What Pakistan can learn from India

While Modi looks to woo tech giants, Pakistan continues to tax heavily

Manzoor Ahmad January 10, 2016
Whenever Modi speaks of building highways, he also stresses the importance of “i-ways”. PHOTO: FILE


The long-delayed telecom policy was finally made public on 12 December 2015.

After the successful launch of 3G/4G technologies in May 2014, this is another major achievement of the present government.

Telecom Policy 2015 termed positive development

Although the 2015 policy does not set out any measurable targets except to set down general objective of achieving widespread and affordable broadband services, by being a signatory to the ITU (International Telecom Union) Connect 2020 Resolve, Pakistan is committed to providing 50% of households’ access to the Internet by 2020.

The question is whether our existing policies are enough to enable us to achieve this objective and what else needs to be done for this purpose.

A look at our neighbour’s policy will provide us with many clues on the way forward.

Modi’s vision of ‘Digital India’

First, the Indian Prime Minister has made it a personal goal that every other Indian would have access to Internet within the next three years.

Whenever Modi speaks of building highways, he also stresses the importance of “i-ways” meaning fibre optic connectivity for each and every town and village.

The ‘Bharat Net initiative’ that is the biggest project of its kind in the world is attempting to connect all 250,000 local governments through high-speed secure Internet within the next three years.

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Secondly, realising that local efforts may not be enough, the Indian Prime Minister is personally reaching out to local and international mega-corporations.

Recently, Modi was in the Silicon Valley to woo tech giants there to partner with India to realise his vision. Not only did he raise awareness of his “Digital India” campaign but also got financial commitments from the likes of Google and Microsoft to provide free public Wi-Fi to hundreds of railroad stations and to bring wireless Internet to 500,000 villages in India.

Thirdly, the Indian government realises that information technology is key to development, so there are no customs duties or other taxes on import of computers and other IT equipment and there is no withholding or other tax on accessing data on the Internet.  In fact, India has been following this policy for the last 15 years.

Pakistan’s priority: highways

On the other hand, the main concern of Pakistan’s leadership is with highways. Whereas the allocation for highways in the 2015-16 budget was about Rs160 billion, less than Rs3 billion were allocated for expanding optical fibre network to remote areas.

Secondly, not only does Pakistan’s government allocate insufficient funds for this sector, it also does not allow the telecom operators to use their own resources for spreading the Internet.

Telecom policy to guard against monopolistic practices

In 2006, Pakistan established a ‘Universal Service Fund’ through the contribution of telecom networks. The Fund was very successful in implementing various schemes for serving underprivileged areas.

However, like most other projects, the implementation process slowed down midway during the PPP regime, resulting in an accumulation of unspent funds. But the worst came when the present government came to power and immediately withdrew Rs70 billion from the Fund to settle circular debts related to the energy sector.

Despite the orders of the Supreme Court that this money should be returned to the fund, nothing has been done so far.

Thirdly, it seems that the telecom sector is being treated like the proverbial hen that laid golden eggs and was slaughtered by the greedy farmer to get all the eggs in one go.

Already mobile operators in Pakistan pay more than $1.2 billion in taxes each year, representing about 30% of total revenues in the sector.  In a survey by Deloitte (UK) published in February 2015, it was found that taxes represented 30.44% of the cost of mobile ownership, which is the third highest level of taxation found in a sample of 111 countries.

Pakistan is one of the few countries in the world that is not a signatory to the ‘Information Technology Agreement’ as this requires WTO members to do away with customs duty on import of IT equipment. If the government facilitates the growth of this sector through rationalisation of taxes, it would be a win-win situation for the consumers as well as the government.

The Internet, which is often hailed as “The Great Equaliser”, offers us a great opportunity. If we are able to achieve the forward-looking policy goals through the new telecom policy, we have an opportunity to catch-up.  We should ensure that our commitment to ‘International Telecom Union Connect 2020 Resolve’ is not treated in the same way as was done to the Millennium Development Goals.

The writer served as Pakistan’s ambassador to WTO from 2002-08 

Published in The Express Tribune, January 11th, 2016.

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asma tanoli | 7 years ago | Reply @Observer: Like India, Pakistan also has a federal system but some policies like acceding to the Information Technology Agreement is a federal subject. In Pakistan, Punjab has not tax on accessing the internet while other provinces have it. The comparison between the two countries was meant to show the personal involvement of Modi as compared to Nawaz Sharif for promoting use of internet.
LS | 7 years ago | Reply No there is nothing to learn from India... Pakistani's know everything... That is why they import what they need rather than manufacture it.
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