Imtiaz Gul
The images below tell a sorry tale; these agricultural products reached this state after a several week “incarceration” at the Karachi Port. These had reached Karachi under the Afghan transit trade some time in March but languished there for several weeks because Pakistan closed the borders as part of the anti-COVID19 measures.
Imagine the pain and commotion that the Afghan importers go through when sprouting fruits and vegetables stare him in the face! But this is part of an ordeal that hundreds of Afghan traders are currently going through; delays in clearance at Port, demurrage charges, detention (of containers) charges, delays at Torkham and Chamman. Essentially driving many businessmen being driven broke for no fault of theirs at all.
The primary cause for this is cold-blooded regulations imposed arbitrarily by Pakistan’s Federal Board of Revenue and at times a blind thoughtless enforcement of orders by short-sighted officials, without the slightest consideration to the pain and loss it causes to Pakistani and Afghan traders.
The only explanation that comes to mind is that the FBR is willingly dis-incentivising Afghan Transit and Bilateral trade through archaic manipulative mechanisms. The hurdles – or the pretext – range from ever changing regulations, screening facilities, tracking devices, demurrage charges and container detention costs.
No surprise that bilateral trade has plummeted from $1.3 billion last year to $ 600 million this year sofar.
Let us have a cursory look at what is happening right now between Karachi , Torkham and Chamman.
Currently, over 7000 transit trade containers/ consignments are stuck at Karachi port. The pile up resulted from the closure of the Torkham & Chamman border mid March. To compound matters, FBR issued an abrupt notification on April 7 to Karachi Ports & Customs authorities to subject all the Afghan transit cargo to mechanical scan. This was a a shift from the earlier understand of putting about 20% of the transit trade containers to scanning.
With only three scanners available to Karachi Port, the maximum scanning capacity is 150 containers per day, and hence the pile-up.
Now, Afghan importers are worried about the ensuing demurrage and container detention charges – which accrue simply because the Port Authorities and the FBR lack the capacity for swift clearance.
3: Tracking Devices
Another big reason for delays is the non-availability of tracking devices, a pretext used to delay the clearance. The company which was supplying these devices has reportedly run out of stock, and the customs authorities in Karachi have consequently stopped all the transit cargo at Karachi. Traders allege that all officials involved are making money on this head too.
But every additional day entails demurrage (Rs 4000/day) and container detention charges ( $ 100 /day).
By the way, why punish traders if Customs has no Tracking devices (Rs.7500/container), no container screening capacity above 150 containers/day?
4: Smuggling Fears
In order to preclude possibility of smuggling, Afghan traders through insurance companies provide guarantee for each consignment to the Customs of Pakistan.
In case the transit cargo is caught being sold inside Pakistan – smuggling – then the insurance company is obliged to pay to Pakistani authorities all the applicable taxes i.e. import customs duty, sales tax, income tax etc.
Besides, the bonded carrier / transporter is also obliged to compensate the losses to Pakistan Customs Dept if any consignment/cargo is sold in Pakistan.
This modus operandi minimises the chances of smuggling of transit goods back to Pakistan, particularly when each container carries a tracker.
5: CASE STUDY
But lo and behold, the Karachi Terminal is charging demurrage on containers that arrived at the port even before the government announced the lock-down.
In one instance four containers arrived on March 14th and were cleared on April 20th, accruing over half a million rupees in demurrage, and that was charged.
For the same containers, the importer deposited a security worth little over 2 million with the shipping company, which allows about 28 days – four weeks – between its landing at the port and return. Every single day thereafter accrues a $100 a day.
One of the four containers released on April 20 is still stuck at Torkham.
The importer has literally lost the security deposit because his grace period of 28 days is over, with no certainty as to when the four containers will reach back at Karachi.
Additionally, he is will have to endure a penalty of $400 daily for all four containers for every single additional day. And this importer is not alone in this; hundreds of empty or loaded containers are stranded on the Afghan side for almost two months – giving their current owners heart attacks.
Imagine the detention cost of these containers to the importers, many of whom have meanwhile given up on the Pakistani route for uncertainty and unforeseen costs.
And this delay comes from Pakistani cold-blooded, self-entered bureaucratic gimmicks as well as incapacity.
6: Slower Processing at Torkham / Border
Now, even if the Karachi port and customs were to clear 150 containers a day, quick relief for the traders is not in sight. The average clearance at the Torkham and Chamman border in the month of April has hardly been 20 trucks/containers per day, despite an understanding that at least 100 trucks/containers would cross the each point every day. This of course also results from issues such as low handling capacity of Afghan Ramadan and COVID19.
On May 1, the government announced 5-days a week operation, saying the border will be open “for export only, bilateral trade, transit NATO / ISAF . But it seems the notion of “bilateral” doesn’t apply to Afghan dry fruit / fresh fruit & etc not allowed to inter to Pakistan Via Torkham / Chamman / Ghulam Khan . Afghan export are on the queue at Torkham / Spin Boldak for the past 2 months to enter to Pakistan.
Proposed Solution
Afghan traders propose to continue the old regime i.e. subjecting only 20 % of containers to scanning at Karachi port based on the risk management system (as per the Afghanistan-Pakistan Transit Trade Agreement (APTTA) until the current 7000 containers are released.
Beside the delay due to usual bureaucratic dithering, the COVID-19 related disinfection procedures are also consuming a lot of time. Slow screening at Karachi because of the lack of capacity and the slow Afghan customs’ response as well as immigration/ disinfection / destuffing of goods at Torkham (Afghan side) process is causing huge losses to traders on both sides. And this invariably eats away a) the goodwill for Pakistan, and b) causes loss of interest in imports via Pakistan.
After intense efforts, Pakistan finally opened its border six-days a week from May 16 onwards to clear the passage of several hundred containers stuck both sides of the border for weeks. Government is reportedly also seriously considering waiving the accumulated demurrage charges worth tens of millions of rupees. Why not a one-window operation for both bilateral and transit trade movement, which will also certainly improve the relations?
