Increasing call rates to Pakistan is plain cruelty

Overseas Pakistanis will have to pay between $120 to $150 million extra to the PTA to call their families in Pakistan!

Faraz Hasan October 10, 2012
The recent increase in the calling rates for incoming calls to Pakistan has come as a rude shock to many overseas Pakistanis for several reasons.

Firstly because there was no prior announcement of this revision in rates and secondly because the rate of increase which ranges between 300% to 800% is beyond anybody’s comprehension. It is being reported that this big increase is a result of the PTA’s decision to implement the International Clearing House (ICH) and is claimed to reduce illegal calls to Pakistan.

This government has now become notorious for its illogical and poorly advised decisions but this increase in rates seems to be a new low. To put it simply, this looks like a scam to extort money from overseas Pakistanis who have to call their loved ones regularly no matter what the cost.

According to estimates, there are almost seven million Pakistanis living abroad and monthly incoming international traffic to Pakistan is 1.5 billion minutes per month, which means overseas Pakistanis will have to pay between US $120 million to US $150 million extra to the PTA for calling their family back home. Now the government probably believes that the overseas Pakistanis are not doing enough for their country and decided to impose extra charges on them through this increase in tariff- but a small Google search reveals that Pakistan ranks amongst the top 10 countries for remittances sent home with remittance potential topping US $20 billion a year.

That number, though magnanimous in its own right, is also almost 9% of the country’s estimated nominal GDP. Considering that a majority of the Pakistanis working abroad and mostly the ones working in the Middle East do blue-collar jobs making just enough money to make ends meet, this massive increase in rates seems very harsh. Assuming that most people would still prefer to keep calling their folks back home, this increase in tariff rates would either result in the amount of remittances suffering a sharp decline or people resorting to other services such as Skype or Viber to call people back home.

Whatever the case may be, the government’s own coffers are assured to be filled up.

Let’s now move away from the plight of the overseas Pakistani for a moment and look at the economic aspect of this decision.

In these times of prolonged recession, businesses are looking to save costs wherever they can and the shared service environment has really taken off in the last few years with companies relocating aspects of their businesses to countries that offer lower rates for services than those that would be applicable in their home countries.

As a result, economies of countries like India, China and Mexico have thrived as they offer outsourcing solutions to companies at a fraction of the cost applicable in the host country. India in particular has benefited from the host of call-centres that multinational companies have set up in the country over the past few years. The reason for this is that it is far cheaper for a business to divert a call to India than to host it in the country of origin as call rates to India are one of the lowest in the world.

Also, call-centre operatives in India are available at much lower salaries than in western countries. People have long argued that Pakistan has the same potential as India to be an outsourcing location for businesses with labour rates being as low but with the decision of increasing the tariff rates for calls to Pakistan, we can rule out the possibility of any multinational relocating its shared service centre to Pakistan any time soon.

It is a request to the government of Pakistan and PTA to reconsider the increase in tariff rates and if they ascertain that an increase is in fact necessary, then to reconsider the percentage of increase in the interest of both the economic development of the country and for the benefit of the Pakistanis living abroad.

Read more by Faraz here or follow him on Twitter @eff_eche

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WRITTEN BY:
Faraz Hasan A Chartered Accountant from the Institute of Chartered Accountants of Pakistan and is currently working in the UK & Ireland division of one of the big 4 audit firms. His interests include travelling, cricket and photography. He tweets @eff_eche (https://twitter.com/eff_eche) and blogs at http://farazhasan.wordpress.com
The views expressed by the writer and the reader comments do not necassarily reflect the views and policies of the Express Tribune.

COMMENTS (66)

Ismail | 8 years ago | Reply Yes i also say a report on Geo news and Express newspaper about reducing call rates for incoming calls from out of countries but when the PTA implement new notification for this because in U.A.E (Dubai) still same calls rates after increasing rates.can any body give m details about this when th PTA reducing calls tax?
Umar | 8 years ago | Reply Congratulations .. PTA withdraw all the taxes .. rates should now be back to normal or less then before.
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