According to a recent news report, withdrawal of 5 percent custom duty, on import of computer accessories and hardware components, together with imposition of 15 percent GST, has resulted in piling up of scores of containers with computer hardware accessories at the sea ports, and air shipped consignments at Karachi, and certain foreign ports, thereby, depriving the national exchequer of a heavy amount in unrealised taxes.
The report has also stated that according to a rough estimate, computer components and accessories worth Rs 1 billion were being imported in a month, before the announcement of the budget. Quoting a leading importer, it pointed out that the shortfall in supplies, which should have made an impact on the situation in the market, but that does not appear to have happened.
The calmness of the market has been attributed to an evident equilibrium in the supply and demand, thanks to the active role, being played by "Khaipyas" or business travellers, usually driven by an irresistible urge for profits in such circumstances.
Of course, a minor jolt is stated to have been caused in the computer market, because of non-fulfilment of big importers' fond expectations of gain from withdrawal of the customs duty, as part of the much-trumpeted business-friendly approach of the government.
This is not to say that the government turned a blind eye to the interests of those in the computer business. In so far as the imposition of 15 percent GST is concerned, the government may have some justification. This has reference, among other things, to the bigger task it has undertaken of expanding the GST net. Be that as it may, the fact remains that an abnormal trend can be seen in the fast expanding computer business in the country, largely because of its intimate link with brightening prospects of development of Information Technology in a constantly widening range.
Again, while small shocks from minor shortages of imported items and the nominal rise in prices may soon be made good by the increasing "Khaipya" activity, it can be any body's guess as to how the government intends to overcome the upsetting situation created by non-clearance of accumulating consignments.
For, it will be noted that the budgetary exercise was initiated much in advance, this time, in which all sectors of trade and industry had actively participated, because of growing perception of exceptionally pro-business stance of the government. Needless to point out, some of the popular expectations have come true.
However, the same cannot be said of all sectors of the economy. Although the Finance Bill has been adopted, it remains dotted with certain omissions too. And in so far as computer related imports are concerned, such omissions will also appear to hit this sector which can be seen to have fallen a prey to the powerful "Khaipya" system. However, the "Khaipya" system, which revolves around clearance of goods, evading taxes, from complicity with those who matter at the ports, is believed to have captured around 80 percent of the business, thereby contributing a great deal to apparent normalcy in the computer market.
This also refers to the indifference of the importers, both to booking of new orders and clearance of the accumulated consignments. However, for good or for bad, the system has a long history behind it, with its initiation dating back, at least four decades, to increasing import incentives offered to overseas Pakistanis, in return for their huge foreign exchange earnings brought back home.
Making a modest beginning with transistors, home appliances, and other durable goods, it later covered cars in the form of gifts, computers and items related to information technology too. However, this sector has gained more from "Khaipya" activity than government's direct incentives. To reverse the process will certainly pose a problem for the government.
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