Day: July 6, 2021

The Pakistan Telecommunication Authority (PTA) has observed that the Mobile Termination Rates (MTR) are higher in Pakistan than the international benchmarking, and may revise it downward to Rs. 0.30 per minute from 1 October 2021 against the current Rs 0.70 per minute.

The reduction in the MTR will help to reduce the variable cost of each operator and will allow the benefit to be passed on to the consumers as reduced tariffs, will help operators to offer better off-net call rates, will reduce the current differentials of on-net and off-net rates, and will protect the interests of smaller operators.

The MTR is the ‘price that a Cellular Mobile Operator (CMO) charges to another mobile operator for terminating its off-net calls on its network’. Generally, end users are not aware of the wholesale termination charges that have been settled among the operators.

Higher termination charges are expected to favor larger players as compared to smaller operators, hence the role of the regulator is important in providing a level playing field by rationalizing the termination rates in the telecom sector. Furthermore, the effective implementation of interconnection promotes competition in the telecom sector, the PTA added.

The PTA has undertaken international benchmarking analysis which shows that the MTR calculated for Pakistan is between Rs. 0.28 and Rs. 0.30 as per the purchasing power parity (PPP) adjustment, and is between Rs. 0.12 and Rs. 0.24 as per the Average Revenue per User (ARPU) adjustments.

Accordingly, the current MTR of Rs. 0.70/min in Pakistan is still a lot higher than the calculated MTR using benchmarking. Therefore, it has reportedly been proposed that the MTR in Pakistan may be determined at Rs. 0.30 per minute with effect from 1 October 2021.

The last change in the MTR had been decided in 2018 based on international benchmarking. Adopting a glide path approach, a further review of the MTR is required as the current MTR at Rs. 0.70/min in Pakistan is still higher than the international benchmarking results had been in 2018 — the MTR at Rs. 0.30 to Rs. 0.43 per minute as per the PPP adjustment, and Rs. 0.18 to Rs. 0.19 per minute as per the ARPU adjustment.

The MTRs in Pakistan are also higher than the MTRs in regional countries, and the PTA has been requested by telecom operators to review them.

Clause 5.1.12 of the Telecommunication Policy states that the cost-based interconnection charges will be reviewed not less than once every two years. In the case of Pakistan, the data on cost-based interconnection charges is not readily available. Accordingly, this consultation paper provides benchmarking analysis for the determination of the MTR in Pakistan in line with Clause 18.6 of the interconnection guidelines that allow the PTA to establish interconnection charges based on benchmarking when adequate cost information is not readily available.

The PTA took a sample of 26 countries and calculated the average benchmark MTRs using the mean and median of the PPP-adjusted MTRs, and compared it with Pakistan’s PPP-adjusted MTR. Resultantly, the proposed MTRs for Pakistan were calculated as Rs. 0.30 and Rs. 0.28 by the mean and median benchmark respectively.

The ARPUs in cellular mobile markets of the sample countries are between $1.37 and $30.96. For alternate benchmarking, the PTA has considered the ARPUs of the sample countries relative to Pakistan’s ARPU. Using this benchmarking method, the proposed MTR for Pakistan is between Rs. 0.24 (mean) and Rs. 0.12 (median).

Therefore, the current MTR in Pakistan at Rs. 0.70 per minute is still quite high as compared to the above-proposed MTR based on international benchmarking.

The average benchmark MTRs were calculated using the mean and median of the PPP-adjusted MTRs, and were compared with the PPP-adjusted MTRs of Pakistan. Resultantly, the MTRs for Pakistan are calculated as Rs. 0.32 and Rs. 0.28 by the mean and median benchmark respectively. The ARPUs in the cellular mobile markets of the sample countries are between $1.37 and $24.12.

The ARPUs of the sample countries relative to Pakistan’s ARPU were used for alternate benchmarking. Using the benchmarking adjusted for the ARPUs, the proposed MTR for Pakistan is Rs. 0.16 (mean) and Rs. 0.15 (median).

The proposed MTR for Pakistan based on the PPP adjustment is between Rs. 0.28 and Rs. 0.32 as compared to Rs. 0.30 and Rs. 0.43.

Considering the MTR of the regional countries in USD, Pakistan’s MTR at US cents for 0.45 per minute is much higher than those of Bangladesh, India, Malaysia, and Sri Lanka that are US cents 0.16, 0, 0.24, and 0.28, respectively.

Source: Pro Pakistani

Continued efforts by the Government of Pakistan toward fiscal consolidation and policy reforms will be keys to sustaining improvements in macroeconomic stability, especially in broadening the tax base and improving the business environment, says the Asian Development Bank (ADB).

The ADB in its latest report titled, “Asian Development Bank and Pakistan; Fact Sheet,” said that the COVID-19 pandemic continues to pose major health care and economic challenges to Pakistan, and reforms are required to promote high value-added exports, expand social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs.

It further stated that ADB would support Pakistan’s development priorities as outlined in the bank’s new country partnership strategy, 2021–2025. The strategy focuses on improving economic management, building resilience, and boosting competitiveness and private sector development.

ADB’s assistance will comprise support for structural reforms and project assistance in key sectors, including energy, transport, irrigation, agriculture, urban infrastructure and services, small and medium-sized enterprises, and social development.

The bank will also mobilize private financing, expand its financing and technical assistance for public-private partnerships, and explore guarantee products to help the government leverage more financing and support capital market development.

Pakistan’s growth prospects have been influenced by COVID-19 challenges. ADB’s lending will include policy support for the energy sector and capital market and trade and competitiveness to return the economy to a sustainable growth trajectory.

