There is a possibility that Pakistan will not be able to pay for Google apps.
While the SBP calls the reports “baseless,” the minister of information technology writes to Dar.
ISLAMABAD:
On Tuesday, Federal Information Technology and Telecommunication Minister Aminul Haque stated that a letter had been sent to Finance Minister Ishaq Dar expressing reservations over the move. The letter was sent in response to the concerns that the telecom operators have expressed regarding the blocking of payment to Google.
In a statement, Haque added that a few days ago, all telecom operators had penned a letter to his ministry, expressing their concerns over the State Bank of Pakistan (SBP) blocking payment by users to Google. This was something that they had done in an effort to bring to the attention of Haque’s ministry.
He went on to say that because the situation was so serious, all of the relevant parties were discussed, and it was decided that a letter should be written to the finance minister to relay the concerns that have been raised.
According to the statement, he was cited as adding that “the telecom sector is already in critical difficulties” and that such actions will make problems worse for the sector.
The minister emphasised that the suspension of paid Google Play applications was the only effect that the barring of payment would have.
“The functionality of the free programmes will be maintained,” he stressed.
On the other hand, Haque pointed out that preventing payment to international businesses might be detrimental to the country’s prestige.
He went on to say that customers who used premium applications could potentially run into significant obstacles.
Haque urged that Dar take urgent note of the situation and instruct the SBP to abolish the ban on using mobile phones to make Google payments.
According to the statement, the minister was cited as adding that it is necessary for the ministry of information technology and telecommunications to be consulted before such decisions are made in the future.
As of the 1st of December, consumers in Pakistan will no longer have access to the services offered by the Google Play Store since the country’s central bank has terminated the direct carrier billing (DCB) process.
Users would be able to download the applications, but the only way they could make a purchase for them would be by using their debit or credit cards.
The second possibility for making these kinds of payments is the direct carrier billing system, which requires users to pay using their cell balance.
The Decentralized Content Blockchain was created since there are now no international digital payment methods available to pay for different apps.
In a letter that was sent to the SBP by the telecom companies, one of the paragraphs read as follows: “It is pertinent to mention here that we all understand the prevailing challenge of worsening economic conditions of the country and thus are open to working in an amicable way with the Regulator (SBP); as we are already working with them in case of the telecom sector imports related transactions to navigate through these testing times.” This passage was taken from the letter that was sent to the SBP by the telecom companies
The central bank, on the other hand, has denied the accusations that certain payments to Google were held up at the SBP, alleging that the reports are “groundless” and “misleading.”
“[The] SBP vehemently contests all allegations to that effect. The fact of the matter is that in order to make things easier for domestic entities, [the] SBP specified a number of services relating to information technology that domestic entities can acquire from foreign countries for their own use and then make payments in foreign currency to those countries against invoices of up to $100,000 each. The central bank explained in a statement that these services include satellite transponder, international bandwidth/internet/private line services, software license/maintenance/support, and service to use electronic media and databases.
Furthermore, the central bank stated that the entities who desired to use this option designated a bank, which was then reviewed and authorised by the SBP once. After the designation was made, such payments could subsequently be processed through the designated bank, and they would not require any additional regulatory approval.
However, it was added that during recent off-site reviews, it was observed that in addition to utilising the aforesaid mechanism to remit funds for IT-related services for their own use, telcos were remitting the bulk of the funds for video gaming, entertainment content, and other similar purchases made by their customers using airtime, which was in accordance with DCB. This was a finding that was made.
“The telecommunications companies were allowing their consumers to purchase the aforementioned products using airtime, and they were subsequently sending monies overseas that reflected such transactions as payments for the acquisition of IT-related services. As a result, the telcos were, in essence, functioning as mediators or payment aggregators because they facilitated the procurement of services by their subscribers,” it noted.
As a consequence of this violation of foreign exchange restrictions, the central bank said that the SBP has withdrawn the designation of banks belonging to telcos as being able to process these types of payments. Telcos, on the other hand, have been instructed by their banks to resubmit their requests in order to assist the genuine IT-related payment needs of their businesses.
“If any entity, including a telco, intends to operate as an intermediary or payment aggregator and such arrangement involves outflow of foreign exchange, it is required to approach [the] SBP, separately through its bank, for seeking special permission for providing such services under the Foreign Exchange Regulation Act, 1947,” the statement read. “Such permission may be granted only after the entity has complied with the requirements of the Foreign Exchange Regulation Act, 1947.”
In addition, the guidelines for the procurement of information technology and other services from other countries are available at the following link: https://www.sbp.org.pk/fe manual/pdf/2020/Chp-14.pdf. This was stated in the document.
Tech titans such as Google, Amazon, and Meta are feeling the effects of Pakistan’s failure to pay the $34 million that it owes to overseas service providers. As a result, these companies are considering whether or not to continue providing their services completely.
