KARACHI (April 29 2008): Imposition of 15 percent GST on information and communication technology industry (ICT) has severely hampered the industry's growth as annual growth rate of PC/server market in Pakistan declined to 9.6 percent in 2007 against 16.4 percent in 2006.
According to a research, the implementation of 15 percent GST had a very negative effect on Pakistan's ICT industry compared to India where information technology industry grew its overall revenues 10-fold in the past decade to $47.8 billion in 2006-07 from just $4.8 billion in 1997-98.
Industry analysts said that constant economic growth, which reflects the progress of any country, depends upon several factors and one of very significant factors is its information & communication technology (ICT) sector.
Imports of PCs/servers also dropped to 149,000 units in July-December 2007 from 630,000 units recorded in 2006-07, showing a decline of 40 percent. This sector is not only influential in cutting down cost, but also in enhancing productivity and efficiency of other sectors.
Since the implementation of 15 percent GST on imported and local parts of computer hardware in the federal budget for fiscal year 2006-07, the IT sector has suffered severely and it is also hitting end-users and businesses across the country.
The Chairman of Kalia Group & Ko-ordination Group (KRG), Hanif S Kalia, in his statement said: "It is an established fact that Pakistan can't progress well until we have computer-literate workforce which can prove to be a high earning source of income for the economy, as proved by developed countries, especially by our neighbour India".
He said that now it is a question of survival with honour and dignity. The government must facilitate the infant IT industry by bringing down the 15 percent GST on import of IT to zero in the larger interest of the country, he said.
Recently, the Pakistan Software Export Board (PSEB), Pakistan Software House Association (Pasha), Pakistan Computer Association (PCA), and other IT-based organisations also expressed their concern and sought removal of sales tax on PCs and its networking parts, describing it as a chief factor in encouraging illegal import of PCs.
Ko-ordination Group--KRG--was the first entity that raised concern right after the imposing of 15 percent GST on imports of all IT products by the government in the budget 2006-07 and demanded its withdrawal. KRG has also been communicating with government officials on regular basis and peacefully protesting against it.