FPCCI concerned at continued implementation of upfront payment system

KARACHI: Irfan Iqbal Sheikh, President FPCCI, has reiterated his profound and long-standing concerns vis-a-vis continued implementation of the upfront payment system for import shipments by Pakistan Customs.

We believed that this practice runs counter to the principles of transparency, fairness, efficiency and as upheld in the Trade Facilitation Agreement (TFA); a commitment to which Pakistan is a signatory, he added.

Irfan Iqbal Sheikh proposed that it is high-time that Customs formed a liaison committee with FPCCI and appoints focal persons to resolve the issues promptly; and, the presence of such a large number of senior leadership from various trade bodies from across Pakistan at Member Customs Operations visit to FPCCI is a testimony to the fact that traders are looking for solutions through an inclusive, convergent consultative process.

Suleman Chawla, SVP FPCCI, maintained that, in addition to TFA, the upfront payment system poses several other challenges for importers in Pakistan. Firstly, it imposes a substantial financial burden – particularly on small and medium-sized enterprises (SMEs) – as they run-out of liquidity after filing goods declarations (GDs). Secondly, it causes delays in the clearance of goods – resulting in increased dwell times and unfair demurrages. Lastly, it undermines the global competitiveness of Pakistani businesses.

Nadeem Qureshi, VP FPCCI & Regional Chairman, added that Article 7.1 of TFA explicitly stipulates that “Members shall not require the payment of duties and taxes prior to the release of goods.”

Therefore, this provision aims to streamline customs procedures, reduce trade-related costs and minimize delays.

Shabbir Mansha, VP FPCCI, demanded that all containers still stuck in Customs clearance, due to the huge and unprecedented backlog of last year, should be cleared immediately after receipt of taxes through financial instruments. It is pleasant to see the most of senior management of the department in the customs delegation led by member customs operations, he added.

Engr M A Jabbar, VP FPCCI, stressed that the traders are deeply concerned about the extended dwell times of import shipments in Pakistan; as according to the World Bank’s Logistics Performance Index (WB-LPI), Pakistan’s dwell time for imports stands at 5 days – significantly surpassing the global average of 2.6 days. This extended dwell time presents a substantial impediment to trade and economic development of Pakistan, he added.

Saquib Fayyaz Maggo, Convener of FPCCI’s high-powered central standing committee on Customs, made an observation that the requirement for invoices inside the shipping containers has failed to achieve any good; and, on the other hand, has resulted in grievances from the business, industry and trade community of Pakistan.

Khurram Ijaz, Advisor on FBR Affairs to president FPCCI, demanded that the validity of FBR’s input/output co-efficient organization (IOCO) certificate should be for one year as opposed to three months or six months. It is a win-win as it reduces burden on FBR staff and facilitates the traders as well, he added.

Zeba Azher, Member Customs Operations (FBR), agreed in principle that Pakistan needs to do away with upfront payments as Pakistan is a signatory of TFA – and, the customs will look into the matter in required detail to alleviate complaints and grievances.

My visit to the apex body signifies that the Customs wants to upgrade and modernise its policies and systems in consultation with the business community; and, also aims to capitalize on FPCCI’s unique position to represent all sectors, industries, chambers and trade bodies under one-roof as the apex body, Zeba added.

Copyright Business Recorder, 2023