Illicit trade major roadblock to investment

LAHORE: A major roadblock in the success of the latest initiative of the special investment council would be illicit trade that refers to the illegal movement of goods across borders, often involving smuggling, counterfeiting, or other illegal activities.

Business plans made by foreign investors need protection from all illicit trade. They want every economic activity to be documented.

We may bring some investment by cutting red tape and providing protection to some investors in their specific fields. But it would not resolve our economic issues. Majority of investors would keep away from the lucrative Pakistani market of 220 million if the issue of illicit trade is not fully addressed.

The responsibility for controlling illicit trade lies primarily with the law enforcement agencies, regulatory bodies, and international organisations.

These entities work together to combat various forms of illicit trade, including smuggling, counterfeiting, money laundering, and trafficking of drugs, weapons, and other illicit goods. Strengthening these regulators and making detractors of law and their abettors fully accountable is necessary to ensure better compliance of rules.

There are numerous items that enter our country illicitly. Some main items that have historically been associated with illicit trade in Pakistan include drugs in which Pakistan serves as a transit route for the trafficking of narcotics, including heroin, opium, and cannabis, from neighbouring Afghanistan. These drugs often make their way to international markets, contributing to the global drug trade.

Then comes the illicit trade in firearms and ammunition, which is a significant concern in Pakistan. Weapons are often smuggled across borders and sold illegally, fuelling various criminal activities.

Counterfeit products, including counterfeit currency, clothing, accessories, electronics, and pharmaceuticals, are known to enter Pakistan through illicit trade as well.

These items are often of inferior quality and can pose risks to consumer safety and public health.

Pakistan is also a source, transit, and destination country for illegal wildlife trade. This includes the smuggling of endangered species, their parts (such as ivory, rhino horn, and tiger bones), and live animals for the exotic pet trade.

Various types of contraband, such as smuggled alcohol, tobacco products, luxury items, and restricted or banned substances, also enter Pakistan through illicit trade channels.

Under-invoicing is another form of illicit trade. It involves deliberately misrepresenting the value or quantity of goods or services on invoices or other commercial documents to avoid taxes, customs duties, or other regulatory obligations.

Under-invoicing can also be used to illegally transfer funds across borders, evade trade restrictions, or engage in money laundering activities. Major under-invoicing originates from the goods imported from China. Tyres and tubes are the major items imported from China and India (through a third country).

Governments and customs authorities employ various measures, such as customs inspections, trade audits, and data analysis, to detect and prevent under-invoicing and other forms of illicit trade.

But persistent under invoicing shows that most of the efforts from Pakistan’s side are cosmetic. Under-invoicing cannot occur without the connivance of the government officials.

It is important to note that it is claimed that efforts are continuously being made by governments and international organisations to combat illicit trade and strengthen border control measures. But the fact that these measures have largely failed in Pakistan and controlled in our neighbouring countries shows that there is some weakness on our part as well.

Illicit trade cannot be eliminated completely as it often involves evolving tactics and networks, making it a persistent challenge. But it can be largely controlled where there is a will among authorities.