STATE'S ROLE IN DEVELOPMENT OF IT INDUSTRY

SALIM GHAURI
(feedback@pgeconomist.com)

May 17 - 23, 2010

Pakistan's economy is struggling fast to obtain a momentum in order to generate more and more job opportunities and a stable society. Efforts are afoot on the part of government to achieve this goal. Especially, the federal government has invested heavily on the rural economy, which comprises of about 70 percent of the total population and provides the essential food commodities to the society at large.

On urban front, the government is investing in efforts to get the maximum potential of the textile industry. In this regard, a separate Ministry of Textile Industry is already in place and the present boom in cotton prices internationally has established its importance in helping strike a judicious balance among all sectors of the textile industry.

However, it is right time for the government to have a change in its mindset in order to diversify the economic base of the country in the light of fast changing global needs and demands.

The technology advancement in and around the world has changed the economic scene worldwide. Especially, these changes are being noticed strongly in the emerging economies.

The technological development has started bearing fruits for many in emerging countries. Like, some 98 of the world's 500 largest firms have R&D facilities in China besides 63 in India. The leading technology multinational IBM has now more people in developing countries comparing with the United States. This relocation of multinationals in developing countries has brought a new pace to the economies of these countries.

The human resource has become a great asset of developing economies. These multinationals are helping not only employing people but also keeping them abreast with different business models. Besides, this trend has also made possible access to new technologies to the inhabitants of these countries.

The policymakers in Pakistan also need to develop a strong realisation regarding the important role played by the Information Technology in many developing economies. The prime advantage of the situation is promotion of huge economic activity in respective countries. Pakistan can also place itself in the list of self-sufficient countries in next five years, provided the economic managers of the country are ready to change their peculiar mindset. They would have to take the IT sector as an engine of growth, an agent of change and a flagship of economy ahead.

No doubt, the agriculture sector is playing pivotal role in keeping the economic wheel of Pakistan running. But still this sector is plagued with countless deficiencies. Two sectors can change the economic destiny of Pakistan, which are agriculture and IT sector i.e. introduction of technology and services as future growth of engine.

On agriculture front, the modern practices are moving to corporate farming from traditional one. Pakistan can use resources, water and land in a much better way to enhance production manifold.

On IT front, with a large young population, Pakistan has natural opportunity to be a technology services country.

Today Pakistan's IT industry is based on individual entrepreneurs having established businesses through their own means and resources. No tangible government support is extended to these IT entrepreneurs, either on federal or provincial level. However, one incentive of zero taxation on IT exports for 10 years by the government has played due role in shaping up the IT scene of Pakistan.

It has encouraged industry to reinvest for further growth. But this is not enough to promote IT industry, as only tax holiday cannot make Pakistani IT industry visible at the global level.

As a matter of fact, very little credit can be given to the public sector for the growth of IT industry in Pakistan, as the automation process of public sector organisations remains very low. The management in the public sector organisations, unfortunately, still believes in in-house IT management than encouraging private sector to automate them, which once successfully done will create massive opportunities for the private sector to go global and bring foreign exchange besides countless jobs, like India. At present, strength of 100,000 employees in a large Indian IT company is very common, against Pakistan where even the total number of IT graduates is not equal to 100,000.

There is a general tendency of mistrust of IT entrepreneurs in the public sector of Pakistan. An absence of public sector support to the promotion of IT industry in Pakistan is making it difficult for the local IT companies to get business from outside world as well. There is an urgent need of encouraging local IT industry in order to make a difference in the country's economic output in next five years.

The state needs to step forward with a well developed plan. This should be aimed at improving the technological base of the economy, making research and development (R&D) an important component of the activities of all enterprises, moving the export sector towards the marketing of more knowledge-intensive products, helping the farming community better their processes, move towards the production of crops for which the country has comparative advantage, and provide incentives to all firms to upgrade the levels of skills of their workers.

(The writer is Chairman & CEO NetSol Technologies Ltd.)