News Update Times

Lahore (NUT-DESK)

The proposed increase of five percent in the withholding tax (WHT) on telecom services and the standard rate of 17 percent sales tax on import of computers and accessories in the forthcoming mini-budget will severely impact the growth of IT sector, besides compromising the envisaged ICT exports target of $5 billion.

This was stated by Federal Minister for Information Technology and Telecommunication Syed Aminul Haque, senior government official, and telecom sector expert. The federal government will present the amended Finance Bill, 2021 and the State Bank of Pakistan (SBP) (Amendment) Bill, 2021 in the parliament, after getting approval from the cabinet.

Haque said that the increase in taxes on telecom sector would negatively impact the sector growth, as well as, investment prospects. Experts have urged the government to support the prime minister’s vision of Digital Pakistan by lowering taxes.

They opined that high taxes may jeopardise the Digital Pakistan agenda as millions of Pakistanis are already unable to afford most mobile phone services.Telecom expert Pervez Iftikhar has said that it would have disastrous effects on the overall growth and the ICT exports.

He lamented that the government was moving towards imposing GST on the import of smartphones causing losses to start-ups and overall growth of the ICT sector.

Official sources revealed that the government is likely to raise WHT by 50 percent, increasing it from 10 to 15 percent on telecom customers in the upcoming mini-budget 2021-22. The government had brought down the WHT rate from 12.5 percent to 10 percent in the budget for 2021-22 and made a commitment that it would be further brought down to eight percent in the next budget for 2022-23.

However, the government is now mulling to reverse its decision to raise revenue, with a five-percentage-point hike in advance tax on telecom sector. If the draft proposition is implemented, the cellular advance tax will be raised to a historic high of 15 percent.

The WHT is currently collected at a rate of 10 percent from all telecom users, regardless of their taxable obligations. Majority of the country’s population has non-taxable incomes; these individuals are required to pay the WHT, which they will never be able to recover.

The Ministry of Information Technology and Telecommunication has opposed any move to impose 17 percent GST on import of computers and accessories arguing that the move would severely impact the growth of the IT sector.

“If the government moves ahead with the imposition of GST at the standard rate of 17 percent on import of computers, laptops, and its others accessories it would negatively impact freelancing, IT exports, and PM’s Vision to make Digital Pakistan,” official sources of the Ministry of Information Technology and Telecommunication (MoITT) said.

The official sources said the policy move would increase input cost of necessary tools making it difficult for freelancers and individuals to purchase laptops, computers, and accessories. The IT and IT-enabled Services (ITeS) export remittances comprising computer services and call centre services surged to $2.123 billion at a growth rate of 47.43 percent in fiscal year 2020-21, compared to $1.44 billion during 2019-2020.

The ICT export remittances for the period July-November fiscal year 2021-22 surged to $1.051 billion at a growth rate of 37.57 percent compared to $764 million during July-November fiscal year 2020-21. In November 2021, the ICT export remittances are $221 million at a growth rate of 31.55 percent when compared to $168 million reported for the month of November 2020, $26 million higher than export remittances during the previous month October 2021. The net exports for the period July-November fiscal year 2021-22 are $797 million, which is 75.83 percent of $1.051 billion in exports. Last year, for the same period, the net exports were $554 million, which was 72.51 percent of $764 million in exports.

The government has envisaged increasing ICT exports to $5 billion by June 2023. However, the estimated target may be hit negatively, if the government impose 17 percent GST on computers, laptops, and its other accessories, said the official.

The Cellular Mobile Operators have also opposed the government’s move for jacking up the WHT by 50 percent. The government is making reversal from its commitment of decreasing taxes on the sector, then how investment can be lured in such circumstances when there is no certainty in policies, said the sources working in the telecom sector, and added that it would be disastrous, if the internet services or SMS would be brought under the tax net.

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Lahore (NUT-DESK)

Following the signing of a Memorandum of Understanding between Pakistan Cricket Board (PCB) and Naya Nazimabad last week, Ramiz Raja, Chairman, PCB, visited Naya Nazimabad today to survey the Cricket Stadium where a drop-in pitch is to be installed.

This partnership is aligned to Chairman PCB’s vision of improving the quality of pitches across Pakistan and Arif Habib Group’s vision of contributing to the improvement of facilities and availability opportunities of opportunities to budding cricketers.