Since 1966, ADB has committed $34.36 billion in sovereign loans, $150.5 million in grants, $1.01 billion in non-sovereign financing, $203.7 million in technical assistance projects, and $591 million in ADB-administered co-financing for Pakistan.

Cumulative loan and grant disbursements to Pakistan amount to $26.96 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.

In 2020, ADB’s loan and grant disbursements to Pakistan amounted to $1.78 billion, comprising $1.1 billion in program lending and $680.7 million from project lending. ADB provided significant and rapid support to Pakistan’s coronavirus disease (COVID-19) pandemic response.

This included a $500 million loan under the bank’s COVID-19 Active Response and Expenditure Support Program to help the government deliver social protection programs.

The funds were channeled through the government’s flagship poverty alleviation program, Ehsaas, to expand health sector capabilities and deliver fiscal stimulus to boost economic growth and create jobs.

ADB also approved $2 million from its Asia Pacific Disaster Response Fund and $3 million through regional technical assistance to help Pakistan purchase personal protective equipment and other emergency medical supplies.

The bank and the Swiss Agency for Development Cooperation co-financed $1 million to train 4,500 doctors and paramedical staff in COVID-19 critical care.

The report further stated that total commitments in loans and equity investments from ADB’s funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness.

ADB also actively mobilizes co-financing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project co-financing and $3.3 billion of co-financing through its Trade and Supply Chain Finance Program and Microfinance Program.

Total outstanding balances and commitments of non-sovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

Total outstanding balances and commitments of ADB’s non-sovereign transactions in the country as of 31 December 2020 were $497.1 million, representing 3 percent of ADB’s total non-sovereign portfolio.

Source: Pro Pakistani

Seven countries including Saudi Arabia, UAE, Qatar, Kuwait, Oman, Egypt, and Kenya have officially communicated their interest in long-term cooperation in Gwadar.

The development came during Prime Minister Imran Khan’s one-day visit to Gwadar, where ambassadors of these countries attended an official ceremony and expressed intent for cooperation in the development of the port city.

During the ceremony, PM Imran launched different mega projects and witnessed the signing of a number of MoUs.

The PM unveiled the following projects:

• Gwadar Fertiliser Plant

• Gwadar Animal Vaccine Plant

• Henan Agricultural Industrial Park

• Hengmei Lubricants Plant

• Gwadar Free Zone Phase Two

• Gwadar Expo Centre

The PM witnessed the signing of the following MoUs:

• Implementation agreement of developing a 1.2 million gallons per day (MGD) desalination plant to address the shortage of drinking water in Gwadar

• Solar generators grant from China for southern Balochistan

Chinese investors including Huang Weiguo (textile), Huang Daoyuan (prefabricated technology), Fang Hongyan (agriculture), Shen Jian (wool spinning), David Dia and Chen Yi (dairy processing), and Bao Dequan (textile) attended the ceremony via video link and pledged to invest in Gwadar.

CM Balochistan Jam Kamal, Chairman Senate Sadiq Sanjrani, Foreign Minister Shah Mahmood Qureshi, Information Minister Fawad Chaudhry, Minister for Defence Production Zubaida Jalal, and Minister for Maritime Affairs Ali Zaidi accompanied the PM during the visit to the port city.

Source: Pro Pakistani

Pakistan’s total debt (domestic and external) stocks had reached Rs. 37.99 trillion by the end of May 2021 as compared to Rs. 35.107 trillion in June 2020, as shown by the data released by the State Bank of Pakistan (SBP).

This is an increase of eight percent (Rs. 2.89 trillion) recorded during the first eleven months of the last fiscal year (FY21) that had come primarily due to high fiscal imbalance, the SBP said.

The highest contribution to this increase had come from the domestic debt that had increased by 12 percent from Rs. 23.282 trillion in June 2020 to Rs. 26.065 trillion in May 2021. This shows an increase of Rs. 2.783 trillion in the eleven months of the previous fiscal year.

The increase in the domestic debt may also be explained by the fact the Foreign Exchange Bearer Certificates, the Foreign Currency Bearer Certificates, the Dollar Bearer Certificates, and the Special US Dollar Bonds that are held by residents used to be the part of the external debt liabilities but have been classified as domestic debt since 8 June.

Of the total domestic debt, Rs. 19.738 trillion consists of long-term debt and the remaining Rs. 6.66 trillion is short-term debt.

The external debt of the federal government also increased by one percent from Rs. 11.825 trillion in June 2020 to Rs. 11.932 trillion in May 2021.

The SBP elaborated that the total domestic debt stocks include permanent debt, unfunded debt, and floating debt.

Source: Pro Pakistani

During FY 2021, Pakistan’s exports to China increased by 34 percent to $2.33 billion compared to $1.74 billion in the previous fiscal year, announced Adviser to Prime Minister for Commerce, Abdul Razak Dawood, on Tuesday.

This shows an increase of $586 million. “[Pakistan’s] exports have done quite well in our major markets,” the adviser said.

He wrote, “Our exports to Germany grew by 19 percent to $1.5 billion over previous FY’s $ 1.3 billion. The exports to the Netherlands increased by 23 percent to $1.2 billion compared to the previous FY’s $1 billion.”

He also informed that Pakistan’s exports to Poland increased by 28 percent to $308 million in FY21 compared to $241 million in FY20.

“Our exporters have accomplished this despite the problems created by the COVID-19 pandemic, and they deserve credit for it,” he wrote, adding, “I also commend the efforts of MOC’s Trade & Investment Officers and urge them to provide even greater facilitation to our exporters.”

The trade data released by the Pakistan Bureau of Statistics shows that Pakistan’s exports had grown by 18.11 percent to $25.268 billion during July-June 2020-21 from $21.394 billion against the corresponding period last year.

Source: Pro Pakistani