TUTOR WANTED : SMUGGLER OR KHEPIA

I am an industrialist manufacturing fabrics and apparel for the domestic market. Over the years, due to diligent quality control, extensive research, and aggressive marketing, the company products have established a superior status in the market. Moreover, the present situation is such that some of our products have become benchmarks with which the competitors’ products are usually compared. However, our biggest competitor has always been smuggled cloth.

The smuggled cloth used to be brought in by petty couriers, known as Khepias. They would go on a joyride to Bangkok, courtesy the financiers, and on return would bring in the cloth. Gradually, this became big business and pretty soon, the organized sector of the smugglers entered this field. Now, the cloth comes in containers, in full view of the controlling authorities, in total defiance of the laws of the land, and in complete contempt for the industrialization process of the nation. The cloth is openly sold in wholesale markets, in fancy retail outlets, and to apparel manufacturers who make garments out of foreign material. At the same time, there is also a lot of inflow of apparel smuggled in from alien shores. Thailand, Dubai, Indonesia, and even India, are major suppliers of foreign cloth and garments to Pakistan.

What is more pathetic is that inspite of the hurried decision of the Government to reduce the import duty on fabrics to 35% without taking into consideration the reduction of duty on imported yarn, there is more emphasis on smuggling of the fabrics rather than importing thru official channels. In this way, the cost difference between the smuggled fabrics and the locally produced goods is attractive enough for the proliferation of smuggled goods. The input cost for local fabrics is high because of atleast 84% front-loading on imported yarn, exorbitant rates of utilities, escalating labor rates, dwindling value of the Rupee, abnormal increase in "invisible expenses" (Translation: bribes, speed money, extortion), and the general inflationary trends.

Meanwhile, the government spurred on by the IMF mandarins is resolutely determined to impose General Sales Tax on the manufacturers of textiles and garments. Without going into an extensive exercise, without looking at the bottlenecks and hurdles, and without ascertaining the expected outcome, the CBR has been ordered to JUST DO IT. There is no streamlined mechanism to plug in the loopholes, there is no sound and fool-proof method of coordinating the adjustments and modifications, and there is no established system of inducing the suppliers to provide documentation for the inputs into the product.

Furthermore, the industrialists will become prisoners of the discretionary, arbitrary, and coercive powers of the concerned officers. There will be frequent squabbles with the sales tax staff, there will be continued visitations by all kinds of agencies who will keep on demanding information which the sales tax Collectorate will already have, and there will be so much discomfiture and dejection that the industrialists will be forced to cower and grovel into succumbing to the eventual and highly popular "muk-muka".

The organized sector in fabrics and garments will not only then face the scourge of smuggled products, or wrestle with the lower cost products from the tax-free and hidden unorganized industries, or grapple with the ever-increasing input cost, but now they will have to digest the mandates of the sales tax Collectorate. Another nine-headed monster will be let loose resulting in an environment, which will be a scene out of a horror movie.

All this will, in the long run, spell disaster for the local industry. The manufacturers will be in a tremendous bind both financially and spiritually because they will be unable to survive in this expected scenario. Why would a consumer pay more in the shape of sales tax for ready-made garments, when custom-made would seem cheaper? Why would the retailer handle goods that cost him more, that are elaborately documented, and that are difficult to market because of the discount culture prevalent in the domestic market? Why would the manufacturer go around hawking his goods, which are subject to sales tax, when he also has to bear the added financial cost because the retailers are very lethargic in discharging their account liabilities promptly. (More often, the retailers seldom pay before six months.)

Therefore, I, as an industrialist manufacturing both fabrics and apparel, have to do some clear-headed thinking ASAP. I also am not a defeatist. Let me make that unequivocal. However, what should I do to survive? Well, in the doomsday scenario drawn above, there is scant chance of survival. It will be extremely difficult to fight a bear with both my hands tied behind my back. It seems that the final curtain will soon fall and the audience will slowly walk away. Years of dedication and devotion, using all efforts and skills, may go to rot. All because of a haphazard system envisioned by those who have no idea how to run an industry.

In my case, I take this opportunity to request the hordes of smugglers and khepias to please contact me thru this publication immediately. I need training in how to smuggle goods into the country, both overtly and in any other manner. I need information on how to circumvent the watchful eyes of the defenders of the borders. I need tutoring in the intricacies of this business and how to do it and remain scot-free. The smuggling regime is a very lucrative venture. I want a part of it. Sounds much better than an industry.

I can assure my teachers that I will be a really good student. I can start work anytime after June 12, 1996, when the jovial Makhdoom presents the budget to 207 bigwigs who would not know what he is talking about, and where the Treasury members, rather then listening to the Minister, would be watching the Prime Minister and whenever she would applaud, they would do like-wise in a sycophantic way. I can also pledge that I will not betray their identity nor will I intrude on their established territories. I will ensure that I carve out a niche for my very own.

I am sanguine that in the not too future, I will be better off than those of my counterparts in the industry who would be still trying to make their units viable. I would like to caution them, however, that once I get into the smuggling field, I will make life hell for them. That’s how it is gonna be! They’ll, of course, gradually follow my course as they have been doing so all these years, because I’m after all a trailblazer in my field. They know that too.

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July 06-2002