Effective global transit trade monitoring is contingent upon the integration of transparency, advanced technology, and collaborative stakeholder engagement. A notable example can be found in the European Union, where the New Computerised Transit System (NCTS) facilitates seamless monitoring through real-time tracking and electronic documentation, thereby minimising administrative delays and enhancing compliance.
Effective global transit trade monitoring is contingent upon the integration of transparency, advanced technology, and collaborative stakeholder engagement. A notable example can be found in the European Union, where the New Computerised Transit System (NCTS) facilitates seamless monitoring through real-time tracking and electronic documentation, thereby minimising administrative delays and enhancing compliance.
Similarly, Singapore's TradeNet system consolidates customs, logistics, and regulatory processes into a singular digital platform, which not only improves efficiency but also reduces costs for carriers. In the US, the Customs-Trade Partnership Against Terrorism (C-TPAT) programme emphasises the development of public-private partnerships to bolster supply chain security while mitigating trade disruptions. South Korea incentivises carriers through tax breaks and subsidies for the adoption of certified tracking technologies, thereby promoting voluntary compliance within the industry.
These instances highlight the critical need for systems that prioritise user convenience, cost-effectiveness, and regulatory equity. By benchmarking against global best practices, Pakistan holds the potential to refine its transit trade monitoring framework and foster trust among stakeholders. Unfortunately, Pakistan has recently implemented a strategy that contradicts these principles, which has hindered trade facilitation and resulted in substantial losses for businesses, ultimately impacting the national economy.
In a recent development that has incited considerable controversy and concern within Pakistan's bonded carrier community, the Directorate General of Transit (DG Transit) has issued a directive mandating the installation of Prime Mover tracking devices from specifically designated companies. This requirement imposes an additional financial burden exceeding Rs300 million. The decision has faced criticism not only for its economic ramifications but also for purported violations of Rule 111(1) of the Customs Rules, 2001. The associated challenges may disrupt the efficiency of transit trade monitoring and significantly jeopardise revenue.
Under this new directive, bonded carriers operating in Pakistan are compelled to install Prime Mover tracking devices from three designated suppliers. This vendor arrangement has raised questions. For carriers, the directive imposes substantial challenges. In recent years, these carriers have made significant investments in tracking systems, amounting to approximately Rs560 million on TPL Trakker devices. The abrupt enforcement of a new system from designated providers not only undermines these previous investments but also adds financial pressure to a sector already contending with escalating operational expenses.
The financial implications of this directive are considerable. The anticipated costs for the installation of new devices will amount to Rs300 million, a burden predominantly absorbed by bonded carriers, many of which are categorised as small- and medium-sized enterprises (SMEs). The imposition of a new system without offering compensation for prior investments complicates financial planning and jeopardises operational sustainability.
Should the transition fail, carriers might be compelled to revert to the original system, necessitating further investment. This financial strain has the potential to lead to increased freight charges, which would, in turn, be passed on to consumers. Such a cascading effect could exacerbate inflationary pressures within an economy already facing challenges related to rising costs and economic instability.
The legality of the directive in question has recently faced considerable scrutiny. The mandate infringes upon Rule 111(1) of the Customs Rules, 2001, which regulates the operations of bonded carriers. This rule underscores the principles of fairness and transparency in regulatory practices, principles that many assert are being overlooked in the present circumstances. Legal experts have indicated that the selection of companies, devoid of an open bidding process or the enforcement of proper licensing requirements, fundamentally undermines the rule of law. The absence of a licence exacerbates the situation, raising significant concerns about the criteria employed to designate these service providers and the broader implications for regulatory compliance.
Bonded carriers that have made prior investments in existing tracking systems should receive compensation for their investments or be permitted to continue utilising their current devices. All designated tracking device providers must fulfil licensing and regulatory requirements to guarantee their credibility and reliability
Pakistan's transit trade represents a critical sector of the national economy, facilitating trade with neighbouring countries and contributing substantially to national revenue. The introduction of new tracking systems, implemented without adequate preparation and stakeholder consultation, threatens to disrupt this essential sector. Bonded carriers are integral to the efficient operation of transit trade, providing secure and dependable transportation for goods. A sudden transition to new tracking devices could result in operational inefficiencies, delays, and heightened risks of cargo theft or mismanagement.
The absence of a thorough transition plan has also intensified apprehensions regarding potential revenue losses stemming from deficiencies in trade monitoring. A representative of the Bonded Carrier Association stated, “We have already made significant investments in TPL Trakker devices, which have demonstrated reliability and effectiveness. Mandating a shift to a new system not only undermines our financial investments but also disrupts our operational continuity. This directive is both unjust and a clear violation of established rules.”
The broader business community, particularly the bonded carrier sector, has expressed strong disapproval of the directive, with industry representatives denouncing it as an arbitrary decision. Many stakeholders have advocated for the immediate retraction of the mandate, voicing concerns about its financial implications and potential adverse effects on trade and the overall economy. Chambers of commerce and trade associations have urged the government to reconsider the directive and to engage in constructive dialogue with stakeholders to identify a mutually beneficial resolution.
In contrast, customs officials have defended the directive, asserting that the measure aims to enhance the efficiency and security of transit trade monitoring. Proponents maintain that the designated tracking systems incorporate superior technology and better integrate with customs monitoring frameworks. Nonetheless, these assertions have not alleviated the concerns of bonded carriers, who argue that the government has not provided empirical evidence to substantiate these claims. The perceived lack of transparency and consultation in the decision-making process has further eroded trust between the government departments and the private sector.
The ongoing controversy surrounding the directive underscores broader challenges within Pakistan’s regulatory framework. The absence of a transparent and inclusive decision-making process has long been a contentious issue for businesses, undermining investor confidence and hampering economic growth. Particularly critical are the implications for the transit trade sector. Any disruptions within this sphere could have significant ripple effects on Pakistan’s trade relations with neighbouring countries, notably Afghanistan and Central Asian states. Such disruptions could potentially jeopardise Pakistan’s ambition to position itself as a regional trade and transit hub.
To address the concerns of bonded carriers and ensure the optimal functioning of transit trade, several measures must be undertaken. The government must engage in substantive dialogue with bonded carriers and other stakeholders to gain an understanding of their concerns and to develop a mutually acceptable solution. The existing mandate should be reviewed to ascertain compliance with Rule 111(1) and other relevant regulations. Furthermore, a transparent and open bidding process ought to be implemented for the selection of tracking device providers.
Bonded carriers that have made prior investments in existing tracking systems should receive compensation for their investments or be permitted to continue utilising their current devices. All designated tracking device providers must fulfil licensing and regulatory requirements to guarantee their credibility and reliability. A comprehensive transition plan should be devised and executed to minimise disruptions, thereby facilitating the seamless integration of new tracking systems.
Failure to adequately address the carriers’ concerns may yield substantial repercussions for Pakistan’s transit trade sector and the broader economy. By adopting a transparent, inclusive, and equitable approach, the government can mitigate these risks and ensure the sustained growth and stability of this vital sector.
The writer is a trade facilitation expert, working with the federal government of Pakistan.