INP-WealthPk

Industry Status Spurs Growth of Telecom Sector

February 04, 2022

By Irfan Ahmed ISLAMABAD, Feb 04 (INP-WealthPK): After being given the industry status the telecom sector is set to attract major foreign direct investment, which will lead to its exponential growth and the resultant job creation. Foreign direct investment is a major component of Pakistan’s telecom sector that is seeing gradual growth due to its potential market. The expanding telecom sector has opened employment opportunities for the educated youth in leading international IT and telecom companies. The industry status is meant to help promote the modern telecommunication services, resolve issues regarding establishment of telecommunication systems and introduce fast-track processes for provision of Right-of-Way through one-window operation. In line with the telecom sector’s development policy, information technology minister Syed Aminul Haq said income tax on mobile phone users will be reduced from 12.5% to 8% in the financial year 2022-23. Similarly, the federal excise duty on telecommunication services has already been reduced from 17% to 16%. Mr Haq said the government is also planning to reduce taxes on various telecom services to give maximum benefit to the general public. A fee of Rs250 (about $1.42) on the purchase of a new SIM has also been removed. Besides, the minister said the federal cabinet has approved reduction in customs duty from 16% to 4% and regulatory duty from 16% to 9% on import of telecommunication equipment. “The cabinet has also directed the Federal Board of Revenue to reduce tax from 20% to 7% on import of raw materials used in the manufacture of optical fiber.” The country's IT exports during the July-Oct quarter of 2021-22 were recorded at $234 million. Pakistan’s IT exports increased 47.4% to cross the $2 billion mark for the first time in the country’s history in the fiscal year 2020-21. In the fiscal year 2019-20, the exports were $1.44 billion. According to Pakistan Software Export Board (PSEB), the telecom sector attracted $622.5 million investment, which is 24% of the country’s net foreign direct investment. The PSEB said it has launched a number of projects under the banner of “Tech Destination Pakistan” to promote the IT industry. The aim is to provide facilities and training opportunities to IT professionals and companies as well as to attract local and foreign investors. The Universal Service Fund (USF), which promotes the development of telecommunication services in un-served and under-served areas throughout the length and breadth of Pakistan, has also started 32 projects costing Rs22 billion to provide connectivity to about four million people in 10,132 villages of 50 districts across the country. About 40 software technology parks have been established in various cities under the public-private partnership, which have not only provided jobs to thousands of youths but are also generating the much-needed revenues. Pakistan has 187 million mobile and smart phone connections with over 85.33% tele-density. Keeping in view the growth of the telecom sector, the government expects to net $5 billion revenue during the next three years from the exports of IT products and services. Source: Pakistan Telecommunication Authority Source: Federal Board of Revenue