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It is time to look beyond internet tariff reduction and duty free PC and hardware import

By Syed M. Aslam
Nov 27 - Dec 03, 2000

If internet is the lifeblood of the Information Technology and it is then Personal Computer must be the very heart pumping that lifeblood. If access to a reliable, efficient and speedy internet connectivity is a pre-requisite of developing IT culture, PC penetration is the ultimate barometer of it. Internet access and PC penetration are the two basic pre-requisites which compliment each other.

Much has been done to encourage internet connectivity in the country. During last three months the number of cities having universal internet access has increased tremendously from just 30 in August to over 300 at present. There has been a welcomed reduction in internet tariffs which was slashed by 53 per cent some six months ago followed by an additional 50 per cent reduction recently. The drastic reduction will benefit the software companies, IT firms and the Internet Service Providers (ISPs). The private sector educational institutions and universities in the public sector would also benefit from the reduction in IT tariffs.

Much has also been done to encourage the software firms to increase the volume of software exports vide numerous incentives including retaining a substantial portion of their foreign exchange earnings in the foreign markets, reduction in import duty on computer accessories as well as reduction in taxes applicable at the export stage.

Much, however, remains to be done to encourage the PC penetration in the seventh- or sixth, depending upon who you choose to believe- most populated country on the earth. Except for the abolishment of customs duty of PC, computer hardware and accessories in the Budget 1999-2000 not much has been done to encourage the PC penetration in the country. It must also be said that most of the computer hardware accorded the duty-free status in the Budget was already enjoying the exemption previously.

Universal internet access, reduction in bandwidth rates, duty-free import of computer hardware and accessories are welcomed signs indeed of the government's resolve to bring the much needed, and talked about, IT revolution in the country. However, it's time to look beyond reduction in internet tariff which primarily benefit the software firms, selective groups of students and ISPs which are not required to pass the benefit to internet users. The absence of any statute to make the ISPs pass the benefit of reduction in internet tariffs to the internet users leaves it to their discretion whether or not to pass this benefit to the users and if so, how much?

Thus while ISPs enjoy all the powers to dictate the rate of service to their respective users, the users remain outside the pale of decision making and being left at the discretion of the ISPs. This should change and the users' interest must be protected to ensure that they get proportional benefit of any and all reduction in the internet bandwidth rates.

It is time to look beyond internet tariff reduction and duty free PC and hardware import. Despite the abolishment of the duty the PC prices still remain much prohibitive to encourage the PC penetration in the country. While the importance of branded PCs, hardware and accessories can hardly be undermined, the provision of inexpensive counterparts in a country having a low per capita income should also not be overlooked.

It is not as if the policy makers are unaware of the prohibitive PC prices being a major impediment to the increased universal internet access to more cities without expanding the base of PC use. What good these measures be without having to have a respectable number of users.

The secretary Telecommunication and Information Technology, Abu Shamim Ariff, highlighting the importance of seminar at Karachi recently said that the government is looking at ways to develop the PCs and components locally. The local engineering industry has been asked to help develop components within the country and it could be done, he added.

The importance of PC use has also made Sindh finance minister, Dr Abdul Hafeez Shaikh, remark that cheap PCs are a must for the development of IT culture in the country and that government is considering bringing down 'ship load' of PCs discarded by users in the developed countries to replace them with the latest models.

So what could be done? Will the realisation on the part of the policy makers would translate into action and that too on the top priority basis. The screw-driver assembly of the PCs like the local assembly of television should be encouraged. While number of companies have already announced plans to assemble PCs within the country the issue should be given the top priority by the policy makers to cater to the needs of a market which is not only virgin but also immense.

A specific strategy should be evolved to increase the PC penetration which currently stands at a low 1.5-1.6 million according to estimates on the higher side. Without the increase in the numbers of PCs, and its strong annual growth, the internet connections would remain stagnant at acutely low level of 250,000, active internet users of just 800,000 and e-mail accounts of negligible 1.2 million, including more than one, in the ten most-populated country on the globe.