ISLAMABAD: Telecom industry has warned the government that new measures proposed in the finance bill would trigger a mass exodus of foreign investment, as these abrupt measures cripple the sector's ability to innovate and expand, hindering the overall development of the digital ecosystem.
The industry wrote a letter to the Minister of Information Technology and Telecommunications, Shaza Fatima Khawaja, highlighting key concerns
The industry stated that Pakistan's dream of a hyper-connected "Digital Pakistan" is on hold as the telecom industry goes head-to-head with regressive changes in the 2024-25 Finance Bill. These proposals, slammed as short-sighted and punitive, threaten to strangle the digital economy at its core, potentially triggering a chain reaction that could cripple Pakistan's overall economic well-being.
The telecom sector is the backbone of online commerce, remote work, essential government services, and financial transactions. Restricting its growth with impractical tax burden, unfair penalties for issues out of their control, and making mobile devices less accessible for low-income groups could have disastrous consequences.
Several proposals in the bill raise red flags. The proposed 75 per cent advance tax collection on mobile services for non-filers is deemed unimplementable. Additionally, penalising telecom operators for non-compliance with regulations outside their control is seen as blatantly unfair.
The most alarming proposal is the tax hike on mobile handsets under $500. This measure directly targets low-income groups, widening the digital divide by making it even harder for them to afford basic mobile devices. Affordable phones are the key to unlocking digital inclusion, and this tax increase serves as a big blow to "Digital Pakistan."
With major foreign investors already pulling out of Pakistan, the telecom industry warns that these new measures could trigger a mass exodus of foreign investment. These abrupt measures cripple the sector's ability to innovate and expand, hindering the overall development of the digital ecosystem.
The industry urges the government to reconsider these detrimental measures and open a dialogue with all stakeholders. Collaboration and a gradual implementation approach are key to achieving both higher tax compliance and a thriving digital Pakistan.
The Global System for Mobile Communications Association (GSMA) echoes the industry's concerns. They strongly oppose the handset tax increase, highlighting its potential to shatter investor confidence in the Pakistani market.
Copyright Business Recorder, 2024