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EDITORIAL: The way unchecked smuggling is hurting the tyre industry and the local exchequer alike is just another shameful example of both utter incompetence and criminal collusion on the part of relevant authorities.

Local tyre manufacturers have been crying out loud for a long time that smuggling is causing revenue loss to the tune of Rs50 billion, compromising the legitimate production business in the country and also driving away further investment into the sector.

It turns out, according to reports in the national press, that total estimated value of smuggled tyres has now reached around Rs300 billion, yet the government has still not taken “necessary action to fix the losses through vigilance at customs level, local markets and at borders with neighbouring countries,” according to industry representatives that are up in arms over this unacceptable assault on their businesses.

It’s very important to note that this lack of “necessary action” doesn’t just hurt one industry or sector stakeholders; it also flies in the face of the government’s own policies and initiatives. Local tyre manufacturing was encouraged as an important import substitution exercise, after all, to save precious foreign exchange and contribute to the economy.

The WTO (World Trade Organisation) regime did not allow outright import bans, so authorities instead taxed such items to promote the local industry and economy.

Yet while that looks very nice on paper and during policy meetings, it fails to achieve anything at all when nobody gives much thought to corruption and smuggling that circumvents the customs tax code and the only people that end up making a buck form it are unscrupulous elements in the government machinery and their shady clients that shift contraband across borders. Now who will want to put white money into a sector that is drowning in black money, especially when authorities themselves are not bothered?

There’s also the very valid point that tyres aren’t exactly the easiest thing to smuggle. They cannot be hidden, so they make their way into the country either on trucks on road or containers at the port.

Therefore it’s only logical that any serious investigation should begin with looking into border security as well as the customs departments. And when Rs300 billion worth of tyres is being smuggled right under the nose of the authorities, surely it cannot be too hard to find a string and then pull on it till this mess is sorted out.

All the industry can do is raise the alarm and point in the direction of all the foul play. It is then the government’s responsibility to take “necessary action” and protect sector-wise investment as well as the greater economy.

At a time when the entire country’s future depends on how much money we can save and create through smart investments, the burden of command and responsibility dictates that a government looking the other way as corruption eats into the economy is itself complicit in such crimes.

Legitimate tyre businesses that stepped up to the plate and put their money into import substitution, only to get their fingers burnt, have already waited far too long for the government’s “necessary action”.

It is sincerely hoped that their problems will be taken care of in a way that investors feel secure putting their money in industry once again. So far, though, even as one administration after the other takes the begging bowl around the world, nobody’s taken the trouble to take care of business at home. Until this attitude changes, or is made to change, the economy will not improve.

We wait, then, for the government to put its foot down, clamp down on this blatant smuggling, make examples out of all the bad guys, and restore sanity in the business environment.

Copyright Business Recorder, 2022

Comments

Comments are closed.

Sq Oct 02, 2022 08:27am
On the flip side, protection to local industry by imposing high taxes on imports makes the local industry monopolistic, inefficient and non competitive. The protection should be time bound and export targets introduced in order to bring price efficiency. Examples auto, airconditioning industry. Due to govt protection, consumers are getting inferior quality products at exorbitant prices.
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Anony Oct 02, 2022 10:51pm
Let trace that using footprint, living in Karachi, there is a big market for tyre in Shershah, IC, maripur, they would let you know one of the main source, Chaman Border, filling the container, pickup, Buses contain tyres crossing the border reaching domestic, no duty and easy access gain the moment and retain lucrative rates. It is more leverage to sell the smuggle tyres because of the quality and rates and sources, rest remain history, if you cant stop the smuggling, keep the taxes atleast so the industry compete
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Zafar Oct 03, 2022 07:35am
Something like a bar code engraved on tyres by FBR and custom authorities may help. Vehicles plying on road can be inspected and chalaned for using these tyres
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Saeed Oct 03, 2022 01:44pm
Are quality of local tyres are worth its price ? Never Even foreign companies for exemple Auyo industries producing low quality cars and manipulating the Pakistan environment where dishonesty is prevailing all over
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