Pakistan's Track and Trace System Fails Due to Industry Resistance and Bureaucratic Incompetence

The implementation of Pakistan's Track and Trace System (TTS) has been deemed a failure, according to a report by the Federal Board of Revenue (FBR). The system, which aimed to enhance revenue and streamline monitoring across key sectors, faced resistance from the industrial sector and suffered from bureaucratic incompetence and contractual flaws.

The report reveals that both the FBR and the contracted company lacked the necessary expertise and understanding for the system's implementation. "The industrial sector resisted the implementation of the system, and the incompetence of the bureaucracy was also a factor," the report states. "The inexperience of the licensing company and the lack of understanding of the local industry situation contributed to the failure."

Despite a 25 billion rupee investment, the TTS fell short of its objectives, with electronic monitoring remaining elusive in the sugar and fertilizer sectors. The cement industry, which had cooperated fully with the FBR in the implementation of the TTS, faced operational disruptions and financial losses due to the unsuitable system.

The All Pakistan Cement Manufacturers' Association (APCMA) has called for a tax rebate from the government to compensate for the substantial investments made in the unsuccessful TTS. "The cement industry had cooperated fully with the FBR in the implementation of the TTS, but the system was not suitable and did not deliver the expected outcomes," the APCMA stated.

Why this matters: The failure of the TTS has significant implications for Pakistan's economy and the fight against tax evasion. The system's shortcomings have led to massive revenue losses and hindered the government's efforts to promote transparency and accountability in key industries.

Prime Minister Shehbaz Sharif has expressed dissatisfaction with the report, which did not identify the FBR officials responsible for the poor implementation of the project. He has directed the Secretary of the Ministry of Finance to investigate the matter and identify those responsible within 72 hours.

The FBR's strategic decisions were reportedly influenced by individuals with marginal professional knowledge, and the former Finance Minister's intervention on behalf of the licensing company SICPA further complicated the implementation process. The Tariq Bajwa-led committee attributed the delays and poor implementation to the manufacturers and contractors but did not find any wrongdoing in the contract award.

The failure of the TTS highlights the need for better enforcement, oversight, and penalties for non-compliance. The Prime Minister's directive to investigate the mismanagement of the TTS rollout signals a commitment to addressing the systemic deficiencies and holding those responsible accountable. The cement industry, represented by the APCMA, is seeking a tax rebate to mitigate the financial impact of the failed system and ensure the sector's resilience and competitiveness in the face of economic challenges.

Key Takeaways

• Pakistan's Track and Trace System (TTS) implementation deemed a failure by FBR report.
• TTS faced resistance from industry, lacked expertise and understanding for implementation.
• Cement industry faced disruptions and losses due to unsuitable TTS, seeks tax rebate.
• TTS failure led to revenue losses, hindered transparency and accountability efforts.
• PM directs investigation into mismanagement, holding responsible officials accountable.