KARACHI
President Dr. Arif Alvi has said that manufacturing of tyres in Pakistan will help control smuggling. Addressing the inauguration ceremony of a tyre factory in Karachi on Monday, he expressed pleasure that investment is increasing in Pakistan.
The president said establishment of this factory is the result of joint efforts of Chinese and Pakistani investors. Speaking on the occasion, Governor State Bank Dr. Raza Baqir said that the central bank introduced Temporary Refinance Economic Facility to boost business activities in the country and loans particularly for small business are being given through this scheme on priority basis.
He said a number of steps have been taken to attract investment and promote export through value-addition in the country.
The Governor State Bank said that loans are being given through commercial banks for small business on priority basis to boost business activities in the country.
He said that annual export of three hundred million dollars is expected through this tyre factory.
It is worth mentioning that industry stakeholders have claimed that the growing budget deficit of Pakistan can be controlled by curbing the smuggling of goods, which is dealing a blow to the economy.
According to them, the illegal trade and smuggling of key products like medicines, lubricants, automobile spare parts and tyres are causing huge losses to the national exchequer.
Tyre smuggling alone is costing more than Rs40 billion to the national kitty annually, besides crippling the domestic industry.
Annual demand for tyres in the country is approximately 14 million pieces. Around 15% of the demand is met through domestic production while 35% comes through imports via legal channels. The remaining 50% of the demand is met through the smuggled tyres.
Recently, tyre imports have declined mainly due to the State Bank of Pakistan’s requirement of 100% cash margin for imports coupled with the global market volatility.
Tyre imports via legal channels have dropped 17% in the past five months. According to the stakeholders, the smuggling declined significantly last year because of the restrictions imposed due to the Covid-19 pandemic.
“However, it has been on the rise since August 2021,” they said, adding that despite the Federal Board of Revenue’s (FBR) strict measures at the customs level, still “a lot more efforts are required”.
Tyres were being smuggled via Torkham, Chaman and Taftan borders, and from there these illegal tyres were sent to the local consumption centers.
With over 90% of the border being fenced, smuggled tyres were making their way through the border check posts only, they alleged. The most unfortunate part is that a majority of tyres are of Indian origin.
