Plastics (polyethylene): KCCI suggests forensic audit of imports

KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Mohammed Tariq Yousuf has advised the government to put the import of recycled plastic under any description in the negative list or place complete ban on this item as massive volume of smuggled plastics from neighbouring country and missed lation in terms of value and quantity have caused major losses of Rs 10 billion to 12 billion in just three months on account of customs duty, sales tax, WHT and other levies which indicates that this loss will go up to Rs 40 billion per annum.

In a letter sent to Federal Minister for Commerce, Industries & Production Dr Gohar Ejaz, President KCCI suggested to carry out forensic audit of all recent imports of plastics (polyethylene) during the last four to six months and the importers should be asked to clarify how and through what channel the payments have been made to foreign suppliers for import from neighbouring country.

“This will have a very positive impact on remittances and the vast amounts diverted to grey channels to finance smuggling and missed lation of imports from neighbouring country will be redirected to banking channels and will support the value of Pak Rupee in the interbank market.”

Tariq Yousuf opined that there was no need or logic to import recycled plastic in Pakistan because the country already generates its own massive volumes of plastic waste and scrap which is recycled by many units operating in Pakistan, hence, there was no point in buying other country’s garbage.

“All imports of polyethylene and polypropylene (H.S. 3901 and 3902) from neighbouring country should be assessed on the basis of weekly reports of S&P POLYMER SCAN REPORT which is in practice by Customs stations at Karachi Port, Port Qasim and Dry Ports for many years”, he suggested and added that all such materials imported from neighbouring country should be treated as prime grade materials even if declared as recycled plastics or any other description.

Referring to recent visit of Caretaker Commerce Minister to KCCI, President KCCI said that although it was assured by Dr. Gohar Ejaz that effective measures have been taken against smuggling but the ground reality present a different scenario. “Smuggling of plastic raw materials particularly the polyethylene having PCT Code 3901 continues unabated in large volumes as during the last three months over 50,000 metric tons of Polyethylene have been smuggled or imported under the garb of recycled plastic with very low value declared in the GD.

The value of so-called Recycled Plastic is declared at $450 while the actual value of prime materials is between $1050 to $1100 which is imported as Recycled Plastic”, he added.

He further pointed out that quantity of plastic materials imported from neighbouring country is declared below the actual quantity in container or truck load as one container load is 25 metric tons while the quantity in GD is declared as 17 metric tons, resulting in compounding the revenue loss.

Tariq Yousuf said, “In the normal circumstances the requirement and import of Polymers (Plastics) in Pakistan was 1.6 million metric tons but as per estimates, this will now decline somewhere in between 0.8 million to 1.0 million metric tons whereas the rest of Pakistan’s requirement for Plastics was being met through smuggled and mis-declared imports from neighbouring country.”

“Furthermore, all the smuggling and undervalued imports are financed through hawala/grey channel transfers which means that the foreign remittances which should otherwise be sent through banking channels have now diverted to Grey Channels. High demand by smugglers and illegitimate importers has created a vast difference of Rs.20 to Rs.25 per dollar between interbank and hawala rates which is proved by US$4 billion decline in home remittances.”

Copyright Business Recorder, 2023