A LACK of insight among the relevant circles into imports and importers, in a country where the inward movement of merchandise is about three times the exports, is intriguing.

There are several hundred companies active in the import business, but wide gaps in online data on their size and ownership limit the possibility of a clearer understanding of the situation.

The views of businessmen clash based on their positioning, but the collective front of trade and industry at federal (FPCCI) and sub-national (chambers) levels indicates some overlapping interests.

Some meek efforts have been made in the past to separate industry from trade for lobbying, but the move was dubbed divisive and shot down. Industrialists blamed traders for dominating business platforms while traders saw fault with the conduct of industrialists.

Majyd Aziz, president of the Employers’ Federation of Pakistan, told Dawn that in the early 1980s industrialists almost succeeded in setting up an organisation of their own, like the Confederation of Indian Industry, to project their position.

After a meeting with a delegation of industrialists, then-finance minister Dr Mahbubul Haq cleared the bifurcation of the Federation of Pakistan Chambers of Commerce and Industry to form two separate bodies for traders and industrialists.

“I was part of the delegation that convinced Dr Haq,” Mr Aziz said. “He consented to pass the order the next day. But it never happened. At that point we did not realise the power of traders and their friends in the bureaucracy. The situation could have been different had we stayed back in Islamabad until the passage of the order.”

However, traders brush aside such views, and accuse tycoons of doublespeak.

“It’s an open secret that industrialists import more than their requirement and sell the extra in the open market, crowding out commercial exporters,” said Haroon Agar, a former president of the Karachi chamber and a major importer of commodities.

“There is 11 to 15 per cent advantage in tariff for the industry in raw material and machinery category. We know of cases where people are importing 10 times the capacity of their units,” he said.

Rasheed Jan Muhammad, a key importer of edible oil, hammered the need for a more congenial environment for the industry. He regretted that there is a lack of the monitoring of trading activity by the government. “No industrialist should be allowed to import raw material beyond their industrial capacity to limit their entry in the domain of commercial importers,” he commented.

He was also sceptical of government’s policy interventions to contain imports. “I don’t think they will yield the desired results.”

Kaiser Waheed, president of the Pakistan Pharmaceutical Manufacturers’ Association, seconded Mr Rasheed’s view. “Only yesterday in a meeting with the Drug Regulation Authority [of Pakistan] president I suggested introducing an import licence for industrial importers to control the misuse of the concession on regulatory duty.”

The duty structure supports industry by offering breaks on raw material and machinery, the federal commerce secretary says

The perception of overlapping commercial and industrial interests in Pakistan was endorsed by the commerce ministry, but officials were unable to provide supporting facts. “No monitoring mechanism for imports is currently in place. I doubt if you will be able to get what you are looking for readymade,” Mohammad Ashraf, a spokesperson for the ministry, said by phone.

Muhammad Younus Dagha, the federal commerce secretary, said the duty structure supports industry by offering breaks on raw material and machinery. “We deal with the commercial policy that we craft keeping needs of local industry in mind. Law enforcers should be taken to task if some elements misuse concessions meant for industry. The enforcement of duty structure is beyond our mandate,” he said.

“We work on imports identified under broad groups and places of origin, but we do not monitor companies involved or their proprietors. There is always room to improve but then again in the commercial policy area,” he added, hinting at the Federal Board of Revenue (FBR) and more specifically at Customs inefficiency in this regard.

When approached, higher-ups in the FBR flatly declined to comment on the composition of imports or the profile of the biggest importers, giving confidentiality as an excuse.

The directory of taxpayers published on the FBR’s website was mentioned, but the head of the IT section (custodian of relevant data) insisted that he could not share information with the media.

The country’s trade deficit has been repeatedly projected as a disturbing factor, which threatens the external front’s sustainability.

The Pakistan Economic Survey of 2016-17 states that the external sector continued to face severe stress. “Pakistan’s exports declined by 3.06pc during the first nine months of the fiscal year 2016-17. Imports, however, continued to grow at a much faster rate and grew by a large percentage of 18.67pc during the first nine months of the FY2017”.

The economic survey divides all imports into seven categories, namely food, machinery, petroleum, consumer durables, raw materials, telecom and ‘others’.

The import bill of oil was the biggest, followed by machinery, raw materials, food, consumer durables, others and telecom.

These imports largely originated from China, the United Arab Emirates, Saudi Arabia, Kuwait, Indonesia, India, the United States, Japan, Germany and Malaysia.

Published in Dawn, The Business and Finance Weekly, December 25th, 2017