Tyre smuggling challenge

EDITORIAL: It turns out that yet another unintended casualty of the rupee’s collapse has been the local manufacturers of radial tyres as the falling rupee led to falling imports and the void has been filled by smuggled, substandard tyres up and down the country; hurting manufacturers, the national exchequer and the job market all at once.

Now, the rupee’s infirmity cannot be fixed easily, given the precarious state of the economy, but smuggling can and should be checked. And that is exactly what happened last year, when the government’s efforts to stop illegal dollar trade, especially to and from Afghanistan, also shut down other, similar rackets associated with the Afghan Transit Trade (ATT).

But now things are more or less back to the old ways with smuggled tyres dominating the local market. Pakistan’s annual tyre consumption stands at 14.5 million units, with domestic production able to cater only to a quarter of the demand and only 10 percent met through legal imports.

The rest, unfortunately, filter into the market through illicit channels, dealing a Rs70bn blow to the government and further cutting down an already compromised local manufacturing industry. There’s no doubt that the government will have to enforce the same border checks as last year while also sorting out production bottlenecks, because so long as there is unmet demand, and no legal way of meeting it, the black economy will automatically inflate.

There’s also the safety aspect to consider, of course. Industry insiders complain that smuggled tyres of inferior quality arrive in substandard condition, mostly torn tyre beads and structure; complete with tampered dates. Then smugglers use mechanical tools to treat the most obvious deformities, diminishing their operational lifespan and posing considerable risk to public safety.

People still buy them because they are readily available and much cheaper than genuine products, raising an altogether new headache for authorities in the form of increased number of road accidents and medical emergencies. And we go round in circles.

It’s the government’s duty not just to crack down on all forms of corruption, but also to protect and incentivise local industry, which is the backbone of the economy because it creates employment, generates taxes and saves forex for the country. And since this country struggles on all these fronts, the responsibility of those in charge is much more magnified. But now these issues will get even less attention than usual because of unprecedented political noise and polarisation, which has only increased because of the suspect general election.

Yet these problems must be fixed regardless of the wider political environment. There are enough security and surveillance outfits, which can and must act without waiting for the political machinery to get its act together. Hopefully, the local tyre industry will not have to shout any louder to be heard.

Smuggling, hoarding, theft, etc., are not isolated problems but affect all sectors alike. The government proved last year that it can control these things when it wants to. It now has to exhibit the ability to root them out altogether.

Copyright Business Recorder, 2024