GST levy halves computer hardware import

The placement of orders for the import of computer hardware components has declined over 50 percent, as the issue of 15 percent GST on the import still stands unresolved. Pakistan is one of the largest importers of PC/server and hardware components in the region receiving consignments from Malaysia, China, Singapore, Hong Kong and Taiwan.
The commercial importers are in a fix and have been constantly pressing the CBR to slash the GST, but so far, despite of expressing willingness to address the issue the authorities have not taken any concrete step in this regard. The GST was imposed on the import of computer accessories and hardware components in the federal budget 2006.
A market analyst of an IT research company told Business Recorder that the imposition of 15 percent GST on the import of computer components and hardware accessories had hurt the sentiments of importers, which resulted in a considerable decline in the import orders.
Pakistan Computer Importers and Manufacturers Association (PCIMA) President Salim Balaghan said that the GST imposition was a blow to the commercial importers, and the placement of orders abroad plunged to almost a halt instantly. However, the importers, in order to meet their commitments with the manufacturers placed some orders, but they were incurring losses.
"We noted around 45,000 shipments during June 2006 and we expect that there would be no growth instead there would be a 20 to 25 percent decline in the shipments during July. Although the final statistics are not available at the moment but tentatively such a decline is imperative," he added.
The government continues to focus on increasing IT awareness and penetration in the country. Moreover, improved infrastructure, bandwidth connectivity and telecommunication have accelerated the momentum in the IT market.
The trend of increased PC purchases by households in smaller towns and cities as witnessed over the past several quarters continues to be steadfast but the import shipments through fair channel have been reduced after the imposition of GST.
Salim said that Khaipyas had become active that had affected the import of hardware components but the shipments of accessories like monitors, casings, keyboards and full assembled computers were not affected, as it was impossible to smuggle these things.
The shipments kept on arriving even after the imposition of tax, but these were the orders placed earlier and the commercial importers could not cancel them, as this would hurt their goodwill. However, there are reports of cancellation of orders. He expressed the hope that the issue might be resolved soon.