Thursday April 18, 2024

‘Fiscal constraints hurting Pakistan’s telecom sector’

Pakistan’s telecom sector has been passing through a difficult patch of fiscal constraints, including one of the highest taxation burdens

By Mehtab Haider
November 25, 2022
‘Fiscal constraints hurting Pakistan’s telecom sector’. Representational image
‘Fiscal constraints hurting Pakistan’s telecom sector’. Representational image 

ISLAMABAD: Pakistan’s telecom sector has been passing through a difficult patch of fiscal constraints, including one of the highest taxation burdens, devaluation of the exchange rate, withdrawal of Direct Carrier Billing (DCB) and other problems, visiting GSMA head of Asia Pacific said on Thursday. 

The GSM Association is an industry organisation that represents the interests of mobile network operators worldwide. More than 750 mobile operators are full GSMA members and a further 400 companies in the broader mobile ecosystem are associate members.

“The country will have to reverse its policy for moving towards the trajectory of growth. Pakistan needs to implement a roadmap for promoting the telecom and IT sectors on a consistent basis. Without consistency and predictability of policies, investment cannot be lured on a permanent basis. Pakistan is not ripe for launching 5G technology at the moment,” the GSMA’s Head of Asia Pacific Julian Gorman said while talking to a select group of reporters here on Thursday.

When asked to compare Pakistan and India for promoting the telecom sector, especially in the context of recent launch of 5G by India, the visiting GSMA head of Asia Pacific said that India was ahead of Pakistan because they successfully overcame significant constraints. The scale of the economy of India, he said, helped them in achieving advancement but financial sustainability helped them to go ahead with the launch of 5G. “Pakistan will have to move towards the trajectory of growth prior to the launch of 5G technologies because it required substantial investments as pre-requisites for setting the stage for moving ahead,” he said and added that the existing situation was not ripe where the taxation burden, 30 percent devaluation of exchange rate and other policy reversals made it hard for the telecom sector to survive in a difficult situation.

Julian Gorman expressed his dismay and stated that when he had visited three years ago, there was a more promising situation on the ground but now the moment got lost.

Referring to the GSMA’s intelligence report highlighting that Pakistan’s policymakers possessed the opportunity to accelerate the progress with Digital Pakistan for laying the foundation for the launch of 5G in the country, he said: “This requires improving the financial health of the country as we knew that fiscal problems compounded increasing difficulties for the telecom sector in Pakistan.”

Julian Gorman said that the industry in Pakistan was facing financial constraints, as the cost of doing business escalated, while the return on investments as well as options of business developments was decreasing.

To another query, he said that the withdrawal of Direct Carrier Billing (DCB) was another area of concern for the industry because it is part of the overall ecosystem for promoting the telecom and IT sector in Pakistan. He said that the laying of fiber optical, provision of smartphones, and the modernised regulatory regime could provide the set stage for launching 5G in Pakistan. Above all, the rate of return on investment can pave the way for placing the latest technologies in Pakistan, he maintained.

He suggested that Pakistan needed to amend certain policies such as delinking the government payments in US dollars, especially after the devaluation of currency by around 30 percent in recent months.

“The tariffs and earnings are in Pakistani Rupee terms whereas the payments to the government were in US dollar rate – the devaluation of rupee has only added financial burden to the industry,” he pointed out and added that to provide a breathing space to telecom industry, the government could extend the duration of the spectrum and should provide all other required incentives to keep the existing players operating in Pakistan.