KARACHI, May 6: The Karachi Chamber of Commerce and Industry (KCCI) has identified 69 items, prone to smuggling, urging the government that the rate of custom duty on such items , which are not manufactured locally, be fixed at 5 per cent, whereas on items that are manufactured locally - 10 per cent rate of duty be imposed.

Smuggling has become a permanent feature of our economy. Consequently, the economy fails to meet the GDP growth targets over the years. Smuggling is also one of the major hurdles for local industry, which needs to be addressed properly.

In its pre-trade policy proposals for 2004-2005, the KCCI said that the unprecedented increase of smuggling of items i.e. tea, spices and other daily utility items, coming into Pakistan in the local market through Afghanistan Transit Trade (ATT) and Sust border, must be contained.

The rate of duty on various smuggling prone items ranges between 10-25 per cent. In the light of recent development in the Indo-Pak political scenario, the KCCI has recommended that the import of viscose rayon filament yarn from India be allowed.

Under the current, trade policy 2003-2004, viscose rayon filament yarn under H.S code No. 5403.3100 is not allowed to be imported from India. This item is not manufactured in Pakistan and in order to fulfil the demand of indigenous industry the very same product is being imported illegally from India through third countries.

The chamber also urged the government to allow import of second-hand machinery and parts because the cost of new machinery and parts are very high. The KCCI also seeks lifting of ban on import of cotton waste at a time when cotton crisis is going on.

Free import of cotton waste would reduce the cost of towel yarn produced by cotton yarn of open-end spinning mills. It would also boost exports of towels.

On external environment and WTO regulations, the KCCI said that the developed countries have invented invisible trade barriers in the form of excessive application of anti-dumping laws, linkage of trade with child labour, environment and social standard.

Apart from that, the year 2005 is fast approaching and with its arrival WTO regulations will be fully implemented and textile quota regime will be completely phased out.

In order to keep ourselves ready for a combination of future challenges, the government should handle these matters with the joint discussion and collaboration of KCCI.

On Duty and Tax Remission(DTRE) rules, the KCCI thinks that there still exists room for improvement in this scheme. Despite the fact that a number of positive amendments have so far been made in the DTRE rules, there is further need to remove some of the flaws from it and they should be streamlined and further simplified. Only then these rules would attract exporters to get them registered under this scheme.

Some suggestions pertaining to improvement in DTRE rules are:

a) Under section 297(1) of DTRE, information of each export order is required from the exporter. For large textile units it is very difficult to inform CBR in advance the estimated consumption of raw material, which would vary especially in reference to chemical and dyes.

It is very difficult for textile direct exporters to inform Collector of Custom about the actual consumption of raw material.

b) No amendments have so far been made in sub-rule 302A i.e. refund or adjustment of sales tax. In this respect, refund or input adjustment of sales tax paid on electricity and gas should be allowed to the DTRE approved export on the basis of some pre-defined ratio based on total local & export sales.

c) The imposition of bank guarantee irrespective of the category (commercial/manufacturer) which they are getting DTRE approval, is seemed to be discouraging attitude, therefore, such discretionary powers of collectorates should be abolished.

d) The documentation under DTRE is complex and a cumbersome procedure. Apart from that, presence of auditors and to comply with the statutory criteria require full time staff for monitoring, recording and reporting of the DTRE.

e) The issue of DTRE approval for specific export contracts, by Collector of Exports, should not take more than 10 days as per present rules, laid out for DTRE. However, sometimes, the permission takes much more time than 10 days. It is therefore, suggested that in order to make the approval process faster, the time for approval be reduced from 10 to 3 working days.

f) The cartage rates from Karachi to Kabul or Kandahar are higher as compared to rates added together for Karachi to Peshawar and then from Peshawar to Kabul or Karachi Quetta and then from Quetta to Kandahar.

The rules should allow DTRE registered exporters to transport their export containers on two different trucks one from Karachi to Peshawar/Quetta and other from Peshawar/Quetta to Kabul/Kandahar.