Government of Pakistan announced in the budget of fiscal year 2012-13 that Rs. 410 millions allocated in the area of telecom sector; particularly seven schemes would be initiated for the sake of public sector development program. Out of seven projects 50 million is allocated to create cross border optical fiber cable between China and Pakistan. One of the major milestone to have connected through optical fiber to strengthen the data travel speed between two friend nations.
In this regard 60 million rupees are reserved to facilitate the students for ICT scholarship, government also have planned to expand the GSM network in the area of Gilgit Baltistan and reserved the amount of Rs. 120 million and also laying OFC to connect GIlgit Baltistan and AJK is also allocated Rs. 100 million.
Meanwhile other three projects of telecom sector for the benefit of public sector is healthy initiative as it is already discussed that telecom sector is highly ignored by government officials while in the same time imposed highest tax rate and are collecting big chunk of revenue from this sector. High officials of telecom sector are looking so angry to been not facilitated in the current budget to provide them any direct relief to trigger out their motivation for further development in this sector.
Actually it is neutral budget for telecom sector instead of uniform General Sales Tax to reduce from 19.5% to 16% on telecom service. In reality telecom operators will pass on this uniform GST to consumer directly and will help some extent to reduce the call rates. Also the activation tax rate is not been reduced in the current budget and telecom sector is particularly having an eye in this regard to see anything happen for their favor. In case of any reduction of tax on SIM activation telecom operators are looking to introduce their connection in rural areas.
Due to high taxation, trends of telecom sales are becoming declined, as per the statistics show that government has planned to collect Rs. 730 billion from non tax revenue and actually able to collect Rs. 512 billion, it’s so easy to evaluate the decline of 42% which has been actually estimated, there was a one of the big reason officially told is low sales of telecom sector.
Primarily one of the important declarations of the federal government is collecting GST which is imposed of the services and particularly higher side of collections from the area of telecom is Rs. 44 billion which will be distributed to provinces.
So government has taken good initiative to announce some projects in the area of telecom for the bitterness of public but particularly investors are still looking with open eyes to see any announcement for their interest.