hell would break. We should completely ban luxury cars as well as bullet proof vehicles.
The elite play it safe by travelling in bullet proof cars while the ordinary man faces the wrath of terrorists. If the elite is at similar risk the anti-terrorist efforts would be more effective. Our domestic industries are capable of producing quality tyres and tubes, tiles and sanitary ware. Smuggled goods must be destroyed on the spot.
Only total loss of goods would deter smugglers. These smugglers are so strong and daring that they have killed seven custom officials that effectively checked their trade. Can we allow unscrupulous and rogue elements to openly challenge the authority of the state? If immediate strict action is not taken the remaining custom staff would be cowed down.
Without effectively controlling smuggling we can never embark on a sustainable growth path. After smuggling is controlled the other avenue available to avoid government levies would be under invoicing.
Under-invoicing basically kills the domestic industry because through this channel the importers invoice their products at a very low value that not only nullifies the protective duties on these items but also reduces the landed cost to less than the cost of same domestically produced items.
The result is that the domestic producers slowly fade out. This has happened in the case of artificial leather and ceramic tiles. The growth of tyre industry has stagnated. In fact some tyre producers export their tyres at much higher price than the price written on invoice of under invoiced tyres of same sizes.
Under invoicing could be controlled through technology. Moreover the government could fix the Import Tariff Price based on the sales tax collected on similar products produced in Pakistan. Under invoicing is a curse as the importers send the foreign exchange they under invoice through hundi or hawala. It has become the largest source of money laundering in the country.