Pakistan losses $1Billion Annually to Grey Traffic

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Dr Ramesh Kumar Vankwani of the PML-N has said that the national exchequer is suffering because of the International Clearing House (ICH), putting the monetary damage at over $1 billion per year.

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Last week, in the National Assembly, Dr Vankwani called upon the Minister of State for Information Technology Anusha Rehman Khan to take notice of the loss being caused by grey trafficking in the country.

While speaking with a local English newspaper, Dr Vankwani said, “One can put the blame for putting in place the ICH on the PPP-led government, but we have been running the government for 10 months and unfortunately are not able to curb grey trafficking which continues to afflict the telecommunication sector.”

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“One can put the blame for putting in place the ICH on the PPP-led government, but we have been running the government for 10 months and unfortunately are not able to curb grey trafficking which continues to afflict the telecommunication sector”, Dr. Vankwani.

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A Pakistan Telecommunication Authority (PTA) official stated that grey trafficking has increased by around 75% in the last one and a half year. Like Dr. Vankwani, the PTA official also blamed this increase on the controversial International Clearing House (ICH), which was formed by the PPP-led government in October 2012.

Ever since the formation of the ICH two years ago, the recorded volume of incoming international calls has dropped from two billion minutes to less than 500 million minutes per month; these figures were also highlighted by Dr Vankwani and were confirmed by the PTA official.

Grey traffic is defined as bypassing of legal routes and exchanges, and using illegal telephone exchanges for making international calls. These illegal exchanges include VOIP (voice-over internet protocol) using a computer, GSM (global system for mobile) gateways, WLL (wireless local loop) phones, or mobile SIMs.

This traffic may then be distributed onwards using Wireless Local Loop (WLL) and mobile numbers. Grey routes are arrangements that fall outside the regular course of business among licensed telecom companies in each country.

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There are many reasons associated with the increase in grey trafficking in the country. The decision of the previous PTA administration to increase the rate of incoming calls from 6.5cents to 8.8cents per minute is considered one of the primary ones, as grey traffic business offers cheaper call rates to overseas Pakistanis.

Another reason for the decline in international calls is the increasing use of internet applications such as Skype, Viber, and to some extent WhatsApp. These apps provide internet users with a convenient and cost effective way to connect with anyone, all around the globe.

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“LDI licence holders themselves were involved in grey trafficking in order to avoid government tax”, PTA Official

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Former IT minister Mr Awais Leghari, while speaking on the issue of grey trafficking in the National Assembly last week, alleged that powerful lobbies were carrying out this illegal business through gateways set up in Karachi. He said the only and best possible way to deal with grey traffickers was to significantly cut down on access to promotion charges which the government received.

Mr. Leghari stated, “Grey trafficking will die its own death if cheaper calls are made available to customers.”

Another PTA official agreed with Mr Leghari’s assessment saying that LDI licence holders themselves were involved in grey trafficking in order to avoid government tax.

The official told the local English newspaper that the PTA had suggested to the IT ministry to impose a levy of 1.35 cents per minute and let the LDI licence holders compete among themselves. A summary to this effect is with the minister’s office.

In a telephonic conversation with the local English newspaper, Minister of State for IT Anusha Rehman said, “I have asked for a comprehensive exercise by involving the finance ministry and the Federal Board of Revenue to determine the exact financial impact of the ICH. The future of ICH will be decided after receiving the findings from them,” she said.

It merits mentioning here that the Competition Commission of Pakistan (CCP) had ruled against the arrangements of the ICH.


  • Muhammad Ather

    That is right, when my relatives call me from outside Pakistan I always sees a local number. Unfortunately every teleco is involve in grey trafficking. PTA do nothing to stop this or any other matter. Don’t know why.

    • Ali Salman

      Those who say that grey traffic costs GoP a lot are stupid enough when they don’t consider the fact that we expat Pakistanis pay to VoIP telecom operators for calling Pakistan, this is legal in these countries and we aren’t doing anything illegal at all. Now if PTA and GoP was intelligent enough to allow local operators to operate globally from within Pakistan then overseas Pakistanis will pay directly to PK operators and not to foreign operators. But as PTA officials are either corrupt or live in stone age do not consider that solution from which GoP, CBR, and overseas Pakistanis will benefit but may be not some corrupt officials , PTCL and LDI operators.

  • Javed Akhtar

    Why is the PTA not curbing grey traffic? Probably because the grey traffickers are too strong a mafia and the regulator has no teeth to catch them.

    Why can’t Pakistan charge 8 cents for incoming calls to save their dying LDI companies supporting thousands of families whereas other major countries like UK, Saudi Arabia and UAE charge upto 15 cents a minute for a call?

  • Ejaz

    If GOP remove all taxes and levies for people of Pakistan, there wont be any tax invasions and smuggling. Keeping our economy in view, the question is can we afford that?
    PTA officials are good for nothing. Instead of performing their roll, they want easy way out ignoring the economic benefit of ICH. When these officials are in office, all the time the are coordinating pick and drop of their family members.
    GSM SIMs are the main vehicle used for grey termination as the bundle packages offered by CMOs suits grey operators. Identifying SIMs used for grey termination is not rocket science, but at PTA we sit and relax and try to build our nuance value.
    God help us!

    • Shahid Saleem

      Economic benefit of ICH? What benefit? It lowered income to the government compared with previous system! There is more theft (Grey Traffic) now. How is ICH a benefit for anyone except LDI license owners???

    • Parvez Iftikhar

      If GOP dissolves ICH, GOP’s tax revenue will actually increase, plus benefiting the economy by making calling from abroad cheaper! Putting up an anti-competition ICH is no way to earn by a Government.
      Identifying illegal SIMs may not be rocket science but when they belong to the influentials???

  • Waqar Khan

    Cut and Paste of Dawn news article….. Abuse of copy rights….? Wont the sue you on this act? Readers only appreciate indigenous work!

  • achi baat hay. drop the taxes or be always ready to such great traffic.

  • Salman Abbas

    The government can be losing 1 trillion every day for all I care.. they should have no right to stop communication!

  • Eli Ehsan

    its not a rocket science damn it!! cut the prices down! make customers happy.. Grey or whatever color traffic will reduce automatically.

  • Fenn Rodger

    Non realistic statement without any calculation, do the reverse engineering on this amount you will get an un-realistic minutes calculation. Maximum loss could be around 40-50 M Dollars per year. Most of countries where tax rates are high are facing these issue including technology pioneers not only Pakistan. Interesting thing is international operators chooses the “Grey Route” to reduce call-cost and earn more profit as well.

    • Fenn Rodger

      Readers, typing mistake Maximum loss could be around 400-500 M Dollars

  • Parvez Iftikhar