Amplifying Pakistan's digital footprint to unlock export potential
Pakistan’s young, tech-savvy population, coupled with its growing digital infrastructure, presents an attractive opportunity for investors and innovators worldwide. However, to fully capitalize on this potential, Pakistan must address critical challenges and adopt a comprehensive strategy to attract investment and foster a vibrant digital ecosystem. A comprehensive plan for navigating the digital landscape should be presented to the Special Investment Facilitation Council (SIFC) which has the crucial mandate of attracting investments from the Gulf Cooperation Council (GCC) and beyond. The digital economy stands out as one of the key sectors targeted for investment by SIFC.
Currently the local private sector seems to be facing issues which require early redressal. The first and foremost challenge is that of limited access to affordable and reliable internet. Despite significant progress, Pakistan's internet penetration rate remains relatively low, particularly in the rural areas. This is attributed to the high cost of infrastructure development, limited government support for rural areas, and a lack of awareness among potential users. Second, inadequate regulatory framework for the ICT sector in Pakistan results in uncertainty for investors and hinders innovation. Third, the cost of doing business in the digital sector is high, particularly for small and medium-sized enterprises (SMEs). High taxes, complex regulations, and limited access to financing could be a few reasons for this. Finally, weak overall economic growth in the country has implied that brain drain and emigration of professionals from this sector to other countries has resulted in a skill shortage. This is despite the available opportunities for up-skilling and re-skilling.
To reverse the current situation faced by the private sector in the digital space, the role of the public sector as an enabler remains crucial. The streamlining of regulations, incentivizing innovation, and providing access to affordable financing are a few such areas where continuous government attention is required. Additionally, both the federal and provincial governments will need to continue public investments in digital infrastructure, such as high-speed broadband connectivity and data centers, to enhance the country's overall digital capabilities.
A plan to navigate Pakistan’s digital landscape should be presented to the Special Investment Facilitation Council which has the crucial mandate of attracting investments from the Gulf Cooperation Council (GCC) and beyond.
Dr. Vaqar Ahmed
Under the China-Pakistan Economic Corridor (CPEC), significant digital investments have been completed, underway or planned and could be expedited, including the construction of fibre optic, facilitating high-speed internet connectivity for major cities along the corridor. The initiative also encompasses the establishment of data centers to meet the rising demand for cloud computing and data storage services in Pakistan.
A key point to understand here is that investments in the digital economy should be incentivized with a view to unlocking digital export potential. Pakistan's IT and ICT sector has already demonstrated its capabilities, with firms developing solutions for international markets. To further enhance export potential, the government and SIFC can provide support in areas such as market research, trade facilitation, and skills development. Public sector institutions such as Pakistan Software Export Board and Boards of Investment at federal and provincial level will need to display more agility when it comes to global outreach, skill development, talent retention, market diversification, innovation and research promotion, public-private collaboration, and proactive policy advocacy.
Strategic partnerships for scaling funding could be helpful. Bilateral and multilateral development partners can play a crucial role in scaling funding for critical areas within Pakistan's digital sector. These organizations can leverage their convening power to bring together diverse stakeholders, including governments, private sector entities, and civil society organizations, to foster coordinated actions that yield impactful results at scale. Local think tanks like Sustainable Development Policy Institute (SDPI) who have conducted a study on digital trade integration in Pakistan can convene regular public-private dialogue to arrive at a better understanding of desired legal, policy, and regulatory support. Think tanks and other knowledge intermediaries could also advocate for STEM education, encouraging startups, and providing access to incubation and accelerator programs. Additionally, government think-tank partnerships can create sandboxes and regulatory frameworks that encourage experimentation and the development of new digital solutions.
Not all can be left to the government and donors. Pakistan’s business associations and Chambers of Commerce will need to play their role in providing capacity building and networking opportunities to digital sector firms. Focused workshops, seminars, and training programs to enhance the knowledge on new markets and products are required. Chambers of Commerce across cities need to collaborate among themselves to increase networking events and forums locally and abroad that bring together businesses, government officials, and potential investors.
— Dr. Vaqar Ahmed is an economist, former civil servant, and Board Member at Khyber Pakhtunkhwa Board of Investment & Trade.