ISLAMABAD: The documented steel industry has estimated that around 500,000 Metric Tons (MT) steel is being annually smuggled from Iran and Afghanistan, causing a revenue loss of Rs25 billion to the national kitty.
According to a communication of the steel sector to Prime Minister Shehbaz Sharif on Wednesday, the large-scale smuggling of steel from Iran and Afghanistan, coupled with some other factors, are destroying the local steel industry.
The industry is already fighting on many fronts for sheer survival and facing a very challenging situation due to massive currency depreciation, high financial cost as well as due to massive increase in cost of different inputs.
The production activity is on the halt due to shortage of raw materials and many mills are working on a small fraction of their capacity.
This situation is worsened due to blatant scourge of smuggling which continues unabated and unfortunately being done in most organized manner. All this is resulting in devastation for the local steel industry and at the same time causing huge revenue loss of the nation’s exchequer.
Also, this damages the reputation of all those departments and govt agencies who are deputed to oversee imports at the Customs Check Posts at the borders.
According to an estimate, approximately 500,000 MT steel is being smuggled from these two countries annually to Pakistan which is nearly 10 percent of the total steel being produced in the country. According to a conservative estimate, the menace results in revenue loss of around Rs25 billion to the national exchequer annually.
Also, God forbid, this could lead to create implications for our country in money laundering related (implicating FATF) issues as Pakistan and Iran do not have any formal banking channel for this purpose.
The industry stated that the menace of steel smuggling has literally wiped-out the local steel industry in Quetta and most other parts of Balochistan. Over 80 percent steel that is sold in Balochistan is coming from Iran through smuggling as well as through mis-declaration, under-invoicing and other deviant tactics.
It is an organized crime which coupled with the state of economy is pushing Pakistan towards de-industrialization. Due to lose controls the smuggled Steel is not confined to Balochistan now as it is reaching out to other parts of the country like Lahore, Karachi as well as other cities.
During March 2023, smuggled large trucks/trailers of steel from Iran were caught in Lahore (pictorial evidence attached) and Customs department lodged cases/FIRs against them. Also, in the first week of April this month, a truck full of steel got overturned near the Chaman border. This was the case of smuggling where the truck was loaded with brand new steel (rebars) and was being smuggled from Afghanistan through Chaman border.
The Pakistan Association of Large Steel Producers (PALSP) has been making appeals to the concerned government departments to curb this unlawful activity by taking concrete measures however no steps have been taken to curb the menace of smuggling so far.
In the past, the industry has also suggested to the government that the import of steel should be allowed only through sea routes. This would help in effectively countering the threat posed by smuggling, the industry added.
Copyright Business Recorder, 2023
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