Update: Authentix-led group wins Pakistan digital tax stamp tender

Pakistan’s government has awarded a contract to implement a track and trace system for tobacco, cement, sugar and fertilizer to a consortium led by US authentication specialist Authentix.

Authentix will collaborate on the project with MITAS Corp, a South African traceability company, and   Pakistani trading and project management group AJCL. The award from Pakistan’s Federal Board of Revenue (FBR) is for five years initially, with an option to extend for another three years.

The scope of the project is to assist both domestic manufacturers and importers with the capability to apply secure and digitised tax stamps to each product of the aforementioned products categories that is distributed in Pakistan. The contract is expected to cover around 6.5bn products per year.

“This system will provide for production monitoring, product movement control and product authentication via secure and non-intrusive technologies installed at manufacturing lines, dedicated hand-held equipment, smartphone applications, and multi-faceted security stamps,” said Authentix in a statement.

A spokesperson for the company told SecuringIndustry.com that the tax stamps will include multiple over features, machine readable covert technology, forensic ID protection and a variable, digital authentication code which will be verifiable using a smartphone.

"The current expectation is for the system to go live in July 2021 starting with the tobacco, cement, and fertilizer industries," they added.

The award of the tobacco track-and-trace contract comes a year after Pakistan scrapped a contract a awarded under a previous tender to National Radio & Telecommunication Corporation (NRTC), after a court upheld complaints that the company had been given preferential treatment.

NRTC was offering a track and trace system developed by Inexto, a company controlled by former Philip Morris International (PMI) employees, which led to accusations that the tobacco industry was exerting too much influence over the process.

Using nano-optics to create a new, highly secure brand protection solution

After that contract was awarded, the International Tax Stamp Association (ITSA) industry group said that a week before the tender closed a lobbying meeting took place between the FBR and tobacco firms, in violation of the World Health Organisation’s Framework Convention on Tobacco Control (WHO FCTC) Protocol – which Pakistan has signed up to.

The new tender process that followed was an opportunity for Pakistan to introduce traceability across other industries affected by illicit trade – a multisector approach that is similar to that adopted in Russia with its Chestny ZNAK programme.

According to the World Bank, production and importation of products of tobacco, cement, sugar and fertilizer is affected in all cases by smuggling, counterfeiting, and production volume underreporting, resulting in up to an estimated 50 per cent of the total volume of all goods sold in country. 

For tobacco products alone, that illicit trade robs Pakistan’s treasury of around $480m a year, which for comparison is more than three times the amount currently allocated for annual federal government spending on healthcare.

We are pleased that the [FBR] has finalised this license agreement with us,” said Authentix’ chief executive Kevin McKenna.

“We look forward to implementing this advanced monitoring and enforcement system for the curtailment and remediation of illicit trade for the benefit of the Pakistan citizens and to create fair trade practices in the industries noted,” he added.