ISLAMABAD: The market share of the smuggled cigarettes now stood at an alarming 20 percent, requiring serious changes in anti-smuggling policy of the Federal Board of Revenue (FBR) at the Pak-Afghan Border areas. A report on smuggling (Ascertain the Market Demand of Goods Prone to Smuggling-Establishing the Volume of Smuggling) recommended that the government adopt a single agency focus, to enforce customs' laws.
Customs should be equipped with modern ways to ensure that enforcement is at its desirable level to support the government to exercise greater market control. Reforms should be done within enforcement as they were once made for cargo clearance. In general, Customs as a federal organisation should be given its place and status not only for the sake of the agency but also for allowing it to fulfil its national mandate.
This will not only provide benefits for the country and economy but will also plays a vital role in the viability of the state. The fruits of such reforms will allow for rapid industrialization. The report stated that Pakistan's tobacco cigarettes consumption is the highest in the South Asian Association of Regional Cooperation (SAARC), at 36.7 percent.
The increase in cigarette consumption is also alarming since smoking has become popular in teenagers. According to Pakistan's sixth census, Pakistan's population grew at a rate of 2.4 percent since 1998, making Pakistan 207.8 million strong.
Keeping the growth rate of 2.4 percent in mind, the population has become 212,761,10816 in 2018. The per capita consumption of cigarettes in Pakistan in 2018 was 468 cigarette sticks. With a population of 212,761,108, the resultant annual market demand is 99,572 million cigarette sticks.
Of this demand, 79,804 million cigarette sticks are produced domestically; 215.92 million cigarette sticks are imported, while 42.4 million cigarette sticks were exported. From the total domestic production, 63,707 million cigarette sticks account for declared production, and 16,098 million cigarette sticks are undeclared or counterfeit.
This makes the quantity of cigarettes smuggled into Pakistan amount to 19,594 million cigarette sticks. It said that the proposed quantity of smuggling in sticks is 19,594 million, this is not inclusive of the 16,098 million sticks which are estimated to be counterfeit.
The smuggling caters to 20 percent of the market, which is up from 17 percent in 2015. Domestic production caters to 64 percent of the market, while counterfeit accounts for another 16 percent. These numbers yield the total illicit market of cigarettes at 36 percent.
The report added that the responsibility of combating smuggling is distributed among different agencies, thereby diluting it. Therefore, no agency takes this work as their primary function and the role is assigned a lower level of priority and does not get the attention it deserves.
Agencies try to shift blame when confronted with the failure to control the influx of illegitimate goods across borders, stating that it is not its primary function.
Customs on the other hand, gets an excuse to blame other agencies whom the powers have been delegated to and are recipients of generous government funding for border control functions. The border areas are almost entirely manned by the FC with no checks on the misuse of Customs' powers delegated to them.
Thus, focus on the issue is blurred due to adoption of this policy and its result. Experts added that unlike other smuggled goods, tobacco products entering the country through illegal channels can be easily identified as they do not bear the mandated graphical and textual health warnings prescribed by the Ministry of National Health, Services, Regulation and Coordination, Pakistan.
According to the Cigarettes (Printing of Warning) Ordinance 1979, regularized cigarettes packets have graphical and textual health warnings which comprise 60 percent of the pack (front and back). They are visible and easily identifiable to the naked eye.
Furthermore, the Import Policy Order 2020, clearly states that cigarettes packs which do not possess the Ministry of Health mandated prescribed health warnings cannot clear the ports of entry nor can they be sold, kept or possessed by any individual or retailer.
A concentrated effort is required from all law enforcement agencies to eradicate the issue of smuggling that is hurting the legitimate businesses in the country. The lawmakers and the relevant departments must ensure enforcement of existing laws rather than focusing on making new ones that will only serve the purpose of adding more paper to the existing law books and nothing else, the experts added.
Copyright Business Recorder, 2020
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