GLOBAL COMPETITIVENESS OF PAK IT & TELECOM

MUHAMMAD ASHFAQ
(feedback@pgeconomist.com)
Aug 9 - 15, 20
10

Pakistan Telecommunication Authority (PTA) liberalised the telecom sector in the country in an efficient, transparent and fastest deregulation of telecom in the region. The government of Pakistan gave the status of an industry to telecommunication with deregulation.

In past, basic telecom services were provided by monopolistic, previously called telegraph department. In 1962, telegraph and telephone services were separated from the postal department. During mid 1980s, heavy capital investment was made to develop the telecom sector in the country. Telephone and telegraph department was converted into Pakistan telecommunications corporation on 15 December 1990. Cellular mobile services in Pakistan started during 1990s when two cellular mobile telephone licenses were awarded to Paktel and Instaphone.

Pakistan's telecom sector performance in terms of infrastructure and subscriber growth patterns is outstanding. Teledensity (fixed line) has reached up to 58 per cent of population as quoted by Prime Minister during a meeting with an IT delegation. Similarly mobile subscribers have crossed over 90 million and today internet users have crossed 18 million whereas more than two thousand cities are connected to internet.

Impact of telecom liberalisation, as was thought, has been remarkable. Access to telecom facilities for common man has been increased noticeably, in addition to improvement in quality of telecom services. Prices of services have decreased tremendously. PTA has always been ensuring that all the telecom operators including newly licensed should be provided with level playing field.

New telecom companies promising huge investment in the telecom sector in coming years. Mobile operators planned to invest more than $2.4 billion just in infrastructure and Mobilink alone is investing around $831 million in next three years. Similarly Telenor and Warid had invested around $495 million and $ 325 million respectively during 2005-07 in addition to the license fees. Telenor in next 5 years is going to invest approximately one billion dollar in Pakistan.

Pakistan has been successful in attracting on average two billion dollar in telecom industry since last four years.

Economic Survey of Pakistan 2010 pointed out a massive decline of 47 per cent foreign direct investment in telecom sector during period of 2008-09. The main reasons of this decline are: overall slowdown of economy, prevailing global financial crisis and market saturation. Cumulatively, all investors made $1.6 billion investment during period of 2008-09.

With the contribution of 1-2 per cent in total GDP and 6-7 per cent total tax revenue per annum, it is continuing good performance in such circumstances when the economy as a whole is facing tremendous challenges. Telecom sector showed positive growth of 19.8 per cent revenue in 2008-09 as compared to 18.2 per cent in same period previously.

Total no of IT companies registered with Pakistan Software Export Board 1739
No of Substantial IT Companies 1215
Total number of foreign IT and telecommunication companies 60
Total industry size US$2.8 billion
IT and IT-enabled services exports US$1.4 billion
Number of IT graduates produced per year 20,000
Number of universities offering IT/CS programs 110
Number of IT professionals engaged in export-oriented activities
(software development/call centers etc.)
More than 15,000
Total number of IT professionals employed in Pakistan 110,000
Total space utilised in IT & Software Technology Parks Eleven IT Parks covering an area of 750,000 sq ft

According to SBP, during 2008-09 export of software and IT-enabled services was $201 million. In financial year 2005, total IT exports was one billion dollar. Pakistan's IT and telecom related exports are showing slow positive increasing trend but it is not up to expectations as compared to IT and telecom infrastructure. India has more than $50 billion annual exports. Some experts argue that, we cannot compare both countries in terms of IT and telecom sector because India has huge infrastructure and other incentives for the sector.

During 1990s, unfortunately, we could not make a move for IT and telecom advancement. On the other side, India took some solid steps and now it is enjoying excellent growth and good market share. Pakistan offers certain competitive advantages over other outsourcing destinations like: cheap availability of skilled labour, easy establishment of business, good IT and telecom infrastructure, 100 per cent repatriation of profits, foreign ownership and good quality of software development. If we have good base in IT and telecom sector, then question arises is our education system not producing quality professionals? Government should think what could be the core problems regarding global competitiveness of IT and telecom sector in Pakistan. The concern of government about IT and telecom is evident from this fact that an advocate is the minister for IT and telecom.

At present age, distance has no significance and corporations in developed economies are looking for outsourcing their operations because in those countries cost is higher and they are exploiting economies of scale. We can take direction from the success stories of India, China and Thailand in IT and telecom industry. Government should not create obstacles by introducing taxes and rather should take concrete steps to enhance flow of international investment in IT and telecom sector particularly. Government should make comprehensive policy to bring back Pakistani IT professionals working in other countries by giving them special incentives as other countries are doing the same. No one can deny this fact that Pakistani professionals are highly skilled, competent and productive. If government wants to make IT and telecom industry competitive worldwide then it is an imperative to induct highly experienced professionals and experts in this industry and inconsistent and ad hoc decisions should be avoided. Last government announced to spend a one billion dollar to establish six state of art science and technology universities with international assistance but present government impedes all projects due to financial constraints. Government should cut off non development expenditures and give education priority, only not to sustain the growth of IT and telecom industry but also to take advantage from this promising sector to support overall economy in the country.

The writer is a student of University of Applied Sciences Coburg Germany.