Will Cash Margins curtail imports at the cost of digitisation?

The current account deficit is in dire straits. But what are we willing to give up on for its sake?

Those at the helm of the country’s administration have newfound admiration for the telecommunication and the IT sector. In almost every address to the public on the revival of the economy, praises for the sector are part of the agenda and emphasizing on its potential is a recurring theme. Further, proactive policy making like in the case of Digital Pakistan Policy, Cloud First Policy and Draft Broadband Policy makes one believe that probably the government is willing to see this transition through.  

However, the ground reality is completely different. The Telecommunications sector has seen a chain of events starting from the government tracking back on its promise of reduced withholding tax to the latest implementation of 100 percent cash margin on equipment imports of the sector. 

The measure comes as an attempt to curb current account deficit through discouraging imports. However, it fails to distinguish between consumption based imports and equipment imports that are part of a collective effort to develop the country’s infrastructure, specially in the case of IT and Telecommunication sector.

 

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Note: Access to the full article is limited to paid subscribers only. If you are already a paid subscriber, please Otherwise, you can choose to purchase a subscription package below for as low as Rs 275/month:

 

Ahtasam Ahmad
The author works as a Sector Analyst at Profit and can be reached at [email protected]

3 COMMENTS

  1. The author has missed out to mention pharmaceutical companies, which should never be included in the list of imported luxury goods, SBP should reconsider its decision and make efforts to exclude all items related to pharmaceutical industry.

  2. Good to read about the imports product or services that making impact the country’s infrastructure but its not easy that cash margins reduce the imports cost

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