President Karachi Chamber of Commerce and Industry (KCCI), Mian Abrar Ahmed has urged Advisor to Prime Minister on Finance, Dr Abdul Hafeez Sheikh to reduce the rate of ST and WHT on plastic raw material not produced in Pakistan to prevent smuggling and misuse of exemption.
He also appealed him to take up the issue of huge smuggling of plastic raw material with the concerned officials and agencies responsible for monitoring illegal movement of goods at the borders and inland routes from Balochistan to other parts of the country. At the same time, the culprits involved in this criminal activity should be taken to task to prevent heavy losses, both to the exchequer and business community conducting the trade in a legal and fair manner, he added. He pointed out that huge smuggling of plastic raw material from Iran is causing revenue loss of Rs.9.35 billion to the national exchequer.
In a letter to the advisor, Abrar said:
1. Pakistan has no production capacity for plastic raw materials including Polyethylene and Polypropylene.
2. The country meets 100 percent of its requirements by imports from various countries in the Middle East and South East Asia. The total import by volume is 650,000 metric tons. At the current global prices, value of imports comes to US$942.5 million and the potential tax revenue on imports should be US$330.0 million or Rs. 297.0 billion.
3. Unfortunately, the actual collection of Customs duties, Sales Tax and WHT on PE and PP is less than Rs.100.0 billion which is far less than the actual potential due to smuggling, exemptions under various pretexts and misuse of DTRE scheme.
4. In the last three months, 'a very large volume of High Density Polyethylene has been smuggled' from Iran to Pakistan through Balochistan borders. The volume is so huge that the open market rates of HDPE Film grade have fallen drastically in the open retail/wholesale markets of Lahore and Karachi.
5. As per the international rates of HDPE, at US$1400 per metric ton, the landed cost of legally imported High Density Polyethylene should be Rs.79.0 per lb, whereas the Iranian origin HDPE material is openly available at Rs.67.0 per lb. in the retail markets of Lahore.
6. Several representations have been made by trade associations, individual traders and industrialists and chambers of commerce in this regard but no effective action is being taken to stop the large scale smuggling conducted with complete impunity by some powerful individuals supplying the smuggled materials to open markets.
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