Pakistan could more efficiently
harness capabilities of its existing 4G networks while preparing for 5G

Digital technologies are set to transform the way people live and work in Pakistan. As we saw in the GSMA 2020 Digital Societies Report, which tracks the progress of 11 focus countries in Asia Pacific, Pakistan is advancing its societal, economic and digital ambition, as outlined in Digital Pakistan Vision.  Indeed, our report’s digital society index tracked Pakistan in achieving one of the highest increases in its overall score.

By 2023, the economic contribution of the mobile industry in Pakistan is expected to reach $24 billion, accounting for 6.6 per cent of GDP .In an effort to stimulate this growth, Pakistan has recently moved forward with significant mobile services tax reforms.

Digital platforms, such as mobile services, have become the primary channel for a growing number of citizens to access public and private services, especially during the pandemic.  Behind this development are the vital roles played by National and provincial policymakers, the Pakistan Telecommunication Authority (PTA) and Ministry of Information Technology and Telecommunication (MoITT), who have helped increase access for citizens high-quality connectivity and digital services. This has cultivated digital inclusion, e-commerce and a general entrepreneurial spirit for the people of Pakistan. 

With a population of approximately 220 million, and more than 100 million people under the age of 25, Pakistan is well positioned to play a growing role in the global economy over the next decade. Pakistan’s mobile market has experienced rapid development over the last decade, playing a significant role in Pakistan’s growth. In 2018, the total economic contribution of the mobile ecosystem was worth $16.7 billion, equivalent to 5.4 per cent of GDP.

In a post pandemic world, Industry 4.0 – otherwise known as the fourth industrial revolution – will help economies recover and become more resilient to future shocks. And technology, supported by mobile networks, will be at the core of Pakistan’s industrial development as it works to launch the fourth industrial revolution. 

Pakistan’s recent policy actions offer a glimpse of this potential. But authorities must act together, creating the business environment necessary to realise these goals. A whole-of-government (WGA) approach will ensure better coordination of digital transformation initiatives across the public sector, complemented by private sector investment and innovation. We believe this holistic approach is a way for emerging and transition digital societies to leapfrog bureaucratic pain points. 

A whole of government approach in Pakistan creates the start of a predictable investment and flexible regulatory environment. These measures, needed to achieve the goals of Digital Pakistan, include tax reforms as well as efforts to implement Right-of-Way (RoW) infrastructure policies. The success of these efforts will be measured by their implementation, along with the growth they support in the future. 

Implementing tax reforms for industry growth and infrastructure policy 

Pakistan recently approved tax reforms that will stimulate mobile industry growth. These include gradually reducing Advance Income Tax from 12.5 per cent to 10 per cent in the next financial bill (FY2021-22); further reducing to 8 per cent in the 2022-23 Finance Bill; approval of harmonisation /uniform rate of taxes on telecom service; withdrawal of SIM issue tax; simplification of and exemptions for withholding tax to ease doing business; reduction of minimum tax for telecom services from 8 to 3 per cent.  In order to fully realise the benefits of these tax recommendations, the Financial Bill (FY 2021-22) must be enacted into law. Similarly, we recommend policy makers implement Right of Way (RoW) and other policies that impact the infrastructure supporting digital and mobile access. Recently, a significant milestone was reached when policy makers in Pakistan approved, for the first time, RoW infrastructure policy. We commend this move and urge that these policies are implemented quickly. As technology evolves, unforeseen challenges can arise that may not have occurred to policy makers during their inception.

Spectrum roadmap and digital inclusion

Along with these crucial policies and regulatory modernisation initiatives, there are additional steps needed as Pakistan continues to build itself into a digital society. In particular, the development and implementation of a five-to-seven-year spectrum roadmap. Spectrum is the foundation for mobile services. Sufficient spectrum allows mobile networks to reach even more citizens in Pakistan and offer a better quality of service.

Digital Pakistan also includes digital inclusion as one of its policy objectives. Currently, it has a 54 per cent mobile broadband usage gap , as defined by people who live within the footprint of a mobile broadband network but do not use mobile internet .A spectrum roadmap provides stability and certainty as it helps to create a more investment-friendly environment for mobile operators looking to build 5G and 4G mobile networks.

Industry and government stakeholders

A holistic, whole-of-Government approach speeds digitisation and the adoption of new technologies in a more efficient manner. By removing barriers caused by siloed efforts from different ministries, Pakistan could more efficiently harness the capabilities of its existing 4G networks, while preparing for 5G. Another key piece in the digitisation effort will be the solicitation of input from industry stakeholders. A transparent consultation process that offers parties the ability to submit thoughtful input has the potential to lead to an enabling regulatory framework primed for new technologies. Taken together - implementing its new laws, using a whole-of-government approach to support the digitization process, and receiving input from interested stakeholders – Pakistan is well placed to progress to a fully-fledged digital society. In doing so, it may offer its citizens the ability to learn new skills for new jobs, offer small and medium-sized enterprises access to new markets, and spur new investments into the country. This will ultimately help to meet the goals of Digital Pakistan and continue Pakistan’s digital transformation.

Article attributed to Julian Gorman, Head of Asia Pacific, GSMA.