Pakistan’s telecom industry has warned that direct government contracts awarded to state-owned companies could damage private businesses and create more financially weak organisations similar to Pakistan International Airlines (PIA).
The Pakistan Telecommunication Access Providers Association (PTAPA), which represents several major telecom and technology companies, has raised serious concerns about the growing practice of giving government projects directly to state-owned enterprises without open competition.
According to the association, such a system gives government-owned companies an unfair advantage over private businesses. It says that if this practice continues, private companies may reduce investment, innovation and expansion. At the same time, state-owned companies could become less efficient because they may continue receiving projects without facing strong competition.
PTAPA believes this could eventually lead to the creation of more state-owned organisations that depend heavily on government support and become a financial burden on the country.
PTAPA Writes to Senior Government Ministers
The Pakistan Telecommunication Access Providers Association has raised the issue through a letter addressed to Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal and Minister for Information Technology and Telecommunication Shaza Fatima Khawaja.
The association’s president, Dr Shahid Farooq, asked the government to review and remove a provision in the Public Procurement Rules 2004 that allows government-owned organisations and state-owned enterprises to receive certain contracts directly from other government bodies.
PTAPA represents 26 companies operating in Pakistan’s telecom and technology sector. Its members include well-known names such as Cybernet, Nayatel, PTCL, Wateen and Multinet.
The association said that the telecom and technology sector has spent years investing in Pakistan. Private companies have built internet networks, fibre infrastructure, data systems and other digital services. However, the growing use of direct government contracts for state-owned organisations is now creating problems for private companies.
The association believes that government-funded projects should be awarded through a fair and open process where both private and state-owned companies get equal opportunities.
Concern Over Direct Government-to-Government Contracts
The main concern raised by PTAPA is related to direct contracting between government organisations and state-owned enterprises.
Under this system, certain government bodies can award projects directly to another government-owned organisation without going through a full competitive bidding process.
PTAPA says that this practice has increased the number of government-funded IT, telecom and digital projects being awarded directly to state-owned companies during the past five years.
In a normal competitive process, different companies submit their proposals and offer prices for a project. The government can then compare their technical skills, experience, quality of service and cost before selecting the most suitable company.
However, when a project is given directly to a state-owned company, private firms may not get the chance to compete for the work.
The telecom industry believes that this creates an uneven playing field.
Private companies have to invest their own money, arrange financing, hire workers and compete for projects. They also face business risks and pressure to improve their services.
State-owned enterprises, on the other hand, may have access to advantages that private companies do not have.
According to PTAPA, these advantages may include government support, easier access to projects, regulatory concessions and preferential treatment.
Private Sector Has Invested Billions in Infrastructure
Pakistan’s private telecom and technology companies have played an important role in expanding the country’s digital infrastructure.
Over the past two decades, private businesses have invested heavily in fibre networks, internet services, data centres and other technology systems. They have also created jobs and contributed to the national economy through taxes and other payments.
Pakistan’s telecom sector has become one of the country’s important economic sectors. The industry supports millions of users and provides the digital connection needed for businesses, banks, schools, hospitals and government services.
The sector also continues to attract investment and remains important for the country’s future digital growth. The government itself has repeatedly said that technology and telecom investment are necessary for economic development and the expansion of digital services.
However, PTAPA believes that private investment could be affected if companies feel that major government projects are increasingly being reserved for state-owned organisations.
When private companies invest in infrastructure, they expect to compete fairly for business opportunities. If they repeatedly lose access to government projects because of direct contracting, they may become less willing to invest more money in Pakistan.
This could affect the growth of telecom infrastructure and digital services in the long term.
Lack of Competition Can Reduce Innovation
PTAPA has also warned that reduced competition can negatively affect innovation.
Competition forces companies to improve their services, develop new technologies and find better ways to reduce costs.
When several companies compete for a government project, they try to offer better prices and improved services. This can benefit the government as well as the public.
However, if projects are repeatedly given directly to certain state-owned organisations, there may be less pressure to improve.
Companies that do not face enough competition may have fewer reasons to become more efficient or invest in research and development.
PTAPA said that this could slow down technological progress in Pakistan’s telecom and IT sectors.
At a time when Pakistan is trying to improve internet connectivity, increase digital services and strengthen its technology sector, the country needs a system that encourages companies to invest and compete.
The association believes that open competition can help Pakistan achieve these goals.
Warning About More Financially Troubled State Companies
PTAPA used Pakistan International Airlines as an example while explaining its concerns.
PIA has faced serious financial and operational problems over many years and became a major burden on the national economy before the government moved forward with reforms and privatisation.
The telecom industry association warned that other state-owned enterprises could face similar problems if they continue operating without enough competitive pressure.
PTAPA also referred to other government-owned organisations that have faced financial and operational difficulties.
According to the association, when state companies are protected from competition and continue receiving government support, they may become less efficient over time.
