OICCI calls for setting up virtual authority to facilitate IT exports

KARACHI: The government should immediately create a virtual authority to provide IT export players with a single-window cover for all government services and inspections, the Overseas Investors Chamber of Commerce and Industry (OICCI) recommended in its recently launched research report on digital economy.

The OICCI digital recommendations cover six key areas — i) connectivity, ii) digital financial system, iii) export growth and digital skills, iv) platforms and E-commerce ecosystem, v) innovation and regulatory environment, and vi) digital governance and citizen services.

The timing of the OICCI recommendations is motivated by the rise of digital opportunity globally, especially the post-Covid-19 work environment which offers opportunity for Pakistan to build a supportive local digital ecosystem helping the country towards growing participation in the global economy. By digitizing most, if not all, key segments of the economy, it is estimated that the country could boost IT export to US$10 billion annually, provide significant growth to the GDP (additional 7% by 2025 as per McKinsey), attract billions of dollars of FDI and train as much as one million additional IT personnel within a short time.

OICCI is the collective voice of top 200 multinationals in Pakistan. In a report titled “OICCI Recommendations for Digital Economy,” OICCI has demanded that the government should expand software technology parks and make up to 10 million square-feet unutilized space available in the public sector to develop tech garages on the basis of public-private partnership.

The government must harmonise services taxation across all provinces to reduce complexity for export purposes, it said. With regard to the digital financial system, the OICCI recommended that the government should enable all federal and provincial citizen services payments through digital means with mandatory digital payments by 2025. A secure payment gateway should be launched within 2021 with universal connectivity across ecosystem, it said. All micro-subsidy programmes, including Ehsaas, should disburse funds through digital wallets with zero charges for onward transactions. In addition, the government should encourage beneficiaries to pay using non-cash means at government-owned entities like the Utility Stores.

OICCI demanded that the government should incentivise merchants to accept digital payments in order to reduce the merchant investment cost of mobile financial services players and eliminate transaction charges for consumers. It demanded the abolition of the tax on agents’ commission and reduction of sales tax to five per cent for digital and card payments, as is currently in practice in Punjab.

As for connectivity and affordability of cellular services, the OICCI asked the government to facilitate the fiberisation for towers (for 4G bandwidth) and residential broadband besides providing additional spectrum to telecom service providers for 4G data growth.

The OICCI digital report recommends to the government to publish its spectrum policy which addresses the spectrum needs of 5G in near term. Tax rates on the telecom chain and telecom services should be revised downward as well as all outstanding licensing disputes with telecom companies should be amicably settled to send positive message especially to potential foreign investors.

The OICCI also called for allowing spectrum-sharing and trading besides letting telecom companies share infrastructure and networks. It recommended that the government should allow tax-free and mandatory universal access across the country, especially in small cities and far-flung areas, for education and healthcare purposes. The representative body of around 200 foreign companies operating in 14 sectors urged the government to simplify and reduce taxation on low-cost — less than Rs30,000 — smart mobile phones for enhanced data access. It asked the government to reduce excessive consumer taxation, including general sales tax and withholding tax, on telecom services.

The OICCI believes there should be a comprehensive package for global mobile manufacturers for local production. It cited the example of Samsung whose investments in similar economies, like Vietnam, are driving huge GDP growth and exports.

It also recommended the doubling of the backhaul connectivity and capacity (10 cables) to the global internet for reliable access of international companies to IT service providers in Pakistan.

With regard to the development of the ecommerce ecosystem, the OICCI noted that warehousing is a fundamental requirement of e-commerce trade. Sellers exporting/shipping goods from Pakistan to international warehouses are required to submit the customer’s proof of purchase before export. This is due to poor understanding of global e-commerce supply chains, the chamber said. For global trade, re-export facilities should be allowed for returns of demo and faulty products both ways, it added.

Ministry of Education is recommended to collaborate with the industry to recognize and integrate new skill-based learning models in academic credentials (p-Tech and others). Moreover, National Center of Excellences (public-private partnership model) for capacity development in strategic areas (AI, security, quantum, blockchain, human-centric design) should also be developed.

The OICCI demanded that officials of the Federal Board of Revenue should undergo capacity training for start-ups and small-tech businesses. To ensure the prevention of disruptive regulations, any wide-impact regulation should be implemented after due consultation with the relevant industry’s representative body. The federal cabinet should form an oversight body for approval of any regulation that stops ongoing operations or provides guidance for the use of new technologies, the chamber said.

In the sphere of digital governance, the OICCI recommended that basic identity verification services provided by the National Database Registration Authority should be made affordable for wide-scale usage. In addition, the central bank and the corporate sector regulator should allow the creation of shared know-your-customer services companies to reduce the cost of doing business.

The federal citizen services should be consolidated on one digital platform with end-to-end digital transaction capability, including ID, passport, labour, Employees Old-age Benefits Institution, pension and subsidy programs, it said.

The government should set up a fund to create national platforms (built by the private sector) to aggregate resources on education, healthcare, agriculture and industrial collaboration, the OICCI recommended.

Copyright Business Recorder, 2021