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