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March 1, 2021

Govt urged to come up with ‘predictable’ policy framework


March 1, 2021

ISLAMABAD: The telecom sector has asked the government to come up with ‘predictable’ policy framework, harmonize and reduce GST rates and auction more spectrums at affordable rates in order to spur the potential of real growth.

“The policy framework should be progressive and forward looking and it should be predictable. The rate of Withholding Tax should be brought down from 12.5 percent to 5-7 percent. The roadblocks should be removed as spectrum deployment should be done keeping in view long term strategy,” the Chief Executive Officer (CEO), Telenor Pakistan, Irfan Wahab, said in an exclusive interview with The News here at his office last week.

He said that the input cost needs to be reduced, then the network and quality of services would be improved. On longer term, he said that the telecom sector contributed Rs278 billion as taxes and fee paid to PTA on annual basis.

Regarding the 5G technology, he said that there was a need to develop an ecosystem for usage of 5G technologies as Telenor Pakistan did trial last year. “We did not utilise the 4G potential fully as only 40 percent customers possessed 4G, enabling phone handsets, so 60 percent did not have such phone sets,” he added.

There is a need to upscale 4G first, so there is a need to remove the barriers, he added. The 5G required investments on phone handset and other infrastructure, he added.

He said that rural women did not have accessibility and connectivity to the latest phones, so awareness needed to be provided to bring transformation into their lives on account of children education and employment opportunities.

We had undertaken I-Champion campaign and the last time one Hazara female from Balochistan won the competition in Norway, he added.

Regarding data protection, he said that data privacy is very important and being a responsible company they had embedded required regulations. He welcomed the directives on right of way but asked for its effective implementation. "We should have progressive and forward looking regulation keeping in view rapid pace of technology."

The CEO Telenor Pakistan said that digitalization was the biggest opportunity all around the world and Pakistan was not unique and globally if you want to transform different sectors such as education, health, commerce and agriculture, it could be done through digitization. “Pakistan could leapfrog because it did not make a huge investment in technology,” he added.

It could lead our nation and country forward, he said and added that it was not just a slogan but it was now universal slogan now and it could transform the country as a whole. “Pakistan could make much better progress if we removed the irritants lying in our way,” he added.

When asked about digital financial inclusion and its untapped potential, he replied that 80 percent Pakistanis were still un-banked and no one could access them through brick and mortar model. Digitization is the biggest equalizer as women’s financial inclusion stands at just 13 percent, he added.

Referring to a recent study to ascertain the potential of digital financial inclusion, he said that Pakistan could contribute $35 billion to $40 billion into its GDP over the next five years. It would also generate jobs, especially into rural areas of the country.

He said that potential international investors required predictable policy framework and friendly business policies. There are irritants such as higher renewal license, higher taxation and no clear-cut roadmap for spectrum.

He said that taxation was on the higher side in Pakistan on telecom sector compared to other regional economies and even within the country, this sector was treated discriminately such as GST on telecom services was on the higher side compared to other sectors.

There is barrier to users and the higher GST rate within different provinces discourages its usage, he said and added the highest GST rate stood at 19.5 percent. He said that they were asking the government to harmonize the GST rate and bring it down from less than standard rate of 17 percent. If it is not possible to slash it down instantly, then it should be reduced gradually. There should be a roadmap so that investors knew about it.

When asked about the reduction in rate of withholding tax, he said that the rate of WHT stood at 12.5 percent as there were many customers who earned less than taxable ceiling of income tax. Our daily wagers, home servants and farmers do not come into the tax net on account of taxable ceiling but the withholding tax is being deducted on prepaid charge of cards. “It is an anomaly that needs to be rectified,” he said and its rate should be rationalized.

“It should be imposed on certain usage who come into certain limit of tax bracket,” he said and added that data provisioning could easily identify users who could be excluded from deduction of this withholding tax. “On long term basis, the rate of WHT should be brought down to 5 to 7 percent range,” he added.

He said that Dr Ishrat Hussain led sub-committee held consultations and there is a need to translate it into the fiscal bill for 2021. The ease of doing business is major issue for investors as array of taxes exists, so digitization fruits could not be reaped without resolving these irritants.

The roadblocks need to be removed, he said and added that it required a clear-cut vision.

Our journey started from voice, then it turned into megabytes and now it is now moments. Now it is relevant to every segment as customers could relate to them with these services. He said that our program “Khushal Zamindar” had connected 8 million farmers as their income increased by 15 percent with the information services.