Amir Saeed

Pakistan’s telecom sector has been a significant contributor to the economy, attracting substantial foreign direct investment (FDI) over the years. However, forcing telecom companies to block non-filers’ SIM cards has raised concerns about its potential impact on foreign direct investment (FDI). Talking to WealthPK, Farooq Niaz, former public relations manager at Zong4G, said the FBR was vigorously seeking ways to improve tax compliance and revenue collection, which was laudable, but blocking the SIM cards without considering the revenue loss would have far-reaching and disastrous effects on the telecom industry. The telecom sector has been a success story, with high mobile penetration and major contribution to the country’s GDP. However, the sector is extremely sensitive to regulatory changes and disruptions. He opined that blocking non-filers’ SIMs would result in a considerable decline in mobile penetration, which could have a severe economic impact.

The telecom sector is a significant source of revenue for the government, and a decline in mobile usage would result in a decline in tax collection. He suggested that before implementing any strategy to block SIMs, the FBR and regulatory authorities must evaluate the revenue loss as well as the impact on FDI. A more nuanced approach that balances the need to increase tax compliance with the need to protect revenue and FDI is essential. Speaking to WealthPK, Kaiser Bengali, former economic advisor to the Sindh government, said the country has been struggling to attract FDI in recent years, and any policy that discourages investors may have long-term ramifications for the economy. The government requires a stable and predictable regulatory framework to attract and retain investors in the telecom industry. He opined that the telecom industry was highly competitive, and any disruption would result in a loss of market share.

The operators who lose subscribers due to SIM blocking may struggle to regain their market share, resulting in a decrease in revenue and profitability. He pointed out that SIM blocking could cause a loss of trust among the investors, who might perceive the action as a harsh measure that would interrupt their business operations. This could lead to a drop in FDI as investors look for more favorable investment opportunities. Furthermore, SIM blocking would lead to a decline in mobile financial services, which are crucial for financial inclusion. Mobile banking services have helped increase financial inclusion, and any disruption might have a detrimental impact on the economy. The country cannot afford to lose FDI in the telecom sector, which contributes significantly to the GDP. The government and regulatory agencies must guarantee that any policies enacted are balanced and do not hurt the industry.

Credit: INP-WealthPk