SIFC reviews smartphone financing hurdles

Directs IT ministry to conduct due diligence, consult stakeholders and experts

ISLAMABAD:

The issues related to smartphone financing have landed in the Special Investment Facilitation Council (SIFC), which has directed the Ministry of Information Technology
and Telecommunication to conduct due diligence by the end of June 2024.

Sources told The Express Tribune that draft regulations for smartphone financing had been tabled before a recent meeting of the SIFC.

During discussions, the SIFC instructed the IT ministry to undertake a due diligence exercise through consultations with different stakeholders and experts by the close of June 2024.

It underscored the need for developing a viable way forward for addressing the smartphone financing issues.

The Shehbaz Sharif-led government has recently imposed taxes on smartphones in the budget for fiscal year 2024-25. However, it has been greeted with dismay by the telecom industry, which says such high taxes will block the government’s initiative to provide smartphone financing.

Earlier, the draft of smartphone financing programme was tabled before the cabinet for approval. But it was informed that two telecom operators had turned down the proposal of smartphone financing.

The IT ministry suggested that the Pakistan Telecommunication Authority (PTA) could block SIMs of loan defaulters, who took financing for smartphones.

However, the telecom industry underlined that in the current environment where heavy taxes had been slapped on smartphones, it was not feasible to opt for the smartphone financing initiative.

Earlier, during a cabinet meeting, a few members spoke against the scheme of providing smartphones to consumers on easy installments.

Some cabinet members noted that the issuance of a policy directive for a commercial activity did not seem appropriate for the cabinet.

They were of the view that the proposed scheme might lead to an increase in the import of smartphones as well as in the overall import bill of Pakistan, which had to be paid in foreign exchange.

Cabinet members further said that out of the four cellular mobile operators (CMOs) in the country, only two had concurred with the draft policy, whereas the remaining two opposed the proposal.

A cabinet member pointed out that there was no precedent for a cabinet directive relating to any commercial activity. Some members felt that the policy directive could be unacceptable in the case of locally manufactured goods, and stressed the need for holding widespread consultations first.

The IT and telecom ministry emphasised that mobile broadband proliferation had a significant impact on increasing the country’s gross domestic product (GDP), foreign direct investment, exports and generating new business and employment opportunities.

Broadband services in Pakistan are playing a pivotal role in all sectors, particularly commerce, banking, health and governance. At present, mobile broadband density stands at almost 53%.

It was explained that a major deterrent to the widespread adoption was the affordability of smartphones by the masses. The ministry was, therefore, of the view that in order to minimise the digital divide and provide easily-accessible broadband services to all communities, it was imperative to make smartphones affordable for the users.

In this regard, the IT ministry has held consultations with the PTA and the telecom industry.

It has also finalised the final draft of a policy directive to encourage CMOs as well as agencies working under agreements with the CMOs to provide smartphones to the public on easy installments.

The draft also contains remedial measures to deal with those defaulting on payments, along with a clause to review the directive after six months, if necessary.

The IT and telecom ministry argued that Section 8(2A) of the Pakistan Telecommunication (Re-Organisation) Act 1996 empowered the federal government to issue policy directives on any matter related to the telecommunication sector, provided that it was not inconsistent with the provisions of the Act.