Article: Mumtaz Ali Khoso CPEC and role of Pakistan Customs: An analysis

Mumtaz Ali Khoso Additional Director (Valuation) Directorate General Customs Valuation, Karachi

CPEC and role of Pakistan Customs: An analysis

China Pakistan Economic Corridor (CPEC) is a journey towards economic regionalization in the globalized world. This will deepen and broaden economic links between Pakistan and China and will surely leave a positive impact on other countries of the region. Through CPEC, a collection of projects of $46 billion, are currently underway in Pakistan.

The success of CPEC is directly proportional to three factors viz: (a) security arrangements, (b) infrastructural development and (c) smooth e-based Customs operations. Whereas, a number of initiatives are being taken, and proposed to be taken, on two fronts viz: security and infrastructure, but Customs operations, have hitherto been given little thought.

A number of projects, ranging from energy to development of infrastructure, have been carved under CPEC. In order to set up and run these projects, massive imports will be made. Such importation will require expedited clearances, monitoring, and tracking in order to keep an auditable trail, so that untoward incidents and mishaps, which my jeopardize CPEC, are avoided.

Besides, transit cargo will be transported from and to China, which needs Customs facilitation as well as monitoring both enroute and entry/exit stations.

CPEC also envisages establishment of export processing zones, special economic zones and free zones. This requires door-step Customs facilitation to ensure swift clearances of goods without any pilferages. More importantly, the duty/tax free goods will be transported across Pakistan, which needs en-route monitoring so that the same are not pilfered en-route, jeopardizing the very essence of CPEC. Moreover, any smuggling/pilferage of Chinese goods en-route will have direct and serious repercussions on Pakistani industry and  duty paid goods.

A case in hand is Afghan transit trade. It used to suffer from different infirmities which kept on hindering its smooth operations. These issues ranged from mis-declarations, delays, isolated and partial e-monitoring, en-route pilferages, smuggling etc. A number of adhoc arrangements such as verifications of cross border certificates, random examinations at port of entry and enhancement of anti-smuggling operations etc were made, but desired results could not be fetched.

Based on positive experience in Afghan transit trade and keeping in view the economic and global importance of CPEC, it would be in the fitness of things to establish a separate Directorate General of Customs (CPEC).

The proposed Directorate General of Customs, dedicated to CPEC, can play a vital role by (a) expeditious clearances (b) ensuring timely and accurate exchange of data to properly monitor progress of projects (c) monitoring of cross-border and transit/transshipment traffic/cargo (d) security and scanning of cargo (e) curbing illegal trade / en-route pilferage etc. (f) data analysis for effective border management.

The Directorate General of Customs (CPEC) is proposed to be headed by a Director General (BPS-21), to be based in Islamabad, reporting to Member, Customs, FBR, Islamabad. The Director General is proposed to be assisted by atleast five regional Directorates, each headed by a Director (BS-20), three for clearances of goods through WeBOC system at Gilgit, Gawadar and Karachi and two Directorates of Enforcement at Islamabad and Karachi for monitoring movement of CPEC cargo across country and to and from special  economic zones/free zones.

It is pertinent to highlight that expected huge movement of goods will be generating phenomenal data of customs transactions which not only needs to be recorded but also necessitates to be monitored and evaluated through an automated system.

This is particularly required to comprehend increasing/decreasing trends of transit goods, their vulnerability of pilferage or smuggling in Pakistan, the future requirements of customs facilities to handle the increasing cargo and the proper placement of special economic zones and additions of facilities to meet the challenges of burgeoning cargo and its movement.

Thus, the establishment of Directorate General of Customs (CPEC) also compliments International Customs Day slogan for the year 2017 i.e. “Data Analysis for Effective Border Management”.

Its high time to consider establishment of Directorate General of Customs (CPEC) to proactively handle issues, especillay learning from Afghan transit trade. This will add a feather in the success cap of CPEC and also falls within the ambit of International Customs Day slogan for the year 2017.

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