Interim Government Imperils Bangladesh’s Economy to Contraband from Pakistan

Bangladeshi flag

In a short sighted move that leaves it vulnerable to illegal transfer of arms and contraband, Bangladesh National Board of Revenue (NBR) has eliminated the mandatory 100% physical inspection of goods imported from Pakistan as part of ease of doing business. Bangladesh had a rule requiring 100% physical inspection of all goods imported from Pakistan. The decision to scrap the rule by the Bangladesh interim government is ostensibly aimed to expedite customs clearance and improve trade efficiency between the two countries.

Instead of mandatory inspections, Pakistani goods will now be examined based on a risk assessment system. Aside from the fact that this leaves Bangladesh completely open to the risk of contraband goods being imported from Pakistan, there are other concerns about oversight in a high risk-based assessment system. The restrictions were imposed by the previous Hasina Wajid government. The move has come in the wake of Prime Minister Shehbaz Sharif’s meeting with Bangladesh Chief Adviser Dr Muhammad Younis late last month in New York on the margins of the United Nations General Assembly (UNGA) summit. With the new directive, Pakistan’s exports will no longer be automatically classified as high-risk. Instead, Customs officials will implement a Product-Based Risk Management system under the local criteria, allowing more flexibility in handling Pakistani imports.

Firstly getting information on which is a high-risk shipment itself is the most tricky part. For Bangladesh relations with Pakistan have been icy in the past, strained by distrust and historical grievances. To assume that Pakistan will be forthright about any contraband goods with customs authorities in Bangladesh is wishful thinking. Scanning goods based on a high risk-based assessment system, would require state of the art, advanced technologies such as X-ray scanners, electronic tracking systems, and data analytics which Bangladesh lacks. Without these measures in place, by eliminating the mandatory physical inspection of goods imported from Pakistan the interim government is exposing Bangladesh to the risk of not only contraband goods but narcotics, arms and other illicit products entering the country.

Arms trafficking from Pakistan in South Asia is a significant issue. Pakistan’s export of arms and ammunition saw a significant increase in the financial year 2022-23, with export receipts rising to $415.650 million, a 30-fold increase from the previous year. This surge in arms exports has heightened concerns about the potential for illegal arms trafficking. This surge in arms exports highlights Pakistan’s growing role in the global arms market.

Pakistan plays a significant role in arms trafficking, both as a source and a transit point for illicit weapons. Pakistan’s Federally Administered Tribal Areas (FATA) have historically been a hub for the production and smuggling of firearms. The region’s strategic location and exemption from certain national laws have facilitated this illegal trade. A large proportion of privately owned firearms in Pakistan are unregistered, making it easier for these weapons to be trafficked both within and outside the country. This lack of regulation contributes to the widespread availability of illicit arms. The proliferation of illicit arms from Pakistan has significant implications for regional security. It fuels insurgencies, terrorism, and organised crime, exacerbating violence and instability in South Asia.

In 2004 massive consignment of weapons, including assault rifles, submachine guns, rocket-propelled grenades, and ammunition, was intercepted in Chittagong. The weapons were reportedly sourced from China and Singapore, but investigations revealed that Pakistan’s Inter-Services Intelligence (ISI) was involved in orchestrating the shipment. The arms were intended for the United Liberation Front of Asom (ULFA), a banned militant group in India.

As soon as physical inspection of Pakistani goods into Bangladesh is stopped, the possibility of similar arms consignments hidden in shipments and meant for radical extremist groups is likely to happen soon.

Another major concern that must be kept in mind is narcotics trafficking from Pakistan into Bangladesh. Drugs from Pakistan often enter Bangladesh through various routes, including land, sea, and air. The porous borders and extensive coastline of Bangladesh make it a vulnerable transit point for narcotics. Once the goods from Pakistan are made exempt from physical exemption this volume of drug trafficking into Bangladesh will see a massive surge.

The primary drugs trafficked from Pakistan to Bangladesh include heroin and methamphetamine (commonly known as yaba), via maritime routes. The influx of drugs has significant social and economic impacts on Bangladesh. It fuels addiction, crime, and violence, and places a heavy burden on law enforcement and the healthcare systems. Despite Pakistani claims of taking steps towards combating drug trafficking, the effectiveness of these measures is often limited by corruption and the sophisticated nature of trafficking networks.

Large consignments of Khat, is a stimulant drug that is being increasingly smuggled into Bangladesh from Pakistan have been seized at airports, indicating a growing trend.

Among the items frequently smuggled into Bangladesh from Pakistan are counterfeit smartphones, chargers, batteries, and other accessories, fake branded clothing and textiles , counterfeit medicines and health supplements, imitation beauty and personal care products, pirated software, movies, and music. These goods can undermine the local economy and pose health risks. Further, these goods are produced with substandard materials and can pose significant risks to consumers, including health hazards and financial losses

Even Pakistan’s national carrier is known for smuggling goods. Recently a member of the PIA cabin crew has been detained by Cana­dian authorities for carrying contraband items. In April this year Hina Sani, a member of the PIA crew on a Lahore-Toronto flight, was detai­ned for carrying passports of unrelated persons, an immigration stamp and a contraband item allegedly concealed in her shoes.

The smuggling of pirated electronics from Pakistan into Bangladesh is yet another notable issue. These contraband items often include counterfeit mobile phones, laptops, and other electronic gadgets. Pakistani smugglers use various routes, including land and sea, to transport these goods. The extensive coastline of Bangladesh makes it easier for traffickers to move these items undetected.

The influx of pirated electronics undermines the local economy by affecting legitimate businesses. It also results in significant revenue losses for the government due to evasion of taxes and duties. Counterfeit electronics often do not meet safety standards, posing risks to consumers. These products can be prone to malfunctions and may even be hazardous.

Pakistan’s illicit economy, a subset of its broader informal economy, has posed a major economic and security challenge for the region. Over the last few years, this illicit economy – which consists of everything from drugs and foreign currency to consumer goods such as soap – has thrived. Once the physical inspection of Pakistani goods entering Bangladesh is halted any progress that Dhaka had made in the past towards curbing smuggling of pirated electronics through increased border security and stricter enforcement of laws will be totally mitigated. Bangladesh imports a wide range of products from Pakistan, including cotton, yarn, chemicals, wheat, plastic materials, leather, petroleum products, baby food, rice, and fruits, as well as surgical equipment and electric fans. Considering this the interim government of Bangladesh is indeed exposing its economy to a real risk of being flooded with illicit goods.

While the interim government in its zeal to portray itself as cordial and unbiased has gone ahead with the decision to eliminate the mandatory 100% physical inspection of goods imported from Pakistan, it has completely disregarded the considerable risks to which it has exposed Bangladesh by this move. Illegal arms, narcotics, counterfeit goods will flood the market. The move will affect multiple stakeholders, including law enforcement, customs authorities, local businesses, ordinary Bangladeshi buyers and international partners.