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Hilal English

Driving Digital Transformation: Pakistan

January 2024

The Special Investment Facilitation Council (SIFC) aspires to boost Foreign Direct Investment (FDI) inflows, advance modern agriculture, diversify the information technology sector, revitalize mining projects, and empower the energy sector through renewable energy resources. Additionally, it aims to encourage active youth participation in these initiatives.



The Information Technology (IT) industry in Pakistan has emerged as a significant player in the country's economic landscape, garnering attention from both domestic and international investors. With a population of 249.5 million and rapidly increasing young populace, Pakistan stands at the crossroads of becoming a global tech destination. Pakistan is the fifth largest country in the world with approximately 74 million or 31.04 percent of the total population comprising of youth. The key to realizing this potential lies in offering a streamlined and supportive mechanism to encourage and incentivize businesses. Spearheading efforts for an investor-friendly environment, Pakistan's IT sector is poised for an exponential growth, with the SIFC playing a pivotal role in addressing procedural issues, policy reforms, and investor concerns. IT is among the core identified areas with the potential for exponential growth.
Over the past few years, Pakistan's IT sector has witnessed an impressive surge, boasting a 30 percent Compound Annual Growth Rate (CAGR) and a remarkable 178 percent upward growth surpassing other local industries. IT exports soared from USD 1.29 billion to USD 2.45 billion, fostering a boom in freelancing and prompting the government to target USD 10 billion in IT exports within the next three years. A key player in this growth is the SIFC, aiming for nation branding and digital transformation. Startup ecosystