A lot still needs to be done to catch-up with the global development

By Shahid Hameed
Nov 13 - 19, 2000

Two simple words like "Information Technology" or just "IT" have separately been in common use for over centuries but their combined usage is new to our vocabulary and has certainly become the "Eighth Wonder" of the world in the present times. These words have become so common these days that these are being used as cliches. No matter how common these cliches have recently become, particularly in developing countries like Pakistan, but their importance and significance should never be underestimated. All we need to realize are their real meaning and potential particularly in relation to their inherent growth potential in transforming our category of "Developing Countries" to that of the "Developed" one's. The task may seem difficult but certainly not impossible as we already have some of the requisite ingredients and need to acquire just a few.

What the average Pakistani needs to realize is the enormity of our economic problems, which are aggravating with leaps and bounds. Some of the macro economic statistics should convey the required message to an ordinary citizen without any formal background of Economics. Pakistan's biggest economic problem is its ever-increasing debt burden both external and domestic, which is restricting our economic growth and development on the one hand and is leading to acceptance of other counter productive terms and conditionalities related to multilateral funding on the other. Presently, Pakistan's total debt burden stands at Rs. 3,096 billion including Rs. 1,559 billion (50.4%) as domestic debt and Rs. 1,537 billion (40.6%) as external debt. The total debt constitutes 97.5% of Pakistan's nominal GDP while its total debt servicing amounting to Rs. 240.2 billion pertains to 83.3% of tax revenue, 63% of total revenue and 45.5% of total expenditure. The most disturbing feature of the current debt scenario is the fact that the total debt has almost doubled over the last five years from Rs. 1,877 billion in 1996 to Rs. 3,096 billion to-date. Another major economic problem pertains to our ever-increasing fiscal deficits basically resulting from a relatively low revenue generating capacity of the economy vis-a-vis its consumption oriented tendency coupled with existence of an equally large parallel economy. Another disturbing factor is our persistent trade deficit highlighted by an almost stagnant annual export proceeds of US$ 8 billion including software exports contributing only US$ 30 million (0.4%) as compared to India's US$ 4 billion. The trade deficit has however, narrowed down from over US$ 3 billion in 1996 to over 1 billion as of date mainly due to decrease in imports resulting from a general recessionary trend in the economy.

The main reasons responsible for the kind of economic quagmire that Pakistan's economy finds itself in are far too many. However, the major one's included lack of implementation of long-term economic policies, lack of good governance, corruption, nationalization, political instability, etc. Whatever the causes are, the economy is presently at a stage where very little could be done to recover it from the 'vicious circle' or 'debt trap' with the available economic policy prescriptions. The one and only available "panacea" to leapfrog this enormous gap between the developing and developed countries is the "IT Technology Advantage", which Pakistan has the potential to achieve.

Pakistan's exposure to the IT culture started as early as 1996 with the introduction of Internet services, which opened up potential avenues for global interaction in the IT arena. Despite the fact that Pakistan has been a slow starter in the field of IT technology, it has the inherent potential to achieve accelerated growth within a relatively short period.

During its short history, IT industry in Pakistan has been able to achieve the following:

* Establishment of over 300 software houses developing and exporting software in diverse areas including Database Management, Internet Applications, E-commerce, CAD/CAM Management systems, etc.

* The cost Internet Bandwidth has recently been reduced by PTCL by 53%, which led to decrease in end-user Internet prices and improvement in quality of service.

* Processing period for license applications in the deregulated sector by the PTA has been reduced from several months to seven days.

* PTCL is currently providing international bandwidth and Internet connectivity ISP's and other corporate customers within 4 to 8 weeks.

* SBP has allowed the opening of Internet Merchants Accounts within Pakistan.

* With 90% digitized telecom infrastructure, 60 ISP's are presently operating in major cities and remote areas.

* 10,000 computer science graduates are being produced annually.

* Strong international linkages through expatriate Pakistani IT professionals.

