Whose side are we on?

LAHORE: Pakistan is paying an unbearable price for the seemingly minor policy flaws impeding the competitiveness of businesses and unduly burdening the consumers.

Starting with port handling to the unfair duties on local poultry and strangulating procedures to approve seed varieties the businessmen are at the receiving end and the beneficiaries are those operating from outside Pakistan.

Take for instance the case of poultry where Pakistan has permitted some countries under free trade agreement duty free access on processed poultry. Poultry is providing livelihood to millions of workers in Pakistan. The country is self-sufficient in poultry meat. In recent years numerous state of art poultry processing plants have been established. All of these units are operating at much below their installed capacity. Few importers have introduced their processed poultry product brands by repacking imported processed poultry.

The domestic industry must import some spices as local products of low standard. The cumulative import duty on those inputs is over 40 percent. The duty free processed poultry also uses the same spices and inputs but there is no duty on the processed poultry.

It is against the norms of the government policy to allow import of products produced in Pakistan without duty. Still the poultry product processors are competing with the imported stuff but are unable to export poultry products because of high import duties on spices and local taxes.

The refunds are much less than the taxes paid by the sector. This is depriving Pakistan of the lucrative halal market worth over a trillion dollars. Pakistani poultry exports are nominal because of this policy.

The inefficiency of our port operations is well documented and the government hides behind the sovereign agreements signed with different port handlers. But there are other issues that do not relate to port handlers.

For instance the shipping companies allow the importers to clear their container goods within 7 days of filling the Import General Manifest (IGM). After seven days they charge container rent at $70 per day. After 14 days the rent increases to $140 per day and after 21 days it goes up to $280 per day. The IGM earlier was filed as the ship got the birth. Recently the entire import documentation has been digitalised that is a good step. However the ships as soon as they enter the Pakistani water the digitalisation forces the importer to file IGM. The ship in the meanwhile could get berth after seven days which means from day one the container rent meter is down.

When a consignment is stuck because of dispute with customs, the importer has to pay demurrage to the port handler and additional rent to the shipping company. In some cases the container retention may go up to one month and rent to $50,000 for consignment of few containers. The cost of the container is small compared with its rent but ships refuse to sell the container to the importer.

In some cases the imported goods need testing at port from accredited laboratories. Customs have very few and it may take one week before the tests are conducted by an outsourced laboratory. The planners must realise that we are paying all this amount in foreign exchange (the shippers take the rent back home in dollars). Most of the consignments are booked for upcountry (more than 70 percent of all imports). The importer is bound to return the container back to the shippers at the port. It takes a container about a week to reach Karachi or Port Qasim as the transporters wait to fill the container with goods meant for Karachi. Logically as is practiced universally the shipping lines are bound to take containers from importers at the point of final discharge. There are many other flaws in administration of ports that are increasing the cost of our exports (30 percent of inputs of exports are imported).

It is regrettable that public sector agriculture departments are dysfunctional and hardly introduce any new seed varieties. The approval of seeds presented to the regulators after extensive research takes an unusually long time. The seed variety approval system is skewed as those that give approval are all from the public sector seed research departments. Since they do not introduce new varieties they delay researched seeds from the private sector unduly.

It is interesting to note that the seed law states conditions for registering seed companies in Pakistan. Each seed company should have a research farm and qualified agriculture researchers in certain numbers.

According to the federal government website there are over 3,600 seed companies in Pakistan out of which 778 are registered with seed regulators. Hardly two dozen are actually qualified, while the rest are largely importers, bringing in any type of seed hoodwinking the Customs. We will remain a food-insecure and cotton-short country till we develop our seed sector on proper lines.