ISLAMABAD: Pakistan is losing billions in revenue collection after striking a range of preferential trade agreements with various countries especially China that allows import of goods either duty-free or at reduced customs rates, a senior tax official told Dawn on Monday.

As a result of these agreements, the revenue loss reached to Rs16.915 billion for the year 2011-12 from Rs14.134 billion in 2010-11.

But contrary to these losses, Pakistan’s exports to these countries did not witness any substantial increase in volume over the period of years.

Statistics showed that Pakistan imports from China reached to $8.48 billion, as against exports of $2.12 billion in the year 2011, heavily tilted in favour of China after the two countries inked the free trade agreement (FTA).

The FTA came into operation from the year 2006 between the two countries.

At the time of signing the FTA, Pakistan’s exports to China were $1.143 billion in 2005-06 while imports from Beijing stood at $2.869 billion, leaving a small margin of trade deficit.

In 2011, Pakistani exports to China reached to only $2.12 billion in the last six years while imports from China cross $8.48 billion during the same period.

Contrary to this that imports from China witnessed a substantial increase, but this increase led to the revenue loss because of exemptions granted under FTA which also reached an alarming level of Rs13.763 billion in 2011-12 as against Rs10.898 billion in the year 2010-11, reflecting an increase of 26 per cent.

The tax official said that this amount did not include the value of under-valuation of import values of Chinese goods to pay lesser customs duties on imports.

The second FTA that Pakistan signed with Malaysia also lead to losses in revenue since the year 2007, the year of the implementation of the agreement.

A paltry reduction in revenue loss of five per cent was also witnessed in the year 2011-12 as the collection fell to Rs2.750 billion as against Rs2.895 billion in the year 2010-11. As against the loss in revenue, Pakistan’s exports to Malaysia reached to $257 million while imports reached to $2.543 billion in the year 2011, showing that the trade his highly tilted in favour of Kula Lumpur.

At the time of signing the South Asia Preferential Area (SAFTA) treaty Pakistan’s total exports to Saarc countries stood at $0.055 million in 2006, which now rose to $56.119 million in the year 2011. Some progress has been witnessed but it still remained far behind the potential.

Though the flow of trade did not witness an increase but still Pakistan witnessed a loss in revenue because of reduction in duties which reaches to Rs0.151 billion in 2011-12 as against Rs0.116 billion in 2010-11, showing an increase of 30 per cent.The FTA between Pakistan and Sri Lanka is operational from June 12, 2005.

The exemptions from customs duties on imports from Sri Lank under FTA reached to Rs0.196 billion in the year 2011-12 as against Rs0.073 billion in 2010-11, showing an increase of 168 per cent.

The total volume of trade between the two countries reached to $350 million in 2010. This shows that the FTA did not facilitate the trade between the two countries.

Pakistan is also losing revenue because of preferential trade agreements with Iran and other ECO countries.