Smuggling, Under-Invoicing Hurting Pakistan’s Tyre Makers

More than six million tyres are purchased in Pakistan each year, but even though local manufacturers are only capable of producing 2.5 million units annually, they are operating at under capacity. The reason for this, believes the head of one domestic producer, is the prevalence of smuggled and under-invoiced foreign brands.

In a speech on November 13, General Tyre and Rubber CEO Shahid Hussain stated that Pakistan is losing billions of rupees in foreign exchange and revenue due to a flood of smuggled and under invoiced tyres entering the country. China was singled out as a major source of these products. This trade has caused local manufacturers to suffer – according to Hussain, General Tyre has been unable to utilise the extra capacity added in 2005 and 2006, at a time when it was projected that Pakistan would manufacture more than half a million cars in 2010-2011.

The Pakistan government’s tolerance of the widespread under-invoicing is, Hussain said, difficult to comprehend. “It is just a matter of finding the right price through [the] internet,” he commented. Smuggling, he added, occurs mainly due to loopholes in a trade transit agreement the country has with Afghanistan.