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FBR assessment reveals 90% of dollars in Pakistan being hoarded

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2 years ago

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  • FRB member says govt making efforts for signing EDI agreements.
  • Says vigilance increased in bordering areas to curb terror financing.
  • FBR would devise action plan to curb mis-invoicing, smuggling.

ISLAMABAD: About 90% of the dollars are being hoarded in Pakistan while currency smuggling has just a 10% share, revealed a member of the Federal Board of Revenue (FBR) while talking about the assessment carried out by the board. 

According to The News, Mukarram Jah Ansari — who is an FBR member — said that the customs department has increased vigilance at the entry and exit points of the country including airports to prevent currency smuggling. 

“It’s the responsibility of other regulators and law-enforcement agencies to take action against those involved in speculation and hoarding of the greenback. We have found that the US dollar is cheaper in the neighbouring country; however, we have increased our vigilance in the bordering areas to curb terror financing,” he said.

Ansari said that the FBR seized dollars and Saudi Riyals in a few instances. However, as per the assessment, there is only 10% smuggling, while 90% is hoarding of dollars in the country. 

The FBR member also said that the government is making efforts for signing the Electronic Data Integration (EDI) agreements with different Central Asian Republics (CARs) — Russia and the United Arab Emirates (UAE) — to curtail mis-invoicing and under-invoicing. 

He dwelt upon various issues for bringing reforms into customs for improving the overall performance of the tax collection agency. He said Pakistan and China had signed an EDI agreement and both sides were exchanging trade data electronically.

After hectic efforts, he said, China agreed to extend the aggregate value of goods on a quarterly basis. Now discrepancy in the bilateral trade-related data has decreased significantly and is less than $3 billion, which a few years back possessed a difference of over $6 billion on per annum basis.

He said the customs department joined hands with the Pakistan Institute of Development Economics (PIDE) for conducting studies on mis-invoicing and smuggling with the mandate to come up with the exact levels. The result of the studies would be available by the end of the ongoing financial year 2022-23, he added.

He said the FBR would devise an action plan in order to curb mis-invoicing and smuggling. It’s relevant to narrate that the multi-billion dollar losses are estimated to harm the economy in the wake of under-invoicing on an annual basis.

To another query about the EDI agreement, the FBR member said the government would move ahead with signing EDI agreements with Uzbekistan and other CARs — Russia, North Africa and the UAE.

He said Pakistan Single Window and China Single Window would cooperate under the agreement. He said the manual One Customs would be closed down by March 2023 and WeBOC (Web-based One Customs) would be placed.

Ansari said the work on PSW was underway, as 77 entities would be integrated for the clearance of goods at entry and exit points in the country. The State Bank of Pakistan and commercial banks would integrate under the PSW soon.

The FBR member said in order to control currency smuggling, they had developed an electronic application that would be launched within the ongoing month. 

He said that this application will help declare currency through an online application and then scanning will share the whole information with the customs departments at airports, adding that the customs took stern action against Kheppeas and over two dozen FIRs were registered and persons involved were also arrested to penalise those involved in currency smuggling. 

Ansari said he had instructed the collectorates to select 10 cases in each jurisdiction every month and offered them to settle the cases through the Alternative Dispute Resolution Committee (ADRC). He said the mechanism for ensuring barter trade would be finalized, which would help promote regional trade in the context of Iran and other states.

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Finance Minister Meets With World Leaders at World Economic Forum in Davos

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During his attendance at the World Economic Forum in Davos, Switzerland, Finance Minister Muhammad Aurangzeb has met with officials of organisations and leaders of many nations.
Bangladesh’s Chief Advisor, Muhammad Younas, met with Mohammad Aurangzeb.
On the fringes of the World Economic Forum’s Annual Meeting 2025 Opening Banquet, there was an informal meeting.
Additionally, the Finance Minister met with Anwar Ibrahim, the Prime Minister of Malaysia.
Both leaders discussed economic cooperation and bilateral ties.
Muhammad Aurangzeb also had a meeting with Dp World’s Rizwan Soomro and Yuvraj Narayan.
They talked about how to strengthen Pakistan’s logistics and infrastructure systems to support trade.
“The Pakistani government is committed to advancing joint projects and values partnerships in both business-to-business and business-to-government cooperation,” the finance minister added.

