KARACHI – Pakistan, which has imported over nine million cell phones from China out of a total import of over 11 million handsets during 2009-10, is likely to impose custom duty on those imported from countries with which it has signed Free Trade Agreement (FTA) to generate revenue.
Under the existing FTA with China and zero-rated duty on the import of cell phones, Pakistan has potentially lost great revenue which could have been generated, if the Rs 500 per set duty was imposed on FTA countries including China, sources told Pakistan Today on Monday.
Pakistan has imported the phones of worth $269.845 million from China during the last financial year, a recorded increase of 130.80 percent as compared to the corresponding period in 2008-2009. With the jump in imports from China, cell phone imports from other countries like Hungary, Japan, EU countries and others have fallen noticeably numbering only around two million out of the total of 11 million imported handsets.
“The current pace of import from China would not be affected by the imposition of Rs 500 duty. Given that Chinese mobile sets are priced relatively lower than other handsets, the government should impose the duty on import of cell phones imported from FTA partners,” they opined. Being the first major item of import from China, the cash-strapped country could generate reasonable revenue without adversely affecting the competitiveness of Chinese cell phones in the market, they added.
According to sources, the ministry of commerce plans to propose to the government that it take the issue up with the Chinese government in bilateral talks over the revision of Pak-China FTA next month. As the ministry is going to propose various amendments in the FTA, which in its present state is tilted heavily in favour of China, the imposition of duty was one of the priority proposals, sources claimed.
Sources stressed that the ministry had earlier proposed the unified duty system, when it was decided that the Rs 500 levy was to be imposed, but the government had not actively considered the proposals, despite comprehending that the increasing number of imports were from a FTA member country. They reiterated that though there was continuous decline in the import of cellular phone sets from other countries, the import of the item from China was continuously increasing.
The zero duty on import of the major part of total imports and the smuggling of mobile handsets and further dented the government’s revenue generation capacity. It is pertinent to mention that the applied custom duty was previously Rs 750 which was then reduced to Rs 500 by the government.
The cellular phone sets and network installation equipment are the biggest imports from China and in Category -1 of the FTA. During 2009, Pakistan’s import of all kind of telephonic appliances including cell phones and its network installation equipment was 66.4 percent of the total imports from China received by Pakistan.
