News Paper: Business Recorder
KARACHI (July 20 2010): The latest Afghanistan Pakistan Transit Trade Agreement (APTTA) would prove counterproductive for the local importers and manufacturers and catalyse smuggling, the business fraternity observed Monday. The authorities should have held deliberations with us before agreeing on the controversial Afghanistan-Pakistan transit trade, they added.
They were amused by Pakistan's decision to allow Afghanistan a thoroughfare from Wagah to India and also on Pakistan getting a thoroughfare from Afghanistan to Central Asia as the country (Pakistan) is already trading with the Central Asian Republics (CARs) which have levied 10 percent as service charges.
The business fraternity said the APTTA has been abused by the unscrupulous element to import products way above their actual demand in Afghanistan; meant only to return them back to Pakistan for personal gains. Due to the APTTA the locally manufactured products and imports would be undermined, depriving the government of substantial investments, corporate taxes and duties, they said.
President Karachi Chamber of Commerce and Industry (KCCI) Abdul Majid Haji Mohammad said such a decision is strange as already there are talks regarding putting quantitative restrictions on the imports through sea, as last year only more than 10,000 containers were imported by Afghanistan out of which 6,500 were of commercial nature. The KCCI firmly believe that this is not the quantum and quantity which is required by Afghanistan whereas majority of these goods are re-routed to create problems for the manufacturing sector of the country, he added.
Abdul Majid said in many meetings held in Kabul and Islamabad, private sector was very well represented by Muhammad Zubair Motiwala (former President-KCCI) and while representing the KCCI he specified all the possible negative impacts such an agreement could have on the business fraternity of Pakistan. He further said both the governments officially recorded minutes of those meetings. President KCCI opined the Afghanistan-India trade should be done under the international laws through sea via Karachi.
According to a KCCI report, prepared by its member of managing committee Qamar Usman, Pakistan is losing approximately 2 to 3 billion dollars in tax revenue ie Customs duties, GST and a total estimated volume of illegal transit trade (under the ATT) estimated to be 10 billion dollars in the last few years.
Massive scale smuggling of back tea, vehicle tyres, electronic goods, kitchen items, home appliances and other goods were done, the report noted. It also noted the people in Afghanistan prefer to drink green tea and not black tea and their market was just not able to absorb the quantity of electronics and other goods booked in great volumes, clearly indicating that something fishy was going on.
It further noted, under the ATT, Afghanistan was bound to facilitate Pakistan transit trade with CARs, but instead it imposed a number of restrictions on Pakistanis trading with CARs via Afghanistan. Afghanistan's government has made it mandatory for Pakistani traders to get their trade contracts with their Central Asian counterparts, registered with various ministries of Afghanistan.
A Pakistani trader has to pay 2000-3000 dollars per container, besides waiting for more than 15 days to get the cumbersome formalities completed. Similarly the Afghanistan government charges 300 dollars from Pakistani traders per truck on transit consignment through Afghanistan from or to CARs.
Moreover, an amount equivalent to 110 percent of Afghanistan's Customs duties has to be deposited with the authority at the time of Pakistani transit goods' entry into their country, which is refunded with a deduction of 20 percent of the deposited amount, it noted.
Referring to India and Nepal transit trade, the report noted that India prior to signing a transit trade agreement insisted on signing a bilateral trade agreement, an agreement which was negotiated well and then signed, had a clear objective towards the Indian perspective to develop and dominate Nepal's trade and industries making it totally dependent on the goods manufactured in India. A second agreement related to transit trade under the title of "treaty of transit trade" was signed afterwards.
While the bilateral trade agreement restricts Nepal to export only those products which are of Nepalese origin and no other goods could be exported to India, the transit trade agreement further strengthened this status, as it imposes a compulsory condition that imports would only be allowed by Nepal only against an authenticated import license issued by the government of Nepal and mostly against a letter of credit through a reputed commercial bank in their country.
They were amused by Pakistan's decision to allow Afghanistan a thoroughfare from Wagah to India and also on Pakistan getting a thoroughfare from Afghanistan to Central Asia as the country (Pakistan) is already trading with the Central Asian Republics (CARs) which have levied 10 percent as service charges.
The business fraternity said the APTTA has been abused by the unscrupulous element to import products way above their actual demand in Afghanistan; meant only to return them back to Pakistan for personal gains. Due to the APTTA the locally manufactured products and imports would be undermined, depriving the government of substantial investments, corporate taxes and duties, they said.
President Karachi Chamber of Commerce and Industry (KCCI) Abdul Majid Haji Mohammad said such a decision is strange as already there are talks regarding putting quantitative restrictions on the imports through sea, as last year only more than 10,000 containers were imported by Afghanistan out of which 6,500 were of commercial nature. The KCCI firmly believe that this is not the quantum and quantity which is required by Afghanistan whereas majority of these goods are re-routed to create problems for the manufacturing sector of the country, he added.
Abdul Majid said in many meetings held in Kabul and Islamabad, private sector was very well represented by Muhammad Zubair Motiwala (former President-KCCI) and while representing the KCCI he specified all the possible negative impacts such an agreement could have on the business fraternity of Pakistan. He further said both the governments officially recorded minutes of those meetings. President KCCI opined the Afghanistan-India trade should be done under the international laws through sea via Karachi.
According to a KCCI report, prepared by its member of managing committee Qamar Usman, Pakistan is losing approximately 2 to 3 billion dollars in tax revenue ie Customs duties, GST and a total estimated volume of illegal transit trade (under the ATT) estimated to be 10 billion dollars in the last few years.
Massive scale smuggling of back tea, vehicle tyres, electronic goods, kitchen items, home appliances and other goods were done, the report noted. It also noted the people in Afghanistan prefer to drink green tea and not black tea and their market was just not able to absorb the quantity of electronics and other goods booked in great volumes, clearly indicating that something fishy was going on.
It further noted, under the ATT, Afghanistan was bound to facilitate Pakistan transit trade with CARs, but instead it imposed a number of restrictions on Pakistanis trading with CARs via Afghanistan. Afghanistan's government has made it mandatory for Pakistani traders to get their trade contracts with their Central Asian counterparts, registered with various ministries of Afghanistan.
A Pakistani trader has to pay 2000-3000 dollars per container, besides waiting for more than 15 days to get the cumbersome formalities completed. Similarly the Afghanistan government charges 300 dollars from Pakistani traders per truck on transit consignment through Afghanistan from or to CARs.
Moreover, an amount equivalent to 110 percent of Afghanistan's Customs duties has to be deposited with the authority at the time of Pakistani transit goods' entry into their country, which is refunded with a deduction of 20 percent of the deposited amount, it noted.
Referring to India and Nepal transit trade, the report noted that India prior to signing a transit trade agreement insisted on signing a bilateral trade agreement, an agreement which was negotiated well and then signed, had a clear objective towards the Indian perspective to develop and dominate Nepal's trade and industries making it totally dependent on the goods manufactured in India. A second agreement related to transit trade under the title of "treaty of transit trade" was signed afterwards.
While the bilateral trade agreement restricts Nepal to export only those products which are of Nepalese origin and no other goods could be exported to India, the transit trade agreement further strengthened this status, as it imposes a compulsory condition that imports would only be allowed by Nepal only against an authenticated import license issued by the government of Nepal and mostly against a letter of credit through a reputed commercial bank in their country.
-www.brecorder.com
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