For a country that is suffering from the acute fiscal deficiency syndrome, playing dilly-dally with a sector that has contributed over 12 percent to total tax revenues for the first seven months of FY11 doesn make a lot of sense.
This woebegone sector - Customs - has battled with the issue of an automated clearing system, Pakistan Automated Customs Clearing System (PACCS) to be precise, for over a year now.
Agility - the company providing the service to Pakistan Customs - had been appalled by the FBRs indifference to allotting them a formal, long-term contract for the implementation of the system.
Sources revealed that the system started out as a pilot project, and was later rolled out for regular usage by Pakistan Customs, without any formal contract with Agility. On these grounds, Agility demanded a long-term commitment with FBR, which the tax collector had been evading through short-term extensions to the implementation of the system.
And the company also holds the FBR liable for some pending service charges for the use of their services.
FBRs unresponsive stance may seem unwise, especially bearing in mind the rampant media reports avidly avowing the corruption-proofing ability of the system, which renders the clearing process fully automated and less prone to the discretionary powers of customs officials.
The extensive odes in praise of PaCCS often overshadow the downsides, however. An ex-customs official claimed that rolling out a pilot system would have some shortfalls, no matter how meticulously it might have been designed. Earlier, a trader had told BR Research, "PaCCS was not completely satisfactory as there was no price-check mechanism, leading to issues of under-invoicing and mis-declaration."
Thus, the picture may not be as one-sided as has been portrayed.
For FBR, the situation proffers two options; either develop a new system for customs clearing, or strike a negotiation with the company, perhaps, by acceding to their demand of a formal contract, and working towards further improvement of PaCCS. In the face of negligible developments with respect to option 1, the latter seems more rational at the moment.
Besides, the FBR cannot discount the popularity of the system with the traders body of the country, as Malik Sohail Hussain, Chairman FPCCI Standing Committee on Media and PR, said, "The system had made the customs clearing process very convenient for traders, especially in terms of time efficiency."
Total shutdown of the system, therefore, may not be viable, especially giving regard to arbitration expenses, believed to cost the government more than 10 times the cost of PaCCS itself.
There are reports that the two parties are in midst of some negotiations, and that the system has not been abandoned altogether.
Both parties (FBR and Agility) would likely have some negotiable areas and there is a possibility of a compromise being drawn. In most likelihood, PaCCS won be waved goodbye that readily.