IT & TELECOMS NEED TO DEVELOP SYNERGIES
Apr 12 - 18, 2010
The information explosion Pakistan has experienced during the current decade has brought dramatic changes in the social and economic sectors. Faster and cheaper communication has revolutionized the lives of people on one hand, and has substantially reduced the cost of doing business on the other. Increased use of computer and internet technology has not only given wings to the corporate sector but has also made a positive impact on the other sectors of economy.
Being an emerging economy, Pakistan has had been the focus of global investors since 2001. Telecom and IT sector exploits have given a boost to the investor confidence. Opportunities in Pakistan's telecom market had drawn welcome attention of global telecom players who made generous investments in this sector.
The Foreign Direct Investment (FDI) brought in by this sector vitalized Pakistan's economy. This industry alone created 212,000 jobs during 2006-07. The teledensity in Pakistan went up from 4.31 per cent in 2002-03 to 62.00 per cent in 2008-09. At the start of FY-10, it was anybody's guess that the teledensity was inching towards the 100 per cent mark, and that the 75 per cent mark was just around the corner. But to the discerning eye, the global financial meltdown and the domestic political upheaval of 2008 that resulted in one of the worst economic slides were a big question mark on telecom sector's future growth. The inevitable did happen and the sector took to the stagnancy mode.
The telednsity after peaking in 2008-09 now looks set to inching backwards. Nevertheless, this sector has grown phenomenally, far outstripping the neighbor India where the teledensity is yet to reach 40 per cent mark.
TELECOMS GROWTH MEASURED BY THE SIZE OF FDI AND TELEDENSITY
Amount in million US$
YEAR TOTAL FDI TELECOM SECTOR FDI TELECOM SECTOR FDI % TELEDENSITY
2002-03 798 13 1.63 4.31 2003-04 980 207 21.12 6.25 2004-05 1524 494 32.41 11.89 2005-06 3521 1905 54.10 26.26 2006-07 5140 1824 35.48 44.06 2007-08 5410 1440 26.61 58.90 2008-09 3719 815 21.91 62.00 2009-10 1319 205 15.54 61.9 (Jul-Feb) Jan-2010
The staggering telecom sector growth owes almost everything to the cellular revolution that took the entire nation by storm within a short period of 4-5 years to bring about multidimensional social and economic changes of great importance. The current teledensity of 61.9 per cent has a contribution of 58.2 per cent from cellular services alone. Unbelievably, this sector has grown purely on merit that is under the influence of market forces and genuine competition. Companies that showed complacency lost their market share to a more enterprising outfit. The sector now appears to be in the throes of stabilization. The dried FDI pipeline, the onslaught of new taxes, the devalued rupee and the maturity phase of different products and services all have combined together to test the tenacity of this sector.
Pakistan's economy has great potential. Its agriculture, energy and financial sectors are there for the taking. Highly rewarding synergies can be developed with the economies of these sectors. Telecom sector has already turned its focus to the financial sector by creating mutually beneficial partnerships with the banks to develop products that not only ensure saving on consumer time but also promise economic rewards to the partners.
The IT industry in Pakistan has tremendous growth potential. It can generate high remuneration jobs for IT professionals. The growth rate of world IT industry is 8 per cent with a forecast to have a market size of $900 billion by 2010. To survive in the fast pace growth scenario, we will have to be extra competitive by developing human capital in line with the international standards and by swiftly switching over to the changing technologies. Pakistan's present status of one of the major industry players shall ever remain under threat from the changing market conditions and industry's insatiable appetite for new investment. In comparison to India, Pakistan's information technology market is quite small yet it is growing at a reasonably fast rate. This sector produced export cash inflows of $184 million in 2008-09 as against an export cash inflow of $154 million in the previous year. We are also working on an ambitious plan to dramatically increase the software export by 2010-11. The recent economic changes on the global front and the ensuing recessionary pressures have upset a number of future growth forecasts. Besides resorting to realistic policy formulation, government will have to revise its future targets especially those set in the heat of boom of yesteryears.
To effectively meet the threats of globalization and multi-faceted competition, it needs a broad based expansion of IT industry, new investment of both domestic and foreign origins, and a sustained generation of skilled and educated manpower. Pakistan's human resource is both its weakness and strength. The country has abundant young and intelligent manpower that unfortunately lacks formal education. To expand the industry, government not only needs sufficient skilled and educated manpower but also a well-educated user base. Those who talk of creating awareness with reference to IT, should realize that the neglected education sector shall have to be tackled first. And given the culture we are living in, it's a big ask. The two main obstacles on the road to education are low resource allocation and gender bias. The only way out is to raise real literacy rate on a war footing. The spending on social sector, particularly education shall have to be increased substantially to produce a nation of educated people who, besides broadening the IT user base, could become the future managers of this all important industry. Apart from enhancing managerial and user base, the IT industry, like telecom industry, needs to be more innovative and dynamic. This can be achieved through the development of synergies with other sectors, for example education, finance, energy and agriculture.