During a meeting held yesterday, the chief executive officers (CEOs) of telecom companies shared their apprehensions with Federal Minister of Information Technology, Syed Aminul Haq, regarding the government’s policies.
According to sources familiar with the matter, the telecom sector believes that the policies of the State Bank, Finance Division, and Federal Board of Revenue (FBR) are pushing the nation towards regressing from the digital age.
In a detailed discussion, the telecom sector expressed their current challenges to the Federal Minister. They highlighted that due to government policies, the telecom sector is not only facing hardships and experiencing a lack of new investments, but these policies are also affecting the IT sector. The telecom sector is the backbone of the IT industry and serves as a major source of IT businesses.
One of the major concerns raised by the CEOs was the 50% withholding tax hike, which they requested the Federal Minister to address with the federal government. Sources indicate that Pakistan has one of the highest rates of telecom taxation in the world, ranking second highest in South Asia, with an overall tax rate of 34.5 percent on telecom users, including a 15 percent withholding tax and a 19.5 percent general sales tax.
The telecom CEOs also discussed the issue of industrial tariffs with the Federal Minister, expressing their dissatisfaction over the delay in implementing industrial tariffs, leading to increased operational costs. They highlighted that telecom services are charged in rupees, but the renewal costs must be paid in dollars.
Another concern raised was the non-opening of Letters of Credit (LCs) in the telecom industry, which has hindered the sector’s operations. The CEOs emphasized that the refusal to open LCs and import telecom machinery is adversely impacting the industry.
In response, Federal Minister Syed Aminul Haq assured the CEOs that he will discuss the issues with the federal government. He recognized the significance of resolving telecom industry challenges, including the import of telecom equipment, spectrum fees, and industrial tariffs, as the growth of the telecom sector is crucial for economic stability and increasing foreign exchange reserves.
The Federal Minister stated that the Ministry of IT and Telecom is actively working to address the sector’s issues and has already provided recommendations to the Finance Ministry and FBR.
The CEOs appreciated the efforts of the Ministry of IT and Telecom in tackling the sector’s challenges during the meeting.