KARACHI: Finished good importers are increasingly worried over their inability to compete in the market amid uncertain exchange rate movement, illegal imports and rising pressures from various government departments to curb ballooning import bill.

In Jodia Bazaar — Pakistan’s wholesale trade hub — traders look visibly dejected over government’s unfriendly policies and are pessimistic citing possible curbs on imports in the upcoming mini-budget to be announced in January.

But for traders of spices and dry fruits, the unchecked flow of smuggled goods from Afghanistan and Iran via Afghan Transit Trade poses a bigger threat than depreciation.

“Legal imports of dry fruits like peanut, cashew, almond, pista and khopra are non-existent whereas smuggled goods are flowing unabated,” says Mohammad Rafiq of Rafiq Traders. The government is not bothered with the booming smuggling trade from Bandar Abbas to Quetta under the Afghan Transit Trade, said perturbed Rafiq.

“I made a terrible mistake by voting for PTI in the general elections” he lamented adding that, “I hoped for trade and economy betterment but the situation is entirely opposite.”

Another importer, Mohammad Aslam of Aslam Traders, fears that “the rupee will fall to as low as Rs145 by January putting increasing pressure on stressed input costs”. He said that, “two things are currently haunting the traders: rupee-dollar parity and unchecked smuggling of spices via the Afghan Transit Trade”.

Rupee is currently trading at Rs139 against the dollar in the inter-bank market up from Rs108 in January and Rs123 in August earlier this year.

Imports of dry fruits and nuts during winter season have dropped to 11,050 tonnes ($16 million) in the five months from 57,691 tonnes ($78m) last year. Overall, traders are gloomy for their future prospects as the government mulls another round of regulatory duties in the coming mini-budget in an effort to curb imports.

Commodity importer and former president Karachi Chamber of Commerce and Industry Haroon Agar told Dawn in his office at Jodia Bazaar that, “I complained to the Finance Minister Asad Umar two weeks ago that three government departments: Plant Protection Department, Quarantine Department and Pakistan Quality Standards and Control Authority are putting extra pressure on traders to squeeze imports through various unnecessary steps.”

He said that despite non-existent legal imports, traders of smuggled goods have increased prices of dry fruits by 40 per cent in the last three months, while in reality these traders have nothing to do either with rupee loss or regulatory duties.

On the other hand, tea and pulse traders are building stocks taking advantage of the lower international prices and are reluctant to import more quantities on account of weakening rupee.

Low global prices for tea encouraged traders to bring in more black tea surging imports to 95,977 tonnes ($250m) from 74,302 tonnes ($230m). The average per tonne price had dropped to $2,699 per tonne from $3,102.

Patron-in-chief Karachi Wholesalers Grocers Association, Anis Majeed said pulses imports, after witnessing a declining trend in the last fiscal year, are recovering from July onwards solely because of lower prices in world market which has offset any impact of rupee depreciation. Pulses imports swelled to 405,660 tonnes costing $248 million in the last five months up from 246,350 tonnes last year.

However, fear of rupee slide still looms as market is roiled with rumours of further depreciations till June 2019, he said.

Meanwhile, commenting on the prospects of trade in Yuan, he said that implementation of currency swap may bring some stability in dollar rate but he ruled out any decrease in prices of goods in case Chinese Yuan replaces the dollar in bilateral trade.

Rupee depreciation and rising input costs have also pushed the prices of electronic items upwards. President Karachi Electronics Dealers Association, Mohammad Rizwan said the prices of domestic appliances have already gone up by 30pc this year owing to rupee devaluation.

“Traders are in quandary as there is no set policy on exchange rates. Markets lack free working environment because of rupee-dollar situation,” he said while adding that he anticipates the situation to worsen further in 2019.

Country’s overall food import bill in 5MFY19 shrank to $2.468 billion from $2.7bn in same period last fiscal.

Published in Dawn, December 22nd, 2018