KARACHI: Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) President Junaid Makda has expressed deep concern over the alarming decline in bilateral and transit exports to Afghanistan and Central Asian States (CIS).
The imposition of 2% Infrastructure Development CESS (IDC) on trade through Khyber Pakhtunkhwa (KPK), coupled with recent regulatory and economic barriers, is severely undermining Pakistan’s trade competitiveness and regional economic stability.
PAJCCI, established to foster economic cooperation between Pakistan and Afghanistan, operates through dual chapters in countries, advocating for trade-friendly policies and addressing cross-border trade challenges.
With the consistent support of the Ministry of Commerce, PAJCCI continues to work towards stable trade environments that benefit businesses on both sides of the border.
Trade between Pakistan and Afghanistan, which once valued at $2.5 billion and was expected to grow to $5 billion, with a potential of reaching $7 billion, has instead experienced a significant downturn. PAJCCI attributes this decline to restrictive SROs 1380(I)/2023, 1397(I)/2023 issued on October 3 and SROs 1402(1)/2023 October 7, 2023, inactive banking channels, and daily operational challenges at border crossings.
Together with the IDC, these obstacles are disrupting Pakistan’s exports to Afghanistan and CIS countries, as well as the broader transit trade.
“This 2% CESS, combined with existing economic pressures, is creating a perfect storm that could cripple Pakistan’s exports to Afghanistan, CIS countries, and reverse cargo from Afghanistan,” stated President Junaid Makda of PAJCCI. “While PAJCCI firmly supports a documented economy, these measures are inadvertently pushing trade into informal, parallel channels. This not only harms our economy but also threatens Pakistan’s standing as a regional trade leader.”
The IDC has introduced a double-taxation burden on imports routed through KPK, requiring payments at both Karachi and Peshawar, creating a competitive disadvantage for KPK-based businesses. Inconsistent Cess policies across provinces further complicate the issue, with legal challenges in KPK and potential conflicts with International Agreements Afghanistan Pakistan Transit Trade Agreement (APTTA).
While Baluchistan’s exemption of Cess on exports is a positive step, the uneven regulatory environment is diverting trade away from KPK. Afghan traders are increasingly exploring alternative routes, including through Iran, due to additional costs at Torkham.
In response, PAJCCI has engaged Prime Minister’s Office, the Special Investment Facilitation Council (SIFC), and key government stakeholders, including the senior representatives from the Ministry of Commerce (MoC), Federal Board of Revenue (FBR), as well as the Chief Minister and Governor of KPK. PAJCCI has consistently advocated for uniform policies aligned with federal guidelines to ensure a fair and stable trade environment.
“We urge the government to implement an immediate and comprehensive action plan to remove barriers that hinder Pakistan’s export potential and regional trade leadership,” Makda added. “This requires not only addressing the IDC but also establishing consistent policies that support transparent, sustainable trade practices across Pakistan.”
Copyright Business Recorder, 2024
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