Exporters concerned over increased penetration of imported items

LAHORE: Exporters and manufacturers have expressed concern over increased penetration of imported products in the country.
The exporters have urged the government to secure them fair access to global markets, while manufacturers have demanded level-playing field against the imported products.
However, as the government has shown indifference to various hurdles that both the sectors face, experts have expressed certain level of sympathy.
They said Pakistan obtained the most coveted GSP Plus status in the European Union but its nearest competitor India nullified the advantage by providing even discounted rates to the exporters, equivalent to the advantage that Pakistani exporters enjoyed under the GSP regime.
Similarly, they added, the advantage Pakistan enjoyed on duty after signing FTA with China was countered by India through a product specific bilateral treaty with China obtaining similar concessions on major products that Pakistan exports.
As far as manufacturers catering to domestic market are concerned leading businessmen Ali Habib pleaded with the government to accord GSP like status to domestically produced products that pay higher levies than the imported products.
One example in this regard was that the duty on imported used cars is less than the duties on locally produced cars, still the rates of imported three years old cars are higher than the rates of similar new models sold in Pakistan.
Leading chemical and artificial leather producer Mian Anjum Nisar said the local industries are being discriminated by the tax and custom officials. He said when local manufacturers import a raw material for their industry the Import Tariff Price (ITP), on which duty is assessed, is fixed according to the latest price. “What we object to is that when a finished product is imported in to the country no such exercise is carried out,” he said, adding that in most of the cases finished products are cleared at an absurdly low value that does not even cover the price of the raw materials used.
He said import duties on most of the finished products are low but sales tax charged at 17 percent on duty paid value are very high, adding that domestic industries also pay 17 percent sales tax on the actual sales value of their finished products.
The importers of finished goods, he objected, pay much less sales tax and the product is assessed at 1/10th of the actual value, making the local product expensive.
Another menace is smuggling and wrong declaration of goods that provide advantage to the imported products and domestic manufacturers feel that they are operating in alien market.
Auto sector player Syed Nabeel Hashmi said experts have pointed out time and again that smuggling, under invoicing and wrong declaration could be largely controlled if the government fixes a cumulative duty of 15 percent on all imports and fixes the ITP of finished products and raw materials on current basis.
“The ITP should be based on the quantity of each input used in finished product along with its latest price,” he said, adding that the minimum quantity of input required for a quality product should be assessed in consultation with experts, to ensure that no substandard item would be imported in Pakistan.
He said according to Dr Ishrat Hussain the former governor State Bank of Pakistan the cost of smuggling and under invoicing to the importer ranges around 15 percent of the value of the item. If the product is released at the same cost as is paid for bribes the menace of smuggling and under invoicing would be largely controlled. This would also provide level playing field to the domestic industries and would result in steady job creation and reduction of imports to a large extent.
He said the tendency to collect taxes through customs should be discouraged and more efforts should be made to collect direct taxes which are in line with global trend.
Hashmi said no incentives or facilitations could induce investors to commit their resources in Pakistan until they are certain that no malpractice like under invoicing or smuggling would throw them out of the market.
“The fresh investment would make the industries more efficient and create numerous opportunities for growth,” he added.