Business

Massive Discrepancy of $8 Billion Found in Pakistani Imports and Exports

Pakistani traders have allegedly been involved in discrepancies exceeding $8 billion through under-invoicing imports and exports with four major trading partners, leading to substantial foreign exchange and tax revenue losses, while also supporting illicit financial transactions through the Hawala-Hundi network.

According to letters sent to Finance Minister Shamshad Akhtar by the Pakistan Business Council (PBC), a business advocacy platform with prominent foreign and local business group members, Pakistani traders reported imports from China, Singapore, Germany, and the United Kingdom at $18.88 billion in 2022.

However, the four trading partners reported exports of $26.30 billion to Pakistan in the same year, revealing a significant disparity of $7.51 billion.

The PBC also uncovered under-invoicing of $594 million in exports to China in 2022, constituting around 21% of total exports to the neighboring and world’s second-largest economy.

Expressing astonishment over the under-invoicing of exports to China, the CEO believed that Chinese individual trade partners might be withholding the excess amount for under-invoicing exports to Pakistan and that the Hawala-Hundi system was used for actual payments.

PBC CEO Ehsan Malik explained that the $594 million disparity in exports to China meant that Pakistan did not receive the correct amount of foreign exchange, which was a concern amid the country’s foreign exchange reserves being under pressure due to high import demand and foreign debt repayments.

The PBC emphasized the need for transparency and suggested securing real-time trade information exchange through electronic data interchange (EDI) with major trading partners and levying duties based on export values received from these countries.

The PBC also called for an EDI agreement with Gulf Cooperation Council (GCC) countries, especially the UAE, which does not report trade data, as it plays a significant role in Pakistan’s imports and exports.

The PBC further stated that export values exceeded import values by $7.50 billion, estimating a revenue loss ranging from Rs579 billion to Rs964 billion, factoring in duty rates from 10% to 30%, along with a GST rate of 18% and a withholding tax of 6%.

The organization noted that discrepancies in ITC trade data, particularly with transshipment countries, need to be thoroughly examined.

Sidra Anwar

Lives in Karachi Pakistan, working as a social activist and a news reporter at ThePost. In free time, loves to cook, drive and reading books. Also, member in many popular journalists groups, I know what people don't know about our country. Email: sidra@www.thepost.com.pk

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