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China will establish a $250 million EV production facility in Pakistan.

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As Islamabad looks to Beijing to work with it to establish industrial zones for the production of electronic vehicles, the media said Wednesday that China’s ADM Group would invest $250 million to establish an electric vehicle manufacturing unit in Pakistan.

With an even more ambitious target of 90 percent by 2040, the Pakistani government established the National Electric Vehicles Policy (NEVP) in 2019 with the goal of having 30 percent of all passenger cars and heavy-duty trucks be electric by 2030.

By 2030, the policy aimed to achieve 50% of new sales for two- and three-wheelers and buses, and by 2040, 90%.

As part of the Special Investment Facilitation Council’s efforts to draw in foreign investment, Radio Pakistan reported that the Chinese company ADM Group had announced an investment of $250 million to establish an EV manufacturing plant in Pakistan.

“The switch to EVs is anticipated to save billions of dollars by reducing the cost of fuel imports.”

More than 3,000 electric vehicle charging stations will be installed throughout Pakistan, a South Asian nation, as part of ADM Group’s $350 million investment in the EV industry last year.

Pakistan announced earlier this month that, as part of its ongoing energy sector reform aimed at increasing demand, it would reduce the power rate for operators of electric vehicle charging stations by 45 percent.

Additionally, financial programs for e-bikes and the conversion of gasoline-powered two- and three-wheeled vehicles are planned by the government.

On January 15, the government approved a lower tariff of 39.70 rupees ($0.14) per unit, which will take effect in a month. The previous tariff was 71.10 rupees.

The government anticipates that investors in the industry will see an internal rate of return of over 20 percent.

There are currently over 30 million two- and three-wheeled cars in Pakistan, and they use more than $5 billion worth of petroleum each year, according to a report that Power Ministry adviser Ammar Habib Khan provided to the government and that was covered by Reuters.

The paper estimates that the ministry will save around $165 million in gasoline import expenses each year by converting 1 million two-wheelers to electric motorcycles in a first phase, at an estimated net cost of 40,000 rupees per bike.

In September, BYD Pakistan, a joint venture between China’s BYD and the Pakistani automaker Mega Motors, informed Reuters that, in accordance with international goals, up to 50% of all vehicles purchased in Pakistan by 2030 will be electrified in some way.

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The government has introduced a comprehensive strategy to enhance industrial investment.

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Authorities are poised to execute an ambitious investment promotion strategy through a collaborative initiative between the National Institute of Public Administration (NIPA) and the Pakistan Administrative Staff College, aiming for substantial enhancements in industrial investment and economic development.

The Special Investment Facilitation Center (SIFC) will be instrumental in this transformative drive by establishing “Business Facilitation Centers” aimed at optimizing investment processes and attracting both domestic and foreign capital.

Principal features of the comprehensive plan encompass:

  1. Forming collaborative working groups to augment domestic and international investment prospects
  2. Formulating a comprehensive strategy to eradicate obstacles to industrial development
  3. Formulating a novel model to tackle issues in the execution of industrial projects
  4. Striving to enhance Pakistan’s international business rating by 50 points
    Targeting $20 billion in foreign industrial investments within the next five years.

The approach prioritizes digital transformation to enhance the transparency and efficiency of the investment process. SIFC’s strategy emphasizes fostering a favorable atmosphere for investors by streamlining bureaucratic processes and offering strategic assistance.

National administration officers are conducting ongoing study to identify and mitigate potential investment barriers, while a specialized research group is formulating a comprehensive strategy to solve current hurdles in industrial growth.

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