Of the three main modes employed for smuggling contraband goods, ie by air, by land and by sea, maritime presents the most formidable challenge. CBR's decision to purchase speedboats at a cost of Rs 961.50 million, to facilitate effective anti-smuggling operations, is therefore a step in the right direction.
At present the CBR lacks the wherewithal to mount effective surveillance or anti-smuggling operations in Pakistan's territorial waters. Maritime routes remain the major conduits for smuggling gold bullion, jewellery, liquor, watches, cloth, electronic appliances and cigarettes from the UAE.
Pakistan Coast Guards are expected to co-ordinate with the Customs department, to check smuggling of contraband items. The Pakistan Navy too is using speedboats equipped with integrated sensors and other sophisticated gadgets to conduct search operations on suspected vessels, however their focus is entirely different.
It has been estimated that the total value of goods smuggled into Pakistan from UAE alone stands at a staggering US dollar 1.5 billion per annum, though this forms only a part of the total merchandise smuggled into Pakistan from different countries, which is valued at US dollar 6 billion a year. Smuggling on such a vast scale not only deprives the CBR of revenue; it also inflicts massive damage on the local industry by exposing it to unfair competition.
The data compiled by CBR indicates that the annual value of goods smuggled from Afghanistan is US dollar 1.5 to 2 billion; Iran, US dollar 0.5 to 1.0 billion; and that of goods smuggled from India and China is around US dollar 1.5 billion. Smuggling constitutes one of the biggest challenges to Pakistan's economy. Along with the drug trade, smuggling has come to spawn a huge parallel - and undocumented - economy in the country, which has been exerting erratic pulls on our economic system like a malicious black hole.
The illegal traffic of goods into and out of Pakistan without paying the prescribed amounts of duties and taxes has inflicted irreparable harm on the national exchequer, which is already groaning under the weight of numerous non-developmental obligations.
Smuggling and tax evasion account for a sizeable chunk of lost revenue in Pakistan, which can otherwise be used to impart the requisite momentum to our economic growth. CBR's recommendation to the government last year that anti-smuggling powers, vested in 11 agencies, be taken back except from Pakistan Customs was an astute move to impart greater focus and cohesion to the government's anti-smuggling strategy.
This will also inject a greater element of transparency and accountability in the long run. The move has in a way also curtailed the chances of corruption or bungled operations. Further, according to an estimate, about 80 percent of the goods that come under trade agreements are smuggled back into Pakistan through its porous borders.
For instance, it is said that over 25 percent of the value of goods exported to Afghanistan are smuggled back into Pakistan. This back and forth movement of contraband goods has inflicted irreparable harm on our economy. There is a need for the government to evolve a two-pronged strategy to combat the evil of smuggling: while one prong should be focused on mounting unsparing vigilance, the other should be on reducing the profitability of any such undertaking by the smugglers.
Last year the CBR had proposed a judicious cut in the Customs Duty, Sales Tax, Withholding Tax and the Central Excise Duty on all smuggling-prone items to make them an unattractive proposition. If the profit margin is too high for them, the smuggling cartels can even try to "buy" the help of vigilance and enforcement personnel. Therefore, a balanced reduction in different tariffs and duties presents a way out of the dilemma. Meanwhile, CBR's initiative to purchase speedboats to scour the seas in the interest of exercising greater vigilance is a timely move that should be pursued with determination.