PCDMA Chief Calls for Urgent Reforms to Stem Abuse of Export Scheme

KARACHI: Salim Valimuhammad, the Chairman of the Pakistan Chemicals & Dyes Merchants Association (PCDMA), has voiced significant concerns regarding the misuse of the Export Facilitation Scheme (EFS), cautioning that the existing system loopholes threaten small and medium enterprises (SMEs) and could result in major revenue losses for the national exchequer.

In his statement, Valimuhammad called on Prime Minister Shehbaz Sharif and the Federal Board of Revenue (FBR) Chairman to take immediate corrective action. He emphasized that raw materials imported duty-free under the EFS are being diverted illegally into the local market, rather than being used for the export-oriented industrial purposes they were intended for.

Valimuhammad criticized the current auditing practices as insufficient and questioned why real-time verification of transactions could not be implemented. He proposed linking raw material imports to verified Export Letters of Credit (LCs) and establishing fixed percentage ratios to regulate duty-free imports.

He noted that goods with high tariffs and tax escalations are particularly susceptible to exploitation under the EFS. To address this, he suggested reducing the duty structure, warning that without such measures, combating illicit trade activities would remain challenging.

Valimuhammad highlighted the dual crisis created by EFS abuse, noting that it not only drains government revenues but also disrupts the industrial ecosystem. He warned that if immediate corrective actions are not taken, the scheme should be abolished due to its threat to legitimate businesses and failure to meet its original objectives.

He concluded by stating that with proper regulations, the EFS could be a valuable tool for boosting export growth, but in its current flawed state, it is detrimental to the national economy.

Source: Pakistan Chemicals and Dyes Merchants Association