Pakistan’s Telecom Operators Association (TOA) has formally urged the government to abolish Government-to-Government (G2G) direct contracting under the Public Procurement Rules, 2004, arguing that the practice is restricting competition, weakening private businesses and discouraging innovation.
The TOA is an industry association representing major telecom operators in Pakistan, including Jazz, Telenor, Ufone and Zong, along with other stakeholders in the telecommunications sector.
In a formal letter to the government, the association raised concerns over the growing role of state-linked entities in commercial activities and the impact of direct G2G contracting on private-sector companies.
According to the TOA, allowing government entities or state-owned enterprises (SOEs) to receive contracts without open competitive bidding gives them an advantage over private businesses. The association argued that this can ultimately reduce competition and limit opportunities for Pakistani technology and digital companies.
Stifled Growth for Local Companies
The TOA said Pakistani digital products and services companies need access to the domestic market to test, deploy, and improve their products before competing internationally.
The association argued that when government projects are awarded directly to state-linked entities, local private companies lose an important opportunity to establish their products in Pakistan.
According to the TOA, the lack of a domestic market for these businesses can also make it harder for them to compete for customers in international markets.
Unfair Competition
The association also highlighted what it described as an uneven competitive environment between private companies and state-linked entities.
The TOA claimed that state-linked entities or preferred G2G contractors can receive regulatory exemptions, preferential licensing or implicit government guarantees that private companies cannot match.
It argued that such advantages make it difficult for private-sector businesses to compete on equal terms for government-funded projects.
Concerns Over Innovation
The TOA further warned that greater state dominance in commercial markets could suppress innovation.
According to the association, when the government acts as both a regulator and a dominant market participant, private companies face higher barriers to entering the market.
The TOA said this can reduce incentives for businesses to invest in independent research and development, launch new products, and build technology-based businesses.
Less Competition Could Reduce Efficiency
The association also linked G2G contracting to lower efficiency, arguing that state-backed entities face less competitive pressure to improve their performance.
According to the TOA, companies operating in competitive markets have stronger incentives to reduce costs, improve services and respond to customer needs. State-backed entities that are insulated from competition, it argued, may not face the same pressure.
The association cited Pakistan International Airlines (PIA), Pakistan Steel Mills and power distribution companies (DISCOs) as examples of state-owned entities that it says eventually became a burden on the national economy.
Impact on Jobs
The TOA also warned that limiting opportunities for private businesses could affect employment, particularly for educated young people.
The association said small and medium-sized enterprises (SMEs) are major contributors to job creation and argued that restricting their access to business opportunities could prevent them from expanding and hiring more workers.
Financial Pressure on Private Sector
The association also raised concerns about the wider impact of government spending and domestic borrowing on private businesses.
According to the TOA, when the government finances large projects or covers fiscal deficits through domestic borrowing, commercial banks may prefer investing in government debt because it is considered safer than lending to private businesses.
The association argued that this can contribute to higher borrowing costs and make it harder for SMEs to obtain affordable financing.
Concerns Over Subcontracting by SOEs
Another issue raised by the TOA was the subcontracting of G2G projects after contracts have been awarded.
The association claimed that some SOEs subsequently subcontract project work to preferred private companies without conducting a transparent competitive bidding process.
According to the TOA, such practices can effectively bypass the competitive procurement process and weaken transparency and accountability in the use of public funds.
TOA Cites PM’s Words on Government-Owned Businesses
The association also referred to Prime Minister Shehbaz Sharif’s publicly stated position that there is “no business of government in running a business.”
The TOA argued that many SOEs were established using taxes paid by private-sector businesses, but the government subsequently uses public funds to support entities that compete with those same businesses.
The association said giving such entities access to direct government contracts creates an additional advantage for them and risks weakening the private sector.
The TOA maintained that the private sector plays a key role in generating tax revenue, creating jobs and driving innovation. It therefore called for changes to public procurement rules to ensure that government contracts are awarded through a more competitive and transparent process.
The association’s request now puts the issue of G2G contracting and the role of SOEs in public procurement before the government, with the TOA arguing that greater competition could create more opportunities for private businesses and strengthen Pakistan’s broader digital economy.
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