This can result in higher costs, weak performance and financial losses.
Eventually, the government may have to provide financial assistance to keep such organisations running.
The money used to support loss-making state-owned enterprises comes from public resources that could otherwise be used for development projects, education, healthcare and other important areas.
PTAPA believes that the government should avoid policies that could create more financially troubled public-sector companies in the future.
The association’s basic argument is that state-owned enterprises should not receive special treatment simply because they are government-owned.
Instead, they should compete with private companies and prove that they can provide the best service at a reasonable price.
Concerns Over Subcontracting of Projects
PTAPA has also raised concerns about the way some state-owned enterprises may handle projects after receiving them through direct government contracts.
According to the association, there are cases in which state-owned companies receive projects directly and later subcontract part or all of the work to private companies.
PTAPA believes that such a practice raises questions about transparency and competition.
If a government-owned organisation receives a project directly but then gives the work to another private company, the association argues that the original project should have been opened for competitive bidding from the beginning.
In such a case, multiple private companies could have submitted proposals and competed for the project.
This could help the government get better prices and stronger technical services.
PTAPA has therefore called for greater transparency in the awarding of government-funded telecom, IT and digital projects.
The association believes that public money should be spent through a process that is open, fair and competitive.
State-Owned and Private Companies Should Compete Equally
One of PTAPA’s main demands is that state-owned enterprises should compete with private companies on equal terms.
The association is not asking for government-owned companies to be completely removed from public projects. Instead, it wants them to participate in the same competitive process as private businesses.
If a state-owned company offers the best service, has the required experience and provides a competitive price, it should be able to win the contract.
However, private companies should also have the same opportunity to compete.
PTAPA believes that this would create a healthier business environment and protect investment in Pakistan’s technology and telecom sectors.
Fair competition would also encourage both government-owned and private companies to improve their services.
For the government, an open bidding process could help it compare different proposals before spending public money.
For private businesses, it would provide confidence that they have a fair chance to win government projects.
For the overall economy, it could help increase investment, innovation and employment.
Importance of Protecting Private Investment
The private sector plays an important role in Pakistan’s economy.
Private companies invest money, create jobs, pay taxes and introduce new technologies. In the telecom and IT sector, private investment has helped improve internet access and digital connectivity across the country.
The association believes that government policies should support these businesses rather than reduce their opportunities.
If private companies are pushed out of important areas because government organisations receive direct access to projects, the country could lose future investment.
PTAPA has warned that such a situation could discourage companies from expanding their operations or investing in new technology.
Pakistan is currently working to improve its digital economy and increase the use of technology in both public and private services.
Achieving these goals will require strong cooperation between the government and private sector.
The telecom industry believes that this cooperation should be based on fairness and competition.
Call for Changes in Procurement Rules
PTAPA has urged the government to remove Clause 42(f) of the Public Procurement Rules 2004, which it believes has created an unfair advantage for state-owned organisations.
The association says that government procurement rules should be designed to ensure transparency, competition and value for public money.
According to PTAPA, all capable companies should have a chance to participate in government-funded projects.
The association believes that changing the current system would help protect the private sector from being pushed aside by government-owned organisations.
It could also encourage companies to invest more in Pakistan’s telecom and technology infrastructure.
Open competition may also lead to better services, new ideas and improved technology.
A Fair System Could Benefit Everyone
The telecom industry’s warning comes at an important time for Pakistan’s digital future.
The country needs more investment in high-speed internet, fibre networks, data services and new technologies.
Both the public and private sectors have an important role to play in this process.
However, PTAPA believes that the government should make sure that its policies do not create unnecessary advantages for state-owned enterprises.
According to the association, equal competition can help prevent inefficiency and financial problems while also encouraging companies to improve.
PTAPA has made it clear that its goal is not simply to oppose state-owned companies. Instead, it wants all businesses to operate under fair and transparent rules.
The association says that government-owned organisations should compete on merit instead of depending on direct contracts.
It believes that this approach will help protect private investment, encourage innovation and support the growth of Pakistan’s digital economy.
The warning also highlights a wider issue about the future role of state-owned enterprises in the country.
Pakistan has faced the financial cost of weak and loss-making public-sector organisations in the past. PTAPA fears that continuing to protect state-owned companies from competition could lead to similar problems in other sectors.
For this reason, the association wants the government to reconsider direct contracting and move towards a more open procurement system.
In its view, fair competition can help Pakistan avoid creating more organisations that become financial burdens on the state.
The telecom industry believes that allowing private and government-owned companies to compete on equal terms will create a stronger market and encourage long-term investment.
It could also help the government get better services while protecting taxpayers’ money.
PTAPA has therefore called on the government to take action and create a procurement system where every qualified company has a fair chance to compete.
The association believes that this is the best way to support innovation, protect investment and prevent the creation of more financially troubled state-owned enterprises like PIA.
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