Ramiz Raja, Chairman, PCB, concluding his visit of the cricket stadium and Gymkhana observed, “I am amazed at the brilliance of the facilities available at Naya Nazimabad that will go such a long way in uplifting not just the game of Cricket but also other sports. We have decided to assign a technical team to Naya Nazimabad Cricket Stadium which will work very closely with the Management to upgrade the stadium making it ready to host exciting domestic and international. cricket games.’

Once the upgradation is complete, the PCB will host and organise domestic matches at the Naya Nazimabad Stadium including U19 and women’s matches while practice sessions and exhibition matches for the HBL Pakistan Super League franchises can also be staged at the stadium from the 2023 edition onwards.

Arif Habib, Chairman, Naya Nazimabad said, “With the ever-growing demand for cricket in the country and the improvement in the security situation, foreign cricketers are comfortable touring Pakistan, many of whom have already have visited Naya Nazimabad. We look forward to working with PCB to revive Pakistani’s cricket greatness, glimpses of which we have seen recently.”

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Lahore (NUT-DESK)

Despite the efforts made by the government to promote locally produced mobile phones in Pakistan and curtail their imports, the inward shipments of handsets recorded a significant jump in November 2021. According to the Pakistan Bureau of Statistics (PBS), Pakistan imported mobile phones worth $212 million in November 2021, reflecting an increase of 28% on a year-on-year basis and 41.6% on a month-on-month basis.

Data revealed that the cumulative mobile phone imports during the first five months (July-November) of the current fiscal year 2021-22 reached $857 million against $724 million in the same period of last year, an increase of 18.3%.

Speaking to Media, Tecno Pack Electronics CEO Aamir Allawala pointed out that currently almost 70% of inward shipments of cellular phones had moved from completely built up (CBU) units to completely knocked down (CKD) and semi-knocked down (SKD) units.

Another 20% would move to SKD/CKD by January 2022, as renowned global smartphone companies were expected to kick-start production in Pakistan early next year, he said.

Guessing the reason behind the sharp increase in mobile phone imports, ICT expert Parvez Iftikhar said that Pakistanis could be buying and importing a higher number of smartphones these days because local manufacturers were mainly producing 2G phones.

An official of the Ministry of Commerce said that the spike in mobile phone imports came on the back of increase in orders for luxury phones, ie flagship models of renowned brands.

“Such phones are usually priced over $1,000 and Pakistan is manufacturing or assembling phones of mid or low price ranges,” he said. From January to October 2021, the production of mobile phones in Pakistan stood at a substantial 18.87 million units. During this period, imports of cellular phones came in at 9.45 million.

“The ‘Make in Pakistan’ policy is yielding excellent results and we look forward to sustainable growth in the long run,” Adviser to Prime Minister on Commerce Abdul Razak Dawood stated in a tweet last month.

SI Global CEO Noman Ahmed told that the surge in imports was witnessed due to several reasons, but the increase in mobile phone users was the most prominent factor. He elaborated that the import of SKD units increased approximately 87% in November while shipments of CBU units spiked 81%.

Another reason was that the local manufacturers were gearing up to reach 100% capacity and they might still be importing most of the equipment required to assemble mobile phones, he said.

The implementation of Device Identification, Registration and Blocking System (DIRBS) by the Pakistan Telecommunication Authority (PTA) is a massive paradigm shift aimed at curbing fraud and encouraging legal imports, said the SI Global CEO.

According to him, the measure is having a profound impact on the telecommunication ecosystem in Pakistan. Several initiatives have been taken by the Ministry of Information Technology and the Board of Investment to support the local industry.

“There is a wide gap in taxes applicable to locally manufactured and imported phones. Besides, announcement of 5% subsidy is also expected in the near future,” he added.

“The Special Technology Zones, being set up in Pakistan, will give an edge to the local mobile manufacturers.”

Due to these incentives, global smartphone giants are entering Pakistan and the country is expected to see locally assembled smartphones by the end of this month, he hoped.He detailed that cellular phone companies from China and rest of the world were establishing their facilities in Faisalabad.

“When these manufacturers will produce at full capacity in near future, they will gain a competitive edge,” he projected. “They will also open doors to new opportunities for Pakistan by exporting their merchandise.”

In addition, a modest number of jobs will be created and foreign direct investment (FDI) will surge.Furthermore, he noted that Mobile Device Manufacturing Authorisation had been granted to 19 companies.

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