TO REMOVE ANOMALIES TO SAVE/BUILD FOREIGN

CURRENCY RESER VES - AN UTTER NEED OF THE HOUR

A) LPG-Imports through TAFTAN border
The Custom department o f FBR allows to import LPG either in books or
off books by ignoring USA, UN and EUROPE sanctions imposed on
IRAN and consequently, our banks do not allow to open L/C's and make
payments in any manner against supplies to be made from IRAN .
Hence, the buyers are arranging off book payments through currency
dealers via HUNDIS/HA VALAS in accounts o f sellers from Iran or Iraq,
at DUBAI. As evidence, bank letters confirming the sanctioned countries
including IRAN and LPG - GDR issued by the Custom officials at
TAFTAN are enclosedfor your perusal.

Most prominently, off- Spec LPG —a petroleum product, the other

petroleum products such as petrol, diesel etc. are banned officially but
are unofficially IRAN products are being sold even on carts at Quetta
and other cities o f Baluchistan. LPG is being refilled in open
environment in clear violation o f LPG standards notified by OGRA
under LPG rule 2 (P) detailed in its APPENDIX I o f LPG
(PRODUCTION AND DISTRIBUTION) RULES 2018.

There is no independent lab established at Taftan border to confirm

quality o f imported LPG, the sulphur contents injurious to health while
burnings and deteriorates the inner walls o f bowsers and cylinders
weaken it quickly causing significant threat o f explosion and loss o f
precious lives. Due to this fact, the sellers make road supply o f ship's
left over stocks as in case o f ship supplies they have to pass international
quality checks to be carried out by independent consultants. The other
items include MRF used Tyres and rumors are that these are Indian
TYRES with changed particulars plus other miscellaneous items too.
SBP should design some mechanism for payments or otherwise such
imports must be stopped before it comes to the knowledge o f external
regulators such as FA TF etc. in which case it will be embarrassing for
us. With these actions, we will obviously able to get two way benefits:

1) - Foreign currency savings- required to meet our utter need o f the

hour to correct balance o f payments with better control exercises as
millions o f dollars are being paid off books which create opportunity to
remit off book foreign remittances .
2) - To increase our tax revenues as these imports are only partly
recorded in custom records while partly are off book without paying due
taxes thereon.

B) Foreign commission
SBP has allowed 5% to 33% foreign commission to be paid abroad
by the exporters out o f export proceeds and even still SBP permits to
reduce their agreed prices o f goods exported with buyers (by way o f
ambiguous permissions given by SBP to the exporters ). Contrary to
the above, these rates are too high and actually a nominal rate o f
commission is being paid by the exporters and the rest might be
misused. The SBP must revise it by knowing the relevant clauses o f
chapter 12 o f Foreign Exchange Manual -Attached.

C) Foreign currency (FC) dealers

Usually, it is observed that every or 20^^ motorbike riders,
employed by the dealers, is on road to freely carry foreign currency
to deliver/receive after payment in cash (Pak Rupees). Even if you
order to buy/sell or pay abroad in foreign currency equivalent to
 millions o f rupees, they will surely arrange and deliver within half an
hour in Pakistan and abroad. They also deal in off the record home
remittances. We can control money laundering to build our FC
reserves Vis a Vis able to increase our tax revenue by recording these
transactions in books. They are all involved in facilitating money
laundering by creating and operating parallel off the record banking
— serious violations o f SBP and other laws.

The government must take up this issue with SBP as there seems no
strict monitoring; hence all the foreign currency transactions must be
made through banks by rescinding all dealer licenses to eliminate the
menace o f money laundering.

D) Export o f indigenous fuel

For example ethanol fuel - our indigenous product is 100% exported
from Pakistan. The present annual production in Pakistan is between
500,000 to 600,000 M Tons. In India, it is being blended in petrol up
to 15%o with zero exports while in Pakistan blending is not allowed
for the purpose by the influential importers o f petrol. We are
exporting it at less price than that at which we are importing petrol
there against. Resultantly, we will save FC equivalent to billions o f
rupees.

Need to formulate policy to produce ethanol fuel from wheat and rice
straws to save FC being used in import o f oils. Presently, these raw
materials are being wasted or burned causing pollution/health hazard.

E) Vigilance at export/import terminals

Custom officers at export/import terminals do not bother about rate
o f export nor import items to control elements o f under/over
invoicing. They do not even bother to see and compare the rate with
other buyers/exporters o f same items o f same quality and same
country/customer. FBR must devise some mechanism for effective
monitoring o f aforesaid transactions.