Imported machinery worth billions of dollars not installed
Last Updated: July 31, 2008: 5:54 PM CST
ISLAMABAD: Billions of dollars worth of machinery imported by Pakistan has been dumped and never installed, causing a huge drain on foreign exchange resources, a State Bank Report reveals, confirming the fears of SBP Governor Dr Shamshad Akhtar.
Import of phenomenal amounts of machinery at taxpayers?expense was basically to avail kickbacks from suppliers, though Dr Shamshad Akhtar did not make a mention of these imports specifically in painting the dismal picture of the economy on Tuesday at her press conference.
However, her conclusions were backed by certain officially framed reports, one of which indicated that most of imports on which foreign exchange got drained out of Pakistan (over USD5.5 billion) in the past 7-8 years were lying idle and not installed to produce, or build production capacity for infrastructure support.
Some of these included the nearly 200 road-sweepers parked in the close vicinity of where she spoke to the press in Karachi. They were imported but never used, as their specification was never to the need to clean the Karachi roads, which are dilapidated in most parts of the metropolis.
Parts of the report revealed to The News indicated that there were names of departments, organisations and government functionaries that were instrumental in these imports, even against the standing law that "local industry be promoted to the optimum".
Since the SBP has no jurisdiction over these departments in terms of punishing the mega crimes perpetrated by unscrupulous bureaucrats, the relevant officials of this central bank are looking for some federal apparatus to work on the report and find out how to go about specifying the crime in legal terms and then framing legal course.
Machinery is the second largest component in the import bill after petroleum, as its import stood at $7.376 billion in 2007-08, up by 10.32 percent from $6.686 billion in 2006-07. The total import bill of machinery group stood at $5.44 billion in July-April period of 2006-07, as against $4.85 billion in the same period in 2005-06, showing a steady increase in imports but decline in exportable goods and local-consumption materials by use of accessories, parts and equipment.
"Where did this machinery go in a period when the exports and production were on a steep slide?" asked a Commerce Ministry official who was approached by The News to comment on the situation.
"Obviously, a large chunk of import of equipment, accessories and parts went into stores where they are locked up and seldom used by the government apparatus."This growth in the import bill of machinery was observed in a period when the 59.54 percent growth in the import of power generation machinery was made an excuse for the increase in payments in foreign exchange.
This growth accompanied 17.21 percent in construction and mining machinery, 16.89 percent in electrical machinery and apparatus and 9.55 percent in other machinery.Import of textile machinery dropped by 12.85 percent, office machinery by 5.33 percent while import of agriculture machinery and implements declined by 18.84.
Main public sector culprit departments, state-run entities are Pakistan Railways, Wapda, certain Organisations under the Ministry of Petroleum and Natural Resources like the Oil and Gas Development Company Ltd. and the Pakistan Petroleum Ltd, PTCL and the procurement wing of the GHQ.
The organisations like the Quaid-e-Azam University, the Peshawar University and the Engineering University of Technology and research organisations like Water Resources Research organizations also joined the spree. Scientific research equipment instruments they imported were hardly used or had technical justification.
The government organisations during the import-happy government of former PM, Shaukat Aziz, in a blind trend for earning revenues by allowing to amass imported mobile phones and cars exacerbated the decades-old exercise of unnecessary buying of even that equipment available far more cheaply and in good quality at home.
The cost of mounting revenue on these goods had been far greater in foreign exchange, as is revealed to the SBP. No one has asked the government authorities on this mind boggling scam nor was the transfer of billions of dollars in cost, profits and kickbacks received any mention in Ms Shamshad's report.
The franchise fees in foreign exchange to foreign companies, charged to every phone call made in Pakistan and to destinations abroad, is apart from these losses, which never figured on official reckoning, an issue the SBP officials have internally been raising but to little heed.
The cars under the self finance scheme were normally only assembled in the country but import of its components caused a major outflow of foreign exchange, an aspect covered by the report but not articulated.
The government authorities allowed dumping of goods of foreign origin of common use like shoes, clothes, electronic goods at a mass scale, while the outflow of forex met an unprecedented upswing.
