Over a dozen shipments carrying computer hardware components and IT equipment are waiting clearance at the Karachi Port, as the importers are reluctant to get them released.
According to details, a number of shipments of IT-related equipment have been stuck up at the Karachi Port and the airport for custom clearance for the last three days due to the confusion created after the Federal Budget-2007-08, in which certain items, which earlier fell in section 84(71&73) were put in 84(43).
Importers said that certain items, including printers, toners, memory, etc had been put under 84(43), due to which the importers were being asked to pay five percent income tax along with five percent customs duty and the 15 percent GST was already there.
A leading importer told Business Recorder that the importers were delaying to get their consignments released due to this problem and added that hopefully the issue would be resolved soon. Sources in the sector said that consignments were stuck up due to the difference produced theoretically between the Harmonised System Code (HSC) and Pakistan Custom Tariff Code (PCT).
In the recent budget, customs tariffs for the IT equipment are mismatching with the products. As of January 1, 2007, the World Customs Organisation (WCO) introduced the WCO Harmonised System for High-Tech products, a uniform coding system, according to which customs department fix different import-related taxes.
Every year new technology is invented and World Custom Organisation has allotted them new numbers in their HSC code. This year new items were listed while in the recent budget the government merged both the documents.
When highlighted the issue, the Central Board of Revenue asked the importers to prepare a new document with the help of last year''s budget customs tariff and the World Custom Organisation HS code otherwise the current customs tariff, 2007 would be implemented for the year.
It was learnt that a group of IT equipment importers, on Wednesday, submitted clarification certification to CBR hoping that the issue would be solved and their shipments would be released. Pakistan is completely dependent on imports to meet its computer equipment requirements, as not a single component is manufactured in the country.
According to Pakistan Computer Association (PCA), the total AFU import value of computer equipment in the country has declined by 13.5 percent due to the 15 percent GST imposed in the last budget on imports of these components. This decline has been a direct result of the increase in smuggling of these items.
Report says the IT industry was growing till 2006 since the imports reflect the market consumption. But the expected figures for 2007 are lower than 2006 and even lower than 2005, whereas these were expected to be higher.
The Global Competitiveness Report 2006-07 published by the World Economic Forum, Pakistan ranks 91st in the global competitiveness index rankings in comparison of 125 countries.
According to WEF report, personal computer density stands at 0.4 per 100 persons, while the government priority for Information and Communication Technology (ICT) remains at 64th and the government success in ICT promotion is ranked 47th in the list of 125 countries. This is food for thought about the future of Pakistan''s IT sector.