KARACHI (9th August 2023) Pakistan and Iran, two nations striving for enhanced bilateral trade and economic relations, find their efforts hampered by the rampant issue of smuggling. Renowned businessman Zubair Tufail, President of UBG and former President of FPCCI, shed light on the severity of this concern in a recent statement.
According to the statement issued by the central spokesperson UBG Gulzar firoz, Expressing his concerns, Zubair Tufail highlighted the unfortunate reality that despite mutual commitments to bolster trade ties, smuggling activities have cast a shadow over these efforts. Shockingly, the volume of smuggled goods from Iran has exceeded the legitimate trade figures. Of particular concern is the smuggling of Iranian petrol into Pakistan, which is readily available in major cities across the nation.
Tufail underscored the urgency of the situation, pointing out that effective measures have yet to be implemented by relevant ministries and departments to curb the escalating smuggling activities. He speculated that such extensive smuggling may even involve support from border customs and tax authorities.
The economic repercussions of smuggling are staggering. Pakistan is facing substantial losses in terms of sales tax and income tax, as legitimate trade channels between the two countries are being compromised. A notable example is the smuggling of chemicals, including sulphonic acid, washing powder, ceramic tiles etc to from Iran. Moreover the detergent powder industry which is paying billions of rupees taxes will be ruined in few weeks if smuggling not stopped. These chemicals are finding their way into Pakistani cities such as Multan, Faisalabad, and KPK, where they are used in textile and other industrial sectors. The illicit nature of these transactions allows manufacturers to evade sales tax, granting them an unfair advantage over legitimate businesses.
Zubair Tufail also discussed the detrimental impact of Iranian fuel smuggling on Pakistan’s already struggling industry. Citing a report from S&P Global Commodity Insights, he revealed that Iranian fuel is significantly cheaper than its official retail counterpart, contributing to a thriving black market. This price disparity has enabled private dealers to capitalize on the situation by selling Iranian diesel at rates lower than local dealers.
The consequences of fuel smuggling are dire. According to the Oil & Gas Regulatory Authority (OGRA), an estimated 4,000 tonnes of fuel per day are illicitly entering Pakistan, resulting in a staggering monthly revenue loss of around 10.2 billion rupees.
The issue of smuggling has also aggravated food inflation in Pakistan, with consumers turning to cheaper, smuggled Iranian goods in the face of soaring prices. Food inflation has reached an alarming 42 percent, compelling consumers to seek alternatives like smuggled Iranian oil and cheese, which are reportedly available in major cities.
In light of these circumstances, Zubair Tufail expressed skepticism about achieving the ambitious target of 9400 billion rupees in tax collection. He called for urgent and coordinated efforts from all stakeholders and address this critical issue, preserve legitimate trade, and safeguard Pakistan’s economic interests.He added that FBR can stop this smuggling through Directorate of customs intelligence agencies.
