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    Food items smuggling undermines local manufacturing industry

    Food items smuggling undermines local manufacturing industry

    PESHAWAR (APP): The rising population bulge has negatively impacted food services items including perishable and non-perishable edibles affecting gross domestic product (GDP) besides opening gates for smuggling.

    With the country’s population growing at about 2.4 percent rate crossing the psychological barrier of 242.8 million this year, has created problems including corruption, delay in justice, deteriorating education and healthcare services and rampant food items smuggling through grey channels.

    The smuggling of perishable and non-perishable goods including packaged milks, oil, ghee, sugar, poultry meat, eggs black tea, dry fruit, wheat flour, rice, pulses, grapes and vegetables have mostly retarded growth of local food manufacturing industries and shatter confidence of the local investors and manufacturers in Khyber Pakhtunkhwa that was situated in disadvantage location in terms of business point of view due to its nearly 1500 km distance from Karachi sea port.

    The Lahore Chamber of Commerce & Industry (LCCI) research report 2023 has revealed that $2.63 billion was being lost per year in Pakistan owing to smuggling of food items and grey imports. Similarly, the total value of smuggle-prone food items had been reported to be about USD 9 billion which is equal to nearly three percent of the GDP in the cash starved Pakistan.

    Professor Dr Zialkat Ali Malik, former Chairman, Economics Department, University of Peshawar told APP that Pakistan suffers from one of the highest levels of illicit trade in Asia due to its complex and long porous border with Afghanistan, and tax evasion since 1947.

    Underlying the need of regulating the Afghans Transit Trade (ATT), he said the combined value of smuggling, under-invoicing, mis-declaration of imports, counterfeiting, tax evasion, adulteration in food items as reported by Pakistan Business Council (PBC) was estimated at US$ 68 billion or 20% of the formal economy, which should be a matter of great concern for the financial managers of the newly elected government.

    “Informal economy is estimated at about the same size as the formal economy, therefore, illicit trade represents 10% of the total economy,” he said, adding the estimated annual tax loss from illicit trade as reported by PBC is about Rs. 8 trillion, which is amounting to 85% of the tax revenue target for ongoing financial year.

    Dr Zilakat Malik said the International Trade Centre (ITC) revealed that there was a $7.5 billion disparity between the export value declared by four countries including China, Singapore, Germany and UK to Pakistan.

    He said the trade and commerce ministry has issued an order through SRO-237, requiring imported packaged food products to have 66 pc shelf life at the time of import with an ingredients mentioned in both English and Urdu languages and have halal certification from prescribed accredited authorities along with logo and labelling in a specified format.

    He said it also disallowed the use of stickers to mention these details to ensure that the imported products are quality standard compliant and brought in through legal channels. 

    Implementing the order immediately resulted in reduced grey imports of packaged food products and instated incentives for the manufacturers to produce and market their local substitutes, fully compliant with local regulatory requirements and health safety standards for benefits of people.

    Many small food manufacturers, including home businesses, found a business opportunity for them, and new and small local food brands hit the shelves of supermarkets and departmental stores, selling at a rescannable rate than smuggled products.

    Dr Zialkat said the foreign food manufacturers operating in Pakistan have also introduced their brands to test the market by legally importing their products from their facilities in other countries, compliant with the ministry’s order and requirements which was a good sign for the country’s food exports base. 

    He also underscored the need for a broader mechanism to curb illegal trade and smuggling of food items.

    Khyber Pakhtunkhwa Food Safety and Halal Food Authority carried out a major operation in Dera Ismail Khan on Monday last and seized over 3000 liters of adulterated and substandard milk being smuggled in two vehicles from Punjab to Khyber Pakhtunkhwa.

    The Spokesperson of the authority said that the smuggling attempt was thwarted at Qureshi Mor check post connecting DI Khan with Bhukkar district. He said these smuggled goods were immediately discarded, and heavy fines were imposed against the accused.

    Director General of the Food Safety Authority, Wasif Saeed said that food safety teams were instructed to adopt zero tolerance against adulteration and smuggling of food items. He emphasized that strict action would be taken against those supplying substandard food and no leniency would be shown towards the violators.

    Secretary Food KP, Zareeful Mani said that joint check posts comprising representatives of various departments were set up in border districts to monitor the transportation of essential food commodities and curb smuggling of wheat, sugar, poultry and milk etc.

    Close liaison was being established among food, home, agriculture and industries’ secretaries, as well as various commissioners and deputy commissioners to counter smuggling of food items in the province.

    Directives were issued to the relevant authorities to take strict action against hoarding of food items besides monitoring the stock of dealers. Mani said that measures were taken to control the supply of essential commodities and also take action against excessive stocking of food items.

    The Secretary said that a control room would be established at the commissioners and DC offices to curb the smuggling of essential food items, adding these measures demonstrate the government’s strong commitment to ensure availability and accessibility of essential commodities for the public at affordable rates.

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