In a significant move aimed at revitalizing Pakistan’s economy, Prime Minister Shehbaz Sharif has issued directives to eliminate customs and regulatory duties on various goods. This decision comes as part of broader structural reforms in the Federal Board of Revenue (FBR) and Pakistan Customs, targeting enhanced transparency, efficiency, and facilitation of trade. The Prime Minister’s order reflects a strategic pivot towards easing the cost of doing business, encouraging imports of essential goods and industrial raw materials, and stimulating overall economic activity.
A Strategic Economic Shift
The directive to remove customs and regulatory duties is part of a comprehensive reform package designed to modernize and streamline Pakistan’s trade and tax systems. Over the years, the imposition of heavy duties on imports — particularly raw materials and machinery — has hindered the competitiveness of domestic industries. By eliminating these burdensome duties, the government hopes to inject new life into manufacturing, promote exports, and attract foreign investment.
This policy shift is particularly timely, considering the inflationary pressures and industrial slowdown that Pakistan has experienced in recent years. Lower duties will reduce the cost of production for local manufacturers, making Pakistani goods more competitive in both local and international markets.
Separation of Customs and Inland Revenue Services
In a major institutional reform, the Prime Minister has also approved the separation of Pakistan Customs and Inland Revenue Services (IRS) — two arms of the FBR that have long operated under a single umbrella. This bifurcation is expected to be completed by March 31, 2025. The aim is to enhance specialization, efficiency, and accountability within each division.
According to officials, the new structure will allow Customs and IRS to operate independently, each with its own administrative setup, performance evaluation mechanisms, and technological systems. The move is designed to ensure that each wing can focus on its core mandate — trade facilitation and revenue collection respectively — without overlapping responsibilities or bureaucratic red tape.
Emphasis on Digital Transformation and Transparency
The Prime Minister has also emphasized the role of technology in transforming Pakistan’s customs operations. He has called for the deployment of modern tools, including Artificial Intelligence (AI), advanced scanning systems, and digital tracking to monitor cargo and ensure real-time data availability. These technologies are intended to minimize human intervention, reduce corruption, and cut processing times at ports and border stations.
Moreover, a third-party audit mechanism will be introduced across all levels of FBR operations. This move aims to enhance transparency, improve taxpayer confidence, and ensure that the reforms are implemented in both letter and spirit.
Industry Reaction and Economic Implications
Business leaders and industrial stakeholders have largely welcomed the move, seeing it as a long-overdue step to remove inefficiencies from Pakistan’s import-export regime. With regulatory duties often cited as a major non-tariff barrier, their removal could lead to a surge in imports of essential raw materials, benefiting industries such as textiles, pharmaceuticals, electronics, and agriculture.
However, some experts have cautioned that the removal of these duties may temporarily impact revenue collection. To address this, the government is expected to introduce alternative revenue measures, including broadening the tax base, improving compliance, and leveraging digital tools for better enforcement.
In the long term, the government is betting on increased industrial output and exports to make up for any shortfall in customs revenues. If executed effectively, these reforms could also help Pakistan improve its rankings in global ease-of-doing-business indices and enhance investor confidence.
A Long Road Ahead
While the directives issued by Prime Minister Shehbaz Sharif mark a progressive step toward reforming Pakistan’s tax and trade systems, their successful implementation will depend on coordinated action across multiple government agencies. The bureaucracy, historically resistant to change, will need to align with the vision set by the leadership and commit to institutional transparency and efficiency.
Moreover, the government will need to maintain a delicate balance between liberalizing trade and protecting domestic industries. Careful calibration of which items remain protected under customs duties and which are liberalized will be key to ensuring that local businesses are not adversely impacted.
Conclusion
The decision to abolish customs and regulatory duties, along with structural reforms in the FBR, could mark a turning point for Pakistan’s economic trajectory. If implemented effectively, these measures have the potential to not only reduce the cost of doing business but also foster a more competitive industrial base and a vibrant trade ecosystem.
In an economy where growth has been hampered by inefficiencies and overregulation, this bold step by the Prime Minister may well be the catalyst needed to unlock Pakistan’s economic potential.
Reference: وزیر اعظم کی کسٹمز اور ریگولیٹری ڈیوٹی مکمل ختم کرنے کی ہدایت