Mobile tax hike may hinder digital future, warns GSMA

ISLAMABAD: Julian Gorman, head of Asia-Pacific at GSMA, has expressed concerns that Pakistan’s recent increase in taxes on mobile phone manufacturing could jeopardise the GSMA’s Smartphone for All initiative.

Talking to the media, Mr Gorman highlighted that mobile phone penetration in Pakistan is currently at 40 per cent, a figure that should exceed 70pc given the country’s substantial youth population. He noted that less than 60pc of mobile users in Pakistan own smartphones, limiting access to fintech and other essential digital services.

The GSMA has said that Pakistan lacks a vision and direction for digitalisation, which is necessary to achieve the targets of the Digital Pakistan initiative.

Mr Gorman also announced the third ‘GSMA Digital Nation Summit’, which will take place in Islamabad in August 2024. This event, the first in Pakistan, will gather stakeholders, including investors, innovators, and regulatory authorities from various countries, to discuss the path towards digital transformation.

“Pakistan has the potential to become a knowledge-based economy where innovation and technology drive economic growth and enhance governance,” he said but stressed the need to implement all the regulatory actions taken in this regard.

“It has been observed that in Pakistan, various authorities compete to restrict digitalisation instead of complementing each other,” Mr Gorman added.

He said it had been estimated that mobile phones’ total economic impact on Pakistan’s economy reached more than $20 billion in 2023. Still, the Average Revenue Per User (ARPU) was less than $1, which will discourage new investors from entering the Pakistani markets. “Besides, heavy taxation has discouraged investors and innovators from entering Pakistan’s market,” Mr Gorman said.

“However, the government apparatus and the essential services are not up to the digital potential available in the country.