The Sarhad Chamber of Commerce and Industry (SCCI) has called for signing free trade agreements with Afghanistan and Central Asian Republics (CARs) including Tajikistan, Uzbekistan, Kyrgyzstan and Kazakhstan on the pattern signed with Saarc countries. The SCCI had made the call in its proposals for Trade Policy 2009-10.
The copy of the proposals had already been sent to the Ministry of Commerce. The proposals said the NWFP depends on Afghan market as the local industry needs huge raw materials that are available in the Central Asian Republics. It said that there is no harm in inking FTA with Afghanistan, because the goods coming from Afghan market have mostly reached local markets through illegal channels, while Pakistan charges nominal duties on imports of goods.
On contrary, it said the government of Afghanistan levies 5 to 20percent duties on import from Pakistan and in this regard they do not differentiate in wide gap existing in the tariff of Pakistan and China. The proposals of the chamber had identified contract registration, transit fee, security and gratification as irritants in the trade with Afghanistan and CARs.
In Afghanistan, it said the officials demand registration of the mutual contract reached with the business partners of Pakistan and CARs. The registration costs $2,000 and the process is so cumbersome that it has to be routed through three different Afghan ministers, which takes almost 15 days to complete the registration process.
Moreover, the Afghanistan officials demand $200 per truck as transit fee, while the exporters, who send goods to CARs are required to pay 110percent of Afghan duties levied on the goods transported to CARs. The refund of the amount takes more than three months and 20percent of it goes to the Afghan officials as gratification.
Afghan officials discourage the export of Pakistani rice to CARs and have started levying Afghani 90,000 per truck as octroi charges. Moreover, despite fulfilling all the above requirements, the exporters have to pay an additional cost of $500 per truck to the officials concerned as gratification. The SCCI has also proposed arrangement for a reciprocal transit trade mechanism with Afghanistan for allowing Pakistani importers to import raw materials and finished goods for the mutual benefits of both the neighbouring countries.
The government of Pakistan under an agreement with Afghanistan allowed transit trade facilities to Afghan importers to facilitate international trade with the land locked neighbouring country. Further, the chamber suggested that it is a high time to make such an amendment in the transit trade agreement, which is being modified and the USAID arranged a meeting of the stakeholders in Islamabad.
Other matters related to trade with Afghanistan, the SCCI has urged the government of Pakistan to stop allowing multinational shipping companies' shipping directly to Afghanistan. Otherwise, direct shipment will make the life of forwarding agents in Pakistan more miserable. 'Direct shipment to Afghanistan should not be permitted under any circumstances,' the SCCI reiterated.
It has also suggested the abolition of the collection of Export Development Surcharge (EDS) from the commercial exporters. A lot of goods are exported to Afghanistan under the cover of relief goods by the non-governmental organisations, which are exempted from EDS. The collection of EDS from commercial exporters and exemption of NGOs make their goods less competitive. It suggested abolishing EDS, to extend relief to the business community of the province.
Further, the proposals of the SCCI, one of the five top chambers of the country also includes challenges faced by the country to make increase in the exports and measures for bringing improvement in the competitiveness and quality of the products. It has stressed the need for the development of SME sector and increasing its share in the total exports of the country. The SME sector has to be facilitated and encouraged to create more employment with less investment, the SCCI suggestion stressed.
It has also identified energy crises, monetary policy, raising cost of raw material, increasing competitiveness in national market, travel advice to foreigners, lack of skilled labour, bad governance, poor infrastructure, dry port, transportation resulting in extra costs, high cost of capital, delay in refund of sales tax and duty draw back, illegal and irrational condition for exports to Afghanistan, as negative factors responsible for dropping of growth rate to 5percent as compared to 7percent registered last year.
The remedies suggested by the SCCI include the basic focus of the trade policy should be people centric that should focus on the people, as its ultimate beneficiary. Only then it may help alleviate poverty and increase in the growth rate.
The proposals included speedy processing of refund and duty draw back claims, minimising of non-tariff barriers, zero-rating of all export oriented companies, enhancement in productivity, brand development and special incentive package for those marketing their own 'brand' in international market, diversification of exports-product-wise and marketwise, compliance with international standards and special monitoring of all ISO certification institutions, increase in customs stations on Afghan border, utilisation of EDF for the growth of exports and improving infrastructure, facilitation of herbal medicines exports and joint ventures with Chinese companies and establishment of China specific industrial zones in Pakistan.