WHERE DO WE STAND?
The IT-friendly government action and policies are coming thick and fast
By Syed M. Aslam
Jan 28 - Feb 03, 2002
Catching up may be hard to do but it comes easily, and naturally, to Pakistanis. The best example to judge the validity of this statement is the fact that despite being a late starter, both at the individual as well as the collective level, Pakistan today has become an extremely IT savvy country lacking neither the quality human resources potential nor the personal excellence to succeed.
During last year-and-half IT has become the focal point of all government policies according it the attention it all along deserved but never succeeded to receive from any of the previous governments. It is needless to repeat here such measures as the fifteen-year tax holiday till 2016 to help expand the narrow base of software exports; withdrawal of duties and taxes on the computer hardware, software, accessories and equipments; drastic cut in internet bandwidth tariff; expansion of universal internet access by over twenty-fold to over 500 cities, towns and villages; initiation of e-government and e-business projects; formation of IT advisory board, working groups; bringing the IT education under the ambit of accreditation to ensure its quality. The fact that the IT is receiving the financial, technical and policy support from the present government like never before show how high on the government's priority list.
The IT-friendly government action and policies are coming thick and fast and every day there are new developments related to one or other sector of the IT industry. Consider the following developments announced by the government this month.
National Portal & Websites Project
Having said that, the developments in, and related to, the Pakistani IT industry are coming thick and fast. In fact so thick and fast that one has to spend hours a day reading the newspapers, watching the television news and listening to the radio to keep him/her abreast of all these developments. A week after PAGE published a cover story 'It's time to develop a world class portal' in the first week of November, the federal government announced allocating Rs 35 million for a project to create websites for 35 Divisions plus 3 special sites and a website portal. The portal would be ready by March while the websites would be hosted by June this year.
The Governor of Sindh promulgated the Sindh Information Technology Board (SITB) Ordinance 2002 on January 10. The ordinance which came into force at once may help establish a board comprising a chairperson, a vice chairperson and eleven members, atleast five of whom shall be from the private sector, appointed by the government.
The primary objectives of the board are to promote or develop use of IT, formulate and enforce any scheme for the purpose of this ordinance, to procure necessary equipments for its proper functioning and make provision for research, consultancy, and advisory service to enter into arrangements with other institutions or public or private bodies. The financial needs of the board would be supplied from a fund — the Information Technology Board Fund- which will be provided by the government or any body, authority and sums received by itself.
Rs 2 billion allocated for IT Firms
On the 17th of this month the federal government announced to allocate Rs 2 billion for the computerisation of the federal and the provincial governments. The measure is meant to help local software companies develop a local market for their products. Half of the allocated fund or Rs one billion has already been provided by the federal government for implementing the IT projects during June-October this year. A portion of this amount would be given to the provinces as special grant which would be in addition to the funds allocated for IT projects from their own resources.
The need to develop a solid local base for softwares is viewed as one of the major prerequisite to strengthen the base of the domestic software industry without which it can hardly be expected to expand the base of its exports. PAGE has incessantly been highlighting the need for developing a strong domestic market for locally developed softwares not only to help create economies of scale but also to help reduce heavy dependence on costly imports. In addition, expanding the share of locally produced softwares in the domestic market is also necessary to improve the quality of locally developed software at par with those of their foreign counterparts.
Failure to expand the share of locally developed software in the domestic market, which according to an estimate remains at least one-sixth or about $ 11 million of the total software exports, has already hampered the growth of the software development in the country. As is, the practise of awarding contracts of public sector IT projects to foreign companies, such as the $ 28 million contract to Korean company Hyundai for the automation of the State Bank, not only deprived the country of huge drain of foreign exchange but in all the process also undermined the growth of the local software industry.
The global economic slump in the post-September 11 world has left no industry, business or trade untouched. While the aviation and insurance industries have been the worst hit victims of the global economic slowdown the situation posed many challenges for a developing country like Pakistan. On the one hand, the exports started showing signs of decline amidst a sharp decline in retail sales in the US in particular, and elsewhere in general, and on the other weakening rupee-dollar parity meant uneconomical international prices of all goods and commodities. Local software houses complained about a decline in exports and though the situation has been improved sources in the software industry as well as the government officials say that there would be as much as 50 per cent decrease in the value of software exports this fiscal.
