Under-invoicingof Chinese goods in Pakistan soars above $5bn

[Naveed Yaseen]

By Mansoor Ahmad
LAHORE: The industrial sector has drawn the attention of the government to the difference of $5.809 billion between 2003 and 2007 in figures of Chinese government for goods exported to Pakistan and the officially recorded imports of these goods in Pakistan.

The local manufacturers point out that though under-invoicing has been in vogue in Pakistan since long, it has never been possible to record its quantum as most of the imports were from open market economies where the officials do not bother if the goods are under-invoiced. However, ever since Pak-China trade started expanding it has become possible to at least document the quantum of under invoicing channelled through Chinese products.

The Chinese economy is still principally controlled by the state and the amount received by the Chinese exporter for under-invoicing the goods to the third country are well documented. The Chinese official data reflects the actual export figures while the data of the importing economy reflects the invoiced amount less the amount paid by the importer to the Chinese supplier in cash.

They pointed out that in 2003 the Chinese government in its exports statistics declared that it has exported goods worth $1854.970 millions to Pakistan but the official figures of imports from China was recorded by the Pakistani government as $1150.363 only during that year. There was a difference of $4704.607 million in the amount quoted on the official sites of both countries.

In 2004 Pakistani government declared that goods worth $1488.774 million were imported from China while the statistics of the Chinese government showed that the goods exported to Pakistan that year were worth $2465.769. The difference between the two countries on the goods imported in to Pakistan enlarged to $976.995 million. In 2005 Chinese claimed to have exported goods worth $33427.662 Pakistan while the local authorities claimed imports of only $2349.395 enlarging the differential in figures to $1078.267 million.

This trend continued in 2006 and 2007 for which the official figures of both countries are available on their websites. In 2006 the difference in the exports claimed by Chinese and import invoices cleared by the Pakistanis rose to $1324.439 million and in 2007 it enlarged further to $1624.825 million.

Proven under-invoicing of goods imported from China into Pakistan is a major stumbling block in the growth of Pakistan’s domestic industry. Former President Lahore Chamber of Commerce and Industry Mian Anjum Nisar said that the discrepancies in the Chinese and Pakistani trade statistic was pointed out in 2004 and ever since then to every government in Pakistan. He said Pakistan and China in fact have signed a treaty under which Chinese promised to check the under-invoicing and enclose the actual invoice of the goods in each consignment but the practice has not yet taken place.

Industry circles point out that under-invoicing cannot be done without the connivance of clearing staff at the Customs. They said the bureaucracy in fact is not interested in implementing the agreement with the Chinese. They said in current high tech age it is possible for both the governments pass on immediate detailed information of the goods traded between the two countries on daily or even hourly basis.

Industry circles pointed out that the under invoiced finished goods from China and many other countries have marginalized the SME sectors of the economy. They said Chinese under-invoicing has been documented by the difference in trade statistic of the two governments while under-invoicing from Far East and even European country is of the same level but cannot be proved through country trade data. However they said if the custom officials assert themselves and find out the global rates of raw materials used in these products they could arrive at fair price of the under invoiced items.

http://www.thenews.com.pk/daily_detail.asp?id=181938