The dynamics of smuggling and its implications on the commodities in Pakistan.
Smuggling refers to the illegal transportation of goods across borders, bypassing customs and other regulatory bodies. It is a significant problem in Pakistan, as it leads to lost revenue for the government, encourages corruption, and can have negative implications on the economy and society.
The dynamics of smuggling are complex, and it involves a network of individuals and organizations, including smugglers, traders, transporters, and corrupt officials. They work together to transport goods across the border and sell them in the local market. This network is often difficult to dismantle, as it is well-established and has been operating for decades.
Pakistan is an agricultural country and produces significant amounts of commodities like wheat, rice, and sugar which are staple foods for the population. However, due to various factors such as inefficient supply chains, poor storage facilities, and corrupt practices, the country faces shortages of these commodities from time to time.
Smugglers take advantage of these shortages and smuggle wheat, rice and sugar to neighboring countries where the prices are higher. They do this by purchasing the commodities at a lower price from Pakistan and smuggling them across the border to sell at a higher price, resulting in significant profits for the smugglers.
One of the primary reasons for smuggling of commodities like wheat, sugar from Pakistan to Afghanistan is the differences in the prices in domestic markets and international markets. Goods enter the Afghanistan markets without custom duties having been paid and are sold at four times higher prices than normal. The smuggling of Pakistani goods to Afghanistan has tripled since the border closure between the two countries, said the Afghan Chamber of Commerce and Industries (ACCI). According to the Afghanistan and Pakistan Joint Chamber of Commerce and Industry (APJCCI), still there are around 20 smuggling routes through eight bordering provinces through which Pakistani goods are being smuggled into Afghanistan.
The implications of smuggling on the commodities in Pakistan are many. Smuggling of the essential commodities results in a loss of revenue for the government, as smugglers do not pay taxes on the commodities they transport. It also harms the local farmers who produce these commodities, as they are not able to sell their produce at a fair price due to the smuggling.
Moreover, smuggling of commodities like wheat, rice and cotton can lead to a shortage of these commodities in the local market, which can result in higher prices and can impact the availability of food for the population, particularly for those who are poor and vulnerable.
For quite a few years Pakistan itself is not able to meet its own demands of commodities like wheat and with smuggling in winters it faces severe shortage due to which the country has to rely on imports from Central Asian Republics or Russia. To put this in 2020–21 Pakistan has imported 1.8 million metric tons of wheat to meet its local demand which not only puts pressure on the foreign reserves but also brings inflation in the local market. There is a positive relation between the CPI and level of smuggling of essential commodities due to which indigenous people of Pakistan suffer.
To address the problem of smuggling of commodities, the government needs to take steps to improve the efficiency of the supply chain and storage facilities. “Bara markets” set up in big cities must be shut down immediately where smuggled items worth billions of rupees were being sold. It should also increase border security measures to prevent smuggling and strengthen law enforcement against smugglers. Additionally, the government should implement policies that provide incentives for legal trade and investment in the agriculture sector, which can help reduce the shortages and discourage smuggling.
