ISLAMABAD: Pakistan is losing millions in foreign exchange as some rice exporters are allegedly indulging in duty-evasion.
The government is collecting only one per cent withholding tax on export of goods and commodities at ports as there is no mechanism to check the practice.
According to President, Basmati Growers Association, Hamid Malhi, basmati rice was exported at an average price of $844 per ton in 2010-11 as against the Indian minimum export price of $900 per tons.
“This simply suggests that exporters are transferring money to their foreign accounts to evade taxes. The money is sent back in the shape of remittances, mostly from gulf countries, as it does not attract any tax,” he said.
Basmati rice exports during 2010-11 stood at 975,588 tons worth $823.16 million. Of these, the UAE and Iran emerged two major basmati importers from Pakistan, which constitutes 40 per cent of total Pakistan’s basmati exports.
Pakistan lost around $264m on export of 155,903 tons of rice to Iran as value was declared at $580 per ton which is lesser than the total average price of basmati during the year under review.
Pakistan was deprived of $41.159 million alone on export of 155,903 tons of basmati rice to Iran as basmati rice exported at the rate of $580 per ton yielded export proceeds of $90.423 million instead of $131.582 million.
Mr Malhi said that average unit price of $581 per ton is astonishingly low which means local price of Rs1,998 per 40kgs, which is even below the domestic market rate of basmati which remained above Rs2,200 per 40kgs.
Whether it is under-invoicing or export of blended rice being labeled as basmati, in both the cases the country was losing, he said.
“If it is under-invoicing, it can only be checked by imposing MEP for all basmati exports,” he suggested to the commerce ministry.
He said if it is blending or mixing of basmati with non-basmati long grain rice to sell at a low price, it surely hits reputation of basmati as premium rice fetches more than double the price of rice sold in other parts of the world.
The Quality Review Committee (QRC), he said should enforce basmati standards which do not allow admixture of non-basmati varieties above 10 per cent. Even Thai rice sells around $560 per ton.
Pakistan exported 264,596 tons of basmati rice to UAE, which emerged as biggest export destination. It is believed that Indian exporters buy Pakistani rice at much cheaper rates for its subsequent exports with Indian label to maintain their market control.
The ministry of commerce, he said, was not only lacking interest to initiate a move to impose MEP to stop this leakage, but was also providing an official shelter to maintain monopoly of selected exporters over the commodity.
“No one can export rice until having valid membership of Rice Exporters Association of Pakistan”, Mr Malhi said.
Last year’s export statistics suggested that of the 108 countries to which basmati rice was exported, UAE imported 264,596 tons and Iran 155,903 tons, US 16,229 tons, EU 46,710 tons, Australia 21,902 tons and four South American countries 158 tons.Below 100 tons each were exported to 38 countries, below 1,000 tons and above 100 tons to 29 countries, below 10,000 tons and above 1,000 tons to 26 countries, below 100,000 tons and above 10,000 tons to 13 countries, and above 10,000 tons of Basmati exports were restricted to just 15 countries.