LAHORE: Lahore Chamber of Commerce and Industry (LCCI) President Irfan Iqbal Sheikh has said demurrage and detention charges have become a major issue during the crisis and the issue has been taken up on priority basis for extending relief to the business community amid COVID-19.
“Demurrage and detention charges have become a major issue during the crisis. We are cognizant of the fact that the shipping companies are minting money in these difficult times. We persuade Federal Board of Revenue in this regard and the board has directed them to further increase 15 free days but most of the shipping companies are defying the directions,” he said this while talking to Customs Today.
He said that the same companies have allowed free time to the importers and LCCI has approached the authorities for the settlement of the issue. “It is not understandable as to why the companies are not acting upon on the directions. On the other hand, these shipping companies have allowed free time to India while in case of Pakistan they are reluctant to do that. However, we are persuading the issue and hope that it will be addressed soon”.
He admitted that importers have been complaining about the exorbitant demurrage and detention charges being charged by the private terminals and shipping cos.
Talking about the impact of the COVID-19 on trade and industry he said that Pakistan has lost over $6 billion in trade with China, US and EU alone. “The impact of COVID-19 will be long lasting as a large number of employees have been unemployed. The government should also disburse interest free soft loans to the SMEs and small traders enabling them to restart their businesses,” he stated. “The loans should be disbursed on zero percent interest rates if the government wants to revive the economy,” he demanded.
Answering another question about how the losses will be covered after the pandemic ends Irfan said that the COVID-19 has not only affected Pakistan but the economy of whole world. “The world economy has been ditched into an unprecedented recession. We have been doing a big part of the business with the three countries including China, European Union and the US. We have $14.5 billion import and $1.8 billion export annually with China and if the figure is divided in 12 months the total monthly trade with China comes to $1.3 billion. In two and a half months alone, we have suffered from over $3billion losses with China alone,” he explained.
“Then there comes European Union. We have over one billion dollars trade with the EU annually and for the last three months whole of the EU is shutdown and God knows when it will be opened. Then there comes the US. We have over $3.8 billion exports and $ 2.9 billion imports with the USA which is around $6.7 billion annually. This way, we have lost over $1.65 billion in the COVID-19 crisis,” he said.
This roughly can be calculated as over $6 billion with these three countries in three months. There are many other countries that are doing trade with Pakistan. Now we come to the local business activity. We have $ 300 billion worth economy of which $ 24 billion is related to exports while remaining $276 billion economy is totally halted,” he added.
Irfan suggested that things are very difficult ahead as the policy rate in the country is highest in the region in lockdown which is illogical. “If we compare the policy rate with our competitors there is a huge difference. The markup rate in Malaysia is 2.75 percent, China 4.35 percent, Bangladesh 5 percent, 5.1 percent and Siri Lanka 6.50 percent. In such conditions we cannot survive with 11 percent markup rate. The government must have to bring down the interest rate enabling the business to work,” the LCCI chief explained.