* Software exporting companies have been allowed to retain 25% of their earnings in foreign exchange accounts.

* Income Tax holiday for IT training institutions for five years up to year 2005.

* Internet delivery on cable TV allowed.

* Liberal IT Policy announced by the government.

* Establishment of Venture Capital companies like PakVenCap.com specifically for providing 'Seed Capital' to emerging IT ventures.

* Provision of full support and encouragement by the present Government to the promotion of 'IT Culture' in Pakistan particularly through its Ministry of Science and Technology.

In order to further accelerate the pace of growth of the IT industry in Pakistan, greater efforts need to undertaken. As a first step, paksitan can at least try to achieve its ambitious software export target of US$ 1 billion by the year 2003 provided it takes up the challenge squarely annd realistically. Some of the steps which Pakistan urgently need to take may include the following:

* Integration of IT education with that of other related disciplines like management and engineering.

* Encouragement of non-degree technical programmes in both software and hardware development for non-IT graduates.

* Uninterrupted availability of both power supply and conductivity.

* Availability of well trained IT professionals/teachers at training institutes.

* Availability of legal and regulatory and legal framework for development of E-commerce activities.

* Provision of easy access to 'Venture Capital' or 'Seed Capital' particularly for upcoming IT ventures.

* Provision of further incentives to private investors and venture capital firms to establish "Business Incubators" for Pakistan-based companies.

* Improvement in overall investment climate to attract foreign investment in IT ventures from global IT Vendors like IBM, Microsoft, Oracle, etc. and expatriate Pakistani IT professionals.

* The Government can further encourage establishment of locating 'Business Incubators' in its foreign missions as has recently been established at Pakistan's High Commission in Singapore called the "Jinnah Center of Technology".

"Software Technology Parks" need to be established in the major cities of Pakistan to act as One Window solution to all the needs of software companies/houses.

Some recent trends in development of "IT Culture" in Pakistan have greatly encouraged and enhanced the pace of growth of IT related activities. Some of these trends may be highlighted as follows:

Pak Libya Holding Company (Pvt) Ltd., a leading joint venture financial institution, has recently been instrumental in promotion of 'dotcom culture' by way of sponsoring the establishment of the first IT Venture Capital Company in Pakistan in the name and style of PakVenCap.com. Although the VC company is still in its formative stage subject to finalization of Venture Capital Rules by the SECP, it has already started its soft operations by organizing a nation-wide "Talent Hunt Programme" to identify IT related talent in Pakistan for having a ready list of potential clients prior to its formal establishment. After initial screening of over 400 IT proposals, Pak Libya has completed further scrutiny and appraisal of about 90 selected proposals. Although final selection of some solid proposals is underway, Pak Libya has already selected two such proposals namely PakBusinessPortals.com (an info portal) and Ajrak.com (a comprehensive search engine), which have been formally launched by the Sindh Governor in an impressive ceremony held at Hotel Sheraton recently. In a 'Brainstorming Session' on PakVenCap.com, Dr. Ishrat Husain, Governor, State Bank of Pakistan has termed establishment of PakVenCap.com as a "commendable initiative" by Pak Libya, which needs to be fully supported by the banking community at large.

Following Pak Libya's footsteps, other information portals are also being launched in Pakistan like apnakarachi.com, medisure.com, e-taleem.com, etc.

Certain well established expatriate Pakistani US-based software development companies have started establishing their offices in Pakistan for software development for their parent companies.

The Ministry of Science and Technology has also started training facilities for 'Medical Transcription' for encouraging development of medical transcription services in Pakistan.

Despite all the progress that has been achieved by Pakistan in the IT arena within a relative short span of five years, a lot still needs to be done to catch-up with the global development in the IT field. Realizing its real potential, Pakistan needs to leapfrog in the IT arena at a much faster pace to achieve full benefits of the "IT Advantage" in alleviating its ever-increasing economic problems.