Pakistan Software Export Board (PSEB)
This is the official software export promotion agency of the government of Pakistan. While it facilitates software development and its export and also serve as a liaison between local and foreign software companies, it is also works as an advisory body on matters pertaining to international data communication facilities, establishment of software technology parks, call centers and all other IT related activities in the country.
The regional office of the PSEB in Sindh started its operations in Karachi from the 2nd of this month. PSEB has appointed Siraj A. Khan as the Regional Manager Karachi. In line with its policy to induct the professionals from the private sector, Siraj Khan is an professional with vast experience in the IT sector specializing in product development and marketing both at national and international level. He has also been engaged in software development and a certified CMM, the top most software accredition, specialist.
PAGE talked to Siraj at his office in Karachi about the various aspects of the IT industry and PSEB's plans and projects with reference to Sindh in particular and Pakistan in general. Summing up the primary objective of the PSEB's regional office Sindh, he said that it is to promote the Pakistani IT industry both nationally and internationally and to secure increased business from the international IT market. In addition, PSEB looks forward to work closely with the local IT industry and to extend it all possible support and help to make Pakistan a global player in software and other related services.
Siraj told PAGE that Karachi will have its first IT Technology Park within next three months. Agreeing that though Karachi houses the biggest numbers of software houses in the country, about 70 per cent, it contributes no more than 30 per cent in the overall software exports. Siraj said that he intends to make Karachi play a more significant role. Unlike Lahore and Islamabad, each of which have two operational software parts, Karachi has no such facility despite recurring assurances from the concerned official quarters during last many years.
He informed PAGE that a site for the IT Technology Park has already been selected in the financial district of I.I. Chundrigarh Road. The premises is spread over 70,000 square feet and will be equipped with the state of the art technology and served with super bandwidth of up to 155 mb. The facility will have a conference room and a library.
In order to help provide more international exposure to the local IT industry, PSEB, Siraj said, has also already booked spaces in 10 international exhibitions to be held during the current calendar year. Unlike the past, the selection process for participating in these international exhibitions will now be extremely transparent to ensure that only the genuine and deserving entrepreneurs are allowed to attend the exhibitions. "The PSEB has made a model stall at one of the software technology park in Islamabad so that the companies can come and present themselves in order to be selected on the basis of merit alone."
Local IT market
Siraj said that in order to develop the local IT industry, software developers and small and medium enterprises in particular, the PSEB has joined hands with the SME Bank. This collaboration would not only cater to the refinancing needs of the software houses but will also encourage industrial automation by providing up to Rs 500,000 to small and medium enterprises. This would help the industrial automation of the individual small and medium size enterprises on the one hand and to help local software developers to expand the base of local market which remains a low $ 11 million a year. The cost of this project, he claimed, will be borne by the PSEB.
Siraj said that contrary to the popular perception the post-September scenario has little impact on the software exports from the country. "A Karachi-based company signed a $ 1.5 million contract for the export of software with a Dutch company on November 17. In addition, on January 18 PSEB facilitated a $ 20 million software export agreement between a Karachi-based company Winson Technologies and UK-based Aberdeen Communications."
He said that he was present at the signing of the second of the above mentioned agreement at the PSEB Karachi office. The agreement comprises software/hardware/firmware all of which will be developed here in Karachi and will help create an additional 400 jobs besides the ones already existing at the Winson Technologies.
Siraj said that one of the other project approved by the federal government is aimed at creating jobs for the young people. The project, which will soon be implemented, would facilitate the students passing out of local institutions by giving them the liberty to the IT industry, software developers included, to hire them as interns. The student would be paid a stipend the cost of which would be borne by the PSEB. The internship which will last from 3-6 months, he said, is aimed at ensuring that the students would benefit from the hands-on experience. On the other hand, it would help provide the local IT industry to retain a greater number of human resources within the country if a certain entrepreneur feels that the internship a particular student would be of value to it.
