APTTA guarantees: MoC and Customs to persuade insurance companies

The Ministry of Commerce and Customs authorities are expected to invite top insurance companies to convince them to promptly issue insurance guarantees to the importers of Afghan transit goods to make the Afghanistan Pakistan Transit Trade Agreement (APTTA) operational.
Sources told Business Recorder here on Thursday that the issue of insurance guarantee was discussed threadbare during a meeting between the FBR, Ministry of Commerce and other stakeholders here in federal capital. It has been brought to the notice of the concerned authorities that the insurance companies are reluctant to give insurance cover to the importers of Afghan transit goods due to high risk involved in transportation of goods via land route from Karachi Port to Afghanistan.
The insurance companies are worried about the possibility of pilferage of transit goods during the transportation process. Similarly, insurance companies also apprehended that in case of missing goods, the high cost of insurance has to be borne by the companies. If the containers did not reach its destination in Afghanistan, there would be very high risk in such cases. The customs department would immediately en cash the insurance guarantees equal to the amount of duty/taxes involved on the transit goods as per procedure laid down in the Afghanistan-Pakistan Transit Trade Rules.
Due to such high-risk involved in Afghan transit trade, the insurance companies are reluctant to give insurance cover to the importers. Sources said that in case the issue of insurance guarantee has been prolonged for sometime, this might further delay the APTTA. The new transit trade agreement between Pakistan and Afghanistan has been implemented, but the resolution of the issue of insurance guarantees is required without further delay.
The working of the new APTTA now seemed to be directly linked with the issue of insurance guarantees. Sources said that the existing issue has to be resolved on top priority basis to ensure implementation of the APTTA. In this connection, it has been decided that the Ministry of Commerce is likely to invite the leading insurance companies to remove their fears with the help of customs authorities. It is expected that the companies would be invited to convince them about the safe transportation of transit trade goods to Afghanistan.
The Federal Board of Revenue had reportedly informed the Senate Standing Committee that FBR would not accept insurance guarantee of any insurance company which could not be en-cashed in Pakistan on goods imported under the APTTA. The FBR had selected reputed insurance companies with good rating for issuance of insurance guarantee equivalent to amount of import duty against goods imported for Afghanistan through Pakistan land route. The higher rating assigned by the Pakistan Credit Rating Agency Limited (Pacra), is the only basis for selection of these insurance companies. The FBR has not itself developed criteria for selection of insurance companies for issuance of insurance guarantee but the relevant rating agency Pacra has assigned rating to these companies at ''Double AA''. Only credible insurance companies would be allowed to operate by the customs for the purpose of insurance guarantees.