Local manufacturer seeks FBR's help to curb tyre smuggling

The government should re-evaluate the data of the items being imported via Afghan Transit Trade

ISLAMABAD (Dunya News) – A local tyre manufacturer has requested the Federal Board of Revenue (FBR) chairman to take measures to curb smuggling of tyres into Pakistan which is eating up precious government revenues and foreign exchange.

In a letter to the FBR chairman, Hussain Kuli Khan stated that many local industries have either shut down or moved out because of this illicit trade, which resulted in the loss of jobs and loss of foreign exchange. “The same situation is being faced by the local tyre industry. Smuggling is a termite that eats and hollows a country from within. It should not be allowed or tolerated for a second,” stated Hussain.

Talking about the suggestion by some sections of the industry to remove Regulatory Duty (RD) on smuggling prone items, he said this is not the solution.

“The imposition of RD to preserve foreign exchange by reducing imports last year has reduced the number of tyres imported but not drastically,” said Hussain.

He said that the data gathered by PRAL/CARE (July’17-June’18) show that the total percentage of imported tyres has only dropped on average by 11% after the imposition of RD.

“The latest figures show that smuggling meets over 52% of the tyre demand. If we minus this 11% reduction in the imports due to RD imposition, the 41% was still being smuggled so smuggling is not a result of RD imposition,” reasoned Hussain.

Therefore, he stressed, smuggling needs to be stopped and 41% is too large a figure to ignore. A large percentage of Truck Bus Radial (TBR) tyres are imported from China.

According to the figures, over 80% of TBR tyres are imported from China and tyres from China have zero percent duty on them. “Thus, there should be no smuggling of TBR tyres from China but this is not the case as majority of smuggled TBR tyres are from China,” said Hussain.

He said the government needs to enact manufacturing friendly policies so the industrial base of our country grows, and we lose our dependence on imported finished goods.

“People should also be encouraged to invest money in manufacturing and build tyres in Pakistan rather than importing forever. The government needs to clearly differentiate between importers and manufacturers in their policies,” suggested Hussain.

Currently, he added, there are only a handful of tyre manufacturers competing against over 100 smuggled or heavily under invoiced tyre brands.

Unless the industry is given some protection it will not grow, said Hussain, adding that imposition of RD was a good step in this regard but it needs to remain in place for 5 to 10 years so that the local industry can plan and implement their expansion accordingly.

He suggested that FBR should raid markets and seize tyres that the dealers cannot show papers for. “This should not be hard as the smugglers are selling these tyres openly in the commercial centers,” he added.

It should also be ensured that smuggled tyres don’t come in through the Border Check Posts at Chamman and LandiKotal. “The government should re-evaluate the data of the items being imported via Afghan Transit Trade (ATT) and see if the numbers of tyres being imported are supported by the vehicle population in Afghanistan.

“Items under the guise of ATT are either unloaded in Karachi or come back from the Afghan border via smuggling. This needs to be addressed and customs department needs to ensure that this facility is not misused,” suggested Hussain.

He hoped that these positive steps will definitely help the government to earn more in the form of duty and taxes which is the need of the time.