PESHAWAR, Dec 22: Exports of flour to Afghanistan have declined significantly because of the introduction of 15 per cent regulatory duty on the export of flour to that country, according to official and market sources.
The Central Board of Revenue (CBR), according to official sources, issued a notification on Dec 17 introducing 15 per cent regulatory duty on the exports of flour. "The number of flour trucks crossing over to Afghanistan from the Torkham border-crossing has registered substantial decrease during the past four days because of the introduction of the regulatory duty," said a CBR official posted at Torkham.
The move has led to decrease in demand for flour in Peshawar's markets for the good of the consumers as, according to market sources, price of fine quality flour has also experienced significant dip during the past couple of days.
On Wednesday, according to market sources, price of fine quality flour in Peshawar's wholesale market of Rampura Gate stood at Rs12 per kilogramme in comparison with the last week's price of Rs14.70 per kilogramme.
This is for the first time, during last several months, that the prices of flour had gone down, said a shopkeeper. "People doing business with Afghanistan are sitting idle because the export business has lost much of its charm," said a market source.
However, officials of the provincial government welcomed the move, saying it would facilitate keeping the prices of flour at a reasonable level. They said prices would come down further in the weeks to come if the federal government did not withdraw the duty.
A leading flour dealer of the city, when contacted, told Dawn that now only five to 10 trucks loaded with flour bags were leaving Peshawar's markets for Afghanistan every day, undergoing major reduction in comparison with the days before the regulatory duty was imposed and 50 to 60 trucks were used to depart for that country every day.
Torkham-based CBR staff said on the first day of the introduction of the regulatory duty, on Dec 18, several of the exporters did not opt to send their consignments of flour to Afghanistan by paying the regulatory duty.
"Several people got their shipping bills cancelled on Saturday when CBR's notification, issued on Dec 17, became effective," said a Peshawar-based official of the customs department.
The CBR officials said now only four to five trucks of flour were crossing over to Afghanistan every day resulting in major decrease in business activities in the border town as earlier free exports of the commodity to Afghanistan had increased economic activities in the border town.
Exporters were only required to pay nominal export development surcharge and even they were not required to get permission or licence from the agencies for exporting flour to Afghanistan.
"The introduction of regulatory duty has proved to be an anti-climax of the boom the local flour markets experienced during the last four to five months because of free exports of the commodity to Afghanistan," said a dealer.
"The move was necessitated to discourage exports of flour because the increasing exports played a significant role in raising the prices of the commodity," said an official.
The CBR officials said the imposition of duty was preferred in place of introducing ban on the flour exports because that could have posed new problems to the government in view of its commitments under the World Trade Organization's agreement entailing free trade for the member countries.
Market sources complained that the 'abrupt' introduction of regulatory duty had caused heavy financial losses to some of the flour dealers and exporters involved in exports to Afghanistan. "Exporters are trying to cancel their orders because the margin of profit in exporting flour to Afghanistan has decreased substantially," said a dealer of Rampura Gate.
The CBR sources said the exports were likely to dip further in the weeks to come because presently some of the exporters were still supplying flour against the business deals struck before the introduction of the regulatory duty. "Demand from Afghanistan has dropped to the zero level following the imposition of the regulatory duty," said a dealer.
