Daily Times

KARACHI: The government’s move to double the sales tax on the import of mobile phone in the budget (2016-17) did not bode well for the struggling telecom industry as mobile handsets’ imports continue to see fall in the current fiscal.

The government doubled sales tax i.e. from Rs 500 and 1000 to 1000 and 2000 respectively for medium and high category/smart phones on the import of mobile phone sets in budget (2016-17).

As a result, mobile phone imports in Pakistan went down by 14.20 percent during the first five months of current financial year 2016-17 (July-November) as compared to the same period of previous year.

Total imports of mobile phone stood at $264.15 million while it was $307.84 million in the same period last year, according to Pakistan Bureau of Statistics (PBS).

Industry experts attributed this slowdown in mobile imports mainly to the overall economic slowdown witnessed in first quarter of current fiscal and high taxation on import of mobile handsets.

Similarly, overall telecom imports in Pakistan dropped in the said period to $ 494.18 million, registering 13.48 percent yearly growth as compared to telecom imports worth of $ 571.16 million in same period of FY16.

Due to almost completion of next generation technologies’ network roll out in the country, import of mobile apparatus also dipped by 12.64 percent in July-November of 2016.

Telecom companies imported $230.12 million worth of telecom accessories and machinery in the first five months of FY17 while it stood at 263.41million in same period of previous fiscal.

Despite rapid penetration of smart phones in Pakistan due to expanding 3G and 4G networks, legal import bill of mobile phones remained on downward trajectory mainly due to complex procedure and higher taxation on imports as grey imports of mobile phones continue to see rise.

In the month of November 2016, mobile phone imports increased meagerly by 0.87 percent as Pakistani imported $65.96 million worth of mobile phones in the said month as compared to $65.39 million in same month of 2015.

Likewise, mobile imports swelled by 27.55 percent to $65.86 million in November 2016, compared to $51.73 million of telecom imports in October 2016 while import of telecom apparatus and accessories fell by 4.97 percent in November 2016 to $50.13 million when compared to overall import of telecom apparatus worth $52.75 million in previous month of FY17.