‘Govt needs to complement Customs tariff reforms with governance reforms’
ISLAMABAD: The Federal Board of Revenue (FBR) Member Customs (Operations) Shakeel Shah said on Friday that the government needs to complement Customs tariff reforms with governance reforms to make the domestic industry competitive.
He was addressing a high-level discussion titled “Pakistan’s Tariff Reform and the Road to 2030” organised by Revenue Mobilisation, Investment and Trade Programme on Friday.
“For decades, Pakistan’s growth model has been revenue-centric and protection-centric. Moving towards productivity, competition and exports will create its own winners and losers and any policy will have far-reaching effects on investment, industry and jobs. We need to complement tariff reforms with governance reforms to make the industry competitive. When we start growing, pressure builds on the import side because the export push is not there. After two to three years we enter another stabilisation programme. The question is how to break this cycle,” Shakeel Shah said.
“When we start growing, pressure builds on the import side because the export push is not there. After two to three years, we enter another stabilization programme. The question is how to break this cycle.”
During the debate, he said that there was a need to eliminate Income Tax at the import stage to reduce the burden on the manufacturing sector, the FBR member Customs added.
Dr Robina Athar, an independent expert, said that trade liberalisation performed well globally and in our neighboring country India, it went well.
She said that import substitution was the policy of decade of 70s and 80s and cited the example of India, where it moved away from higher tariffs ranging between 100 to 150 percent towards lower tariffs. In the case of FBR, she said there are 43 percent collections coming through the import stage. Quoting a World Bank study, she said that the auto sector in Pakistan earned 50 percent profit. She also contested that the quality of produced cars in Pakistan is the same as in Japan and inquired then why everyone preferred refurbished old cars imported from abroad. She said that five years’ timeframe was sufficient for the industry to settle down.
Zain Mustafa, Rubatech Manufacturing and representing the auto sector, stated that there was chaos and shaking the ground because of lack of consistency and continuity in policies.
The NTP, he said, cannot be dictated because it will kill manufacturers operating in the country. It’s easy to make money to invest outside, but they cannot do so. On paper, it’s easy to ask for exports, but all those who are doing so should be given medals. Don’t become jealous of those who are making profits.
Dr Vaqar Ahmed, Independent economist, emphasised the importance of consistency in implementation, stating: “Tariff reform can deliver its intended benefits only if the policy is implemented consistently, without favoring particular sectors or creating exceptions under pressure from vested interests. A tariff policy must be allowed to run its course rather than being undermined by conflicting industrial or sectoral policies.”
Wajid Bukhari of Pakistan Association of Large Steel Production said that the National Tariff Policy’s impact on industry had been positive during its first two years, but cautioned that its benefits and implications would evolve: “The impact of the National Tariff Policy on the industry has been positive during the first two years, and will turn neutral in the third year. However, safeguards that exist only on paper offer little reassurance to domestic manufacturers and underscored the need for effective safeguards and a predictable policy environment.”
Zafar Mehmood, CEO, NIMIR Chemicals, highlighted the challenges facing domestic manufacturers, noting: “Reducing Customs duties alone will not resolve the challenges facing Pakistan’s chemical industry. Manufacturers face a substantial burden from other taxes, alongside unfair competition from businesses operating outside the tax net. Unless these structural issues are addressed, the benefits of tariff rationalization for consumers may remain limited, while compliant domestic industries face mounting pressure.”
He opposed the reduction in Customs Duty (CD) slab from 20 to 15 percent. He also said that the industry would not be able to survive once the NTP is implemented by 2030.
Zain Mustafa, Rubatech Manufacturing, stressed the need for policy predictability, saying: “Export growth cannot be achieved simply by setting targets for industry; it requires an enabling environment in which exports become commercially viable. Frequent policy shifts create uncertainty for manufacturers and investors, while industries need time to adapt, build capacity and respond to changing market conditions. Policy consistency is essential to strengthening Pakistan’s export competitiveness.”
Copyright Business Recorder, 2026