When probed, it came to light that no state agency was specifically responsible to guard against invasion of the economy through imports. These invaders are operating from inland, connected, on the one hand, with the top government functionaries and the franchise bosses, on the other hand.
Import of phenomenal amounts of machinery at taxpayers?expense was basically to avail kickbacks from suppliers, though Dr Shamshad Akhtar did not make a mention of these imports specifically in painting the dismal picture of the economy on Tuesday at her press conference.
However, her conclusions were backed by certain officially framed reports, one of which indicated that most of imports on which foreign exchange got drained out of Pakistan (over USD5.5 billion) in the past 7-8 years were lying idle and not installed to produce, or build production capacity for infrastructure support.
Some of these included the nearly 200 road-sweepers parked in the close vicinity of where she spoke to the press in Karachi. They were imported but never used, as their specification was never to the need to clean the Karachi roads, which are dilapidated in most parts of the metropolis.
Parts of the report revealed to The News indicated that there were names of departments, organisations and government functionaries that were instrumental in these imports, even against the standing law that "local industry be promoted to the optimum".
Since the SBP has no jurisdiction over these departments in terms of punishing the mega crimes perpetrated by unscrupulous bureaucrats, the relevant officials of this central bank are looking for some federal apparatus to work on the report and find out how to go about specifying the crime in legal terms and then framing legal course.
Machinery is the second largest component in the import bill after petroleum, as its import stood at $7.376 billion in 2007-08, up by 10.32 percent from $6.686 billion in 2006-07. The total import bill of machinery group stood at $5.44 billion in July-April period of 2006-07, as against $4.85 billion in the same period in 2005-06, showing a steady increase in imports but decline in exportable goods and local-consumption materials by use of accessories, parts and equipment.
"Where did this machinery go in a period when the exports and production were on a steep slide?" asked a Commerce Ministry official who was approached by The News to comment on the situation.
"Obviously, a large chunk of import of equipment, accessories and parts went into stores where they are locked up and seldom used by the government apparatus."This growth in the import bill of machinery was observed in a period when the 59.54 percent growth in the import of power generation machinery was made an excuse for the increase in payments in foreign exchange.
This growth accompanied 17.21 percent in construction and mining machinery, 16.89 percent in electrical machinery and apparatus and 9.55 percent in other machinery.Import of textile machinery dropped by 12.85 percent, office machinery by 5.33 percent while import of agriculture machinery and implements declined by 18.84.
Main public sector culprit departments, state-run entities are Pakistan Railways, Wapda, certain Organisations under the Ministry of Petroleum and Natural Resources like the Oil and Gas Development Company Ltd. and the Pakistan Petroleum Ltd, PTCL and the procurement wing of the GHQ.
The organisations like the Quaid-e-Azam University, the Peshawar University and the Engineering University of Technology and research organisations like Water Resources Research organizations also joined the spree. Scientific research equipment instruments they imported were hardly used or had technical justification.
The government organisations during the import-happy government of former PM, Shaukat Aziz, in a blind trend for earning revenues by allowing to amass imported mobile phones and cars exacerbated the decades-old exercise of unnecessary buying of even that equipment available far more cheaply and in good quality at home.
The cost of mounting revenue on these goods had been far greater in foreign exchange, as is revealed to the SBP. No one has asked the government authorities on this mind boggling scam nor was the transfer of billions of dollars in cost, profits and kickbacks received any mention in Ms Shamshad's report.
The franchise fees in foreign exchange to foreign companies, charged to every phone call made in Pakistan and to destinations abroad, is apart from these losses, which never figured on official reckoning, an issue the SBP officials have internally been raising but to little heed.
The cars under the self finance scheme were normally only assembled in the country but import of its components caused a major outflow of foreign exchange, an aspect covered by the report but not articulated.
The government authorities allowed dumping of goods of foreign origin of common use like shoes, clothes, electronic goods at a mass scale, while the outflow of forex met an unprecedented upswing.
When probed, it came to light that no state agency was specifically responsible to guard against invasion of the economy through imports. These invaders are operating from inland, connected, on the one hand, with the top government functionaries and the franchise bosses, on the other hand.