Accreditation and testing
Siraj informed PAGE that National Accreditation Council (NAC) and National Testing Service (NTS) would soon been launched to monitor the working of the IT institutions and the certifying the IT experts teaching at these institutions. The initiative has been taken as the government is very much concerned about the lack of quality of education as well as the mushroom growth of the institutions across the country the majority of which do not meet the minimum standards to qualify as an IT institute.
Siraj said that he personally puts a special emphasis on the creation of a career counseling department at every IT institution so that a student is provided guidance in choosing the discipline best suited to his aptitude to achieve goals and objectives rather than just following the hype.
He said that he has taken specific initiative to ensure that IT experts and the local IT industry should help account for the entire sales promotion either in foreign currency or rupee. "The majority of software exporters in Karachi are not even registered with the State Bank of Pakistan, the Export Promotion Bureau or any other relevant government authority and that makes it all the more necessary for the government to formulate a new policy to collect a genuine data for the overall benefit of the IT industry itself. The absence of such a data makes it impossible for the government to formulate policies needed for the growth of the industry."
Siraj said that he has also argued in favour of making the registration form of the State Bank much more simpler so as to encourage the players in the IT industry, particularly software developers and exporters, to declare their real earnings both local and foreign. "At present over $ 30 million worth of software exports alone from Karachi remain unaccounted for due to this very lacunae. If that is the case with Karachi which contributes only about 30 per cent share in the overall software exports, one can imagine the volume of underreporting from the major software export centers of Lahore and Islamabad."
So that means that the actual value of software exports from the country is much more than those officially registered. It also means that a great percentage of the software exports remain undeclared allowing the exporters to play fast and loose with the rules. In turn it is also costing the government immensely in intangibles despite providing the local IT industry, and the software exporters, with a wide range of fiscal and financial incentives.
KESC vs WAPDA
Siraj also expressed concerns at the refusal by the Karachi Electric Supply Corporation (KESC) to treat IT as an industry. Unlike Water and Power Development Authority (WAPDA) which is responsible for power generation, distribution and marketing in the rest of the country excluding Karachi, the KESC is charging/billing all the IT related businesses commercial tariff which is much more expensive than the industrial tariff. Siraj said that he is pursuing the matter with the KESC officials to convince them that the IT industry should be recognised an industry and should be treated as such like the rest of the country by WAPDA. "The power tariff for the IT industry irrespective of where it is located in the country should be identical and thus be subjected to industrial tariff rather than the commercial which is being charged in Karachi."
Siraj said that PSEB realizes that one of the problem to boosts exports of IT related products; be it the software, medical or legal transcription or other, relates to slow progress in achieving the internationally recognized certifications. "It is imperative for the Pakistani IT industry to get such certifications as ISO 9000 for hardware designing, TickIT for software and CMM, the top software certification anywhere in the world.
"We are ready to provide the greater part of the funding to the companies which want to get certified in any of the above mentioned classifications. The response has been overwhelming as PSEB has received over 100 applications thus far. PSEB will be holding quarterly workshops in Karachi to educate the IT industry about the need to get the certification and the prerequisites thereof."
Despite the late start and the lack of attention which it failed to elicit from the previous governments, developments in the Pakistani IT industry are coming fast and thick. Not withholding the fact that the policies are addressing the various aspects of the industry which only make sense when viewed in one piece, what however is clear that the industry as a whole has started taking a specific direction. For the first time ever the federal government under the able guidance of Minister of Science and Technology Dr. Atta-ur-Rahman has helped cut many bureaucratic tapes to slash bandwidth rate to bring internet prices to affordable level and IT education and teaching staff are in the process of being monitored, accredited and tested. There are real attempts to create a conducive atmosphere for the growth of the IT industry and absorption of skilled and semi-skilled human resources.
Despite inherent shortcomings Pakistan has abundance of human potential to make its mark on the global IT map provided the policies are made even more industry and people friendly. We need more of the same policies initiated by the present government.