The Businessmen Panel (BMP) of the Federation of Pakistan Chambers of Commerce & Industry has issued a stern warning against a recent Federal Board of Revenue (FBR) decision, stating it could severely damage the national economy. The panel strongly condemned the move to allow duty- and tax-free imports of Chinese goods through the Sost Dry Port destined for Gilgit-Baltistan.
Conditional Exemption or a Gateway for Abuse?
Former FPCCI president and BMP Chairman, Mian Anjum Nisar, addressed the specifics of SRO 2488(I)/2025. He clarified that the notification does not grant an unconditional blanket exemption. The waiver of sales tax, income tax, and federal excise duty is tied to quota limits, requires online authorization via the Customs Computerized Clearance System, and mandates certification that the imported goods will be consumed solely within Gilgit-Baltistan.
However, Nisar expressed deep skepticism about the practical enforcement of these conditions. "Conditions on paper do not automatically translate into effective control on ground," he cautioned, highlighting the gap between policy intent and real-world implementation.
Past Failures and Present Risks for Local Industry
Nisar pointed out that Pakistan's industrial sector is already reeling under multiple pressures, including historically high energy tariffs, rising input costs, and heavy taxation. In this fragile environment, even conditional tax relief on imported finished and intermediate goods creates unfair market distortions, putting documented local manufacturers at a serious disadvantage.
He drew a direct parallel with past failures, specifically referencing tax concessions previously granted to the erstwhile FATA and PATA regions. "Those concessions were also subject to conditions and monitoring requirements, yet duty- and tax-free goods found their way into settled areas across the country," he stated, resulting in damaged local industries and significant revenue losses for the national exchequer.
The BMP chairman identified several factors that make the risk of diversion particularly high for Gilgit-Baltistan: geographical challenges, limited enforcement capacity, and overstretched Customs and enforcement agencies. Expecting authorities to fully contain the tax-relieved goods within GB is unrealistic when the profit incentives for smuggling them into mainland markets are substantial.
A Call for Policy Revision and Stronger Safeguards
Mian Anjum Nisar emphasized that Pakistan has surplus capacity in key sectors like steel and construction materials. Therefore, there is no supply-side justification for allowing tax-relieved imports of finished goods. The construction needs of Gilgit-Baltistan can be met through locally manufactured products supplied via formal channels, which would support employment and contribute to the national treasury.
He warned that the new SRO could encourage under-invoicing and misdeclaration, and once an illegal parallel supply chain is established, it becomes extremely difficult to dismantle. While the SRO allows Customs to withdraw benefits for violations, Nisar stressed that "enforcement after the fact does not undo market damage already caused."
The BMP chairman reiterated full support for the socio-economic development of Gilgit-Baltistan but argued it should be achieved through infrastructure investment, improved connectivity, and support for local enterprises, not through import-based tax concessions that distort national markets.
He urged the federal government to revisit the implementation framework of SRO 2488(I)/2025 in consultation with the business community. His recommendations include restricting any conditional tax relief strictly to essential raw materials (excluding finished goods), demanding advance guarantees against duties, implementing independent verification of consumption certificates, and establishing transparent monitoring mechanisms jointly overseen by federal and provincial authorities.
Mian Anjum Nisar concluded with a grave warning: Pakistan's economic recovery hinges on protecting documented industry and ensuring fair competition. Conditional concessions must be enforceable in reality, not just well-drafted on paper, or they risk becoming another channel for smuggling, under-invoicing, and a further erosion of the country's tax base.
