KCCI rejects regulatory duty on 731 items, demands immediate withdrawal

KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has rejected imposition of regulatory duty on 731 items and demanded immediate withdrawal on essential items and industrial inputs.

Muffasar Atta Malik, president of the KCCI, in a statement issued on Monday said that although the step has been taken to plug the rapid decline in foreign exchange reserves, it will have an adverse impact on the overall industrial performance and the economy, besides triggering inflation, promoting smuggling and raise the cost of many products being produced locally.

“The FBR (Federal Board of Revenue) will lose a significant amount of tax revenue due to smuggling, under-invoicing, misdeclaration and pilferage through the Afghan Transit Trade,” he added.

Malik said that regulatory duty ranging from 10 percent 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.

This 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.

Most of these products are 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, he added.

Malik said that the novel idea of using the tool of regulatory duty is an attempt to cover up the blunders of policymakers during the last few years.

“Since the government cannot walk out of the FTAs and PTAs, it has resorted to control the damages through unconventional means and imposed regulatory duty on a large number of importable items,” he said, adding that this action is not going to have any positive impact on the balance of payments situation because the items subjected to regulatory duty do not have a very large share in the total volume of imports in Pakistan.

“Rather doing away with the exemptions and concessionary tax regime enjoyed by the elite, the ministries of finance, commerce and the FBR have put the burden on the common man and small industries and trade,” Malik said.

The Karachi Chamber of Commerce and Industry president said the high-ups at the FBR, finance and commerce ministries are only focused on intensifying the hardships for the common man and the industry, whereas the difficult, but favourable decisions to implement tax reforms, remove exemptions and concessions for favourites, crackdown on corruption, under-invoicing and smuggling through Afghan Transit Trade are being avoided by the decision makers, which is the basic reason why the economy continues to stay in hot waters.

Besides demanding immediate withdrawal of the regulatory duty, Malik urged the FBR to hold meetings with the stakeholders to avoid the adverse impact on consumer prices and cost of doing business for trade and industry.