Traders have expressed resentment over imposition of a new levy by international shipping lines 'unilaterally' as Container FED Surcharge (CFEDS) on inbound containerised cargo to recover their expenses under the head of 16 percent federal excise duty (FED) imposed by the government of Pakistan on imported goods on account of services at local ports and terminals in the 2009-10 Budget.
According to traders, the shipping lines for last few days have started charging the importers $125 per 20-foot-equivalent-unit (TEU) to recover the money they have to pay on account of 16 percent FED. "They charge it to balance the federal tax on services, but the burden would ultimately be passed on to the trade and would reflect on the cost of doing business," said Nasir Mehmood, a former member of managing committee and chairman of Shipping and Multi-Model Transport Sub-Committee of Karachi Chamber of Commerce and Industry (KCCI).
He claimed that Mediterranean Shipping Company (MSC) had, a few days back, included CFEDS in its shipping bill of an importer. Critical of government's decision to impose FED on services, the KCCI official said the traders were determined to oppose all such unilateral acts on the part of shipping lines on the concerned fora.
While the industry sources confirmed the levying of CFEDS by a "big line" like MSC which follows an independent policy in conducting its shipping affairs, the traders on Saturday approached the Ministry of Ports and Shipping for help.
"We discussed various issues with Secretary, Ports and Shipping, Saleem Khan, but he said the Ministry had no power" to solve traders' problems, Javed Bilwani, Chairman of Pakistan Hosiery Manufacturers Association (PHMA), told Business Recorder.
The PHMA chief quoted Saleem as saying that "the shipping lines are controlled by (Customs) Preventive Collectrate; therefore, we can do nothing to regulate them". While the revenue-conscious federal government seems unwary of such happenings, this would be the masses, as usual, who would suffer ultimately, as the shipping lines, terminal and port operators and the traders find it easy to pass on the burden to the inflation-ridden consumer.
"Why don't the port operators cut their 35-40 percent profits and pass on the burden (of 16 percent FED). We would also pass it on to the consumers," said KCCI official Mehmood. When FED was enforced, it was rigorously opposed by almost all stakeholders, including the port and terminal operators, like PQA, PICT, KICT and QICT, and port users, like shipping agents etc, fearing that the duty would put a "compound effect" on the cost of doing business in Pakistan by at least 16 to 40 percent.