Basharat Ahmed Khan ( GUEST WRITER )
President Pakistan Computer Association (Lahore Chapter )
Much has been said and written after the introduction of Information Technology Agreement this year. This event is important for Pakistani IT industry as well, especially after its accession by the government of Pakistan. The fundamental and most critical question that has been arise on this development is that what would be the consequences of it for Pakistan and whether it would have negative impacts on Pakistani IT industry as a result of signing the Agreement? Some of the experts from industry believe that the signing of the ITA Agreement would not bring any respite to our already struggling IT industry. However there are contrary views that say the development might lead to opening up new avenues of
opportunities and linkages with global IT markets. To make the further inroads on the IT Agreement and to implement it in practical terms, Pakistan will have to completely eliminate all sorts of tariff, duties and taxes to ensure zero-tariff level on a wide range of IT products. To facilitate greater market access for IT products the policy level facilitation would play critical role. The experts that support this development considering a positive and forward looking initiative claim that Pakistan can reap the benefits of ITA. However, without lending technical support to IT traders, we may lose the opportunity.
The IT traders in Pakistan at present struggling due to dual tax policy. Hence, a drastic reformation in existing tax structure is need of hour in order to facilitate market access for IT products. This should also include a critical review of government protection policy and non-tariff barriers imposed by it. A World Bank Report (June 2013) on Pakistani tax mechanism termed that “taxpayer system in Pakistan is complex”. The dilemma is that most of the revenues such as customs and general sales tax are generated by trade and customs regulatory duties but as the system has not been simplified by FBR, it’s causing problems for the traders persistently.
As it is the case with other sectors of the economy as well, setting exaggerated revenue targets is a practice based on unrealistic expectations. The real issues of the IT industry have never been addressed
before fixing such targets at the beginning of the fiscal year. Thus, it has not been achieved despite of the fact that various kinds of taxes are imposed under one pretext or the other during the year to meet the revenue shortfalls. The IT business community in Pakistan facing this non-enabling business environment right from its inception and lost its real potential. Another fact that needs to be considered is that the countries that allow unhindered import and export of such parts and equipment have become part of global value chains. Now when Pakistan has acceded to ITA, it must not be motivated by WTO’s compulsion only but it has to cater the larger good of its own people and economy. It is high time that the ministries of IT, commerce and finance as well as private sector stakeholders to develop a
shared vision and strategy to reap the benefits of the ITA.
Though very little has been done since the government declared current year as a year of Information Technology, but to respond to the emerging challenges, a new approach from government is needed so that the volume of IT export could be enhanced besides ensuring the presence of Pakistani IT
companies at global level. It has also been observed that the countries that have joined the ITA are
showing a remarkable progress in exports of software as well as information technology (IT) and information technology-enabled services. Thus, we sincerely hope that the government would take firm measures to get benefitted from acceding to ITA at it has a commitment of introducing
IT-based systems for improving services and governance.
On other hand, Pakistan while touching a significant milestone, has already started a trade and energy corridor with China with an ambitious plan to beef up the country’s global economic activities besides connecting China and Pakistan to markets in region. The ITA in this scenario could help Pakistan in reaping the dividends and expand its IT sector.
It is now also a high time for all the stakeholders to establish a mechanism to discuss and develop a mutually beneficial strategy on ITA in the best interests of the country. The IT sector of Pakistan, despite
being faced by a number of challenges, has the ability to grasp this opportunity. However, the government this time around must take actions to take the industry along with it instead of creating unrest in the business community related to computer and information technology.