LAHORE: The telecommunication sector on Wednesday said its ongoing and future fiber-to-the-home (FTTH) infrastructure projects across the country hang in the balance because a recent levy of regulatory duty has blown up the cost of imported optical fiber up to 107 percent.
“The imposition of 20 percent regulatory duty on the import of fiber optic cables …will decline the deployment of telecommunication infrastructure in Pakistan,” the industry said in a letter written to Haroon Akhtar Khan, the federal minister on revenue.
“The increasing worldwide demand and shortage of the fiber are already adding to its global prices by the global suppliers of the pre-form.”
The letter, a copy of which was acquired by The News, said currently the import of the optical fiber carried a 20 percent regulatory duty, 20 percent customs duty, 17 percent sales tax, 3 percent value added tax, and 5.5 percent advance tax that is not adjustable to the telecom industry.
“The government must withdraw the regulatory duty as well as customs duty altogether or, at least, while abolishing regulatory duty [it should] reduce customs duty from 20 percent to a minimum slab of 3 percent and sales tax from 17 percent to 5 percent on this essential item,” the industry demanded in the letter.
Corning Inc, one of the world's largest optical fiber manufacturers, in one of its recent circulars said the market demand and shortfall of the fiber is apparent that the imposition of the Regulatory Duty will only worsen the situation. Moreover, since the high count fiber cables which are the most commonly used for deploying fiber backbones are rather heavy in weight, the transportation cost resultantly is also quite high. The custom duties and other taxes are applied on the cumulative of cost of the component plus freight and it makes the premium of the delivered finished product extremely high.
The industry, in the letter, also mentioned that the overall incidental impact on the cost of fiber before shortage was 64 percent, after shortage 76 percent and after imposition of the regulatory duty 107 percent. “The cost on the basis of the lowest specifications of fiber, which could exponentially be increased as Pakistani telecommunication sector used higher specifications for infrastructure deployment,” the letter said.
It further stated that the fiber was not a luxury item and the imposition of the duty would not only impede the growth of telecommunication sector frustrating huge investments by the stakeholders, but also adversely affect other industries benefitting from it.
“Optical fiber is the basic requirement for FTTH projects in Pakistan. It is also an essential component of government’s Safe City Projects across many cities in Pakistan,” the sector said fearing the shortage or low standard of the fiber would dent the government's efforts to counter terrorism for a 'safer tomorrow'.
The industry also urged the government to realise that high-speed optical fiber infrastructure -the Information Highway- was the only way to enable the country's digital economy to keep pace with the world.
“The local manufacturers cannot fulfill the rapidly growing fiber demand due to the high costs of imports and, consequently, not only will they monopolise the market but the investments in telecom infrastructures will also be affected severely due to the delays in return on investments (ROIs) or no returns at all,” the industry warned adding that local factories are putting up with indefinite delays in deliveries due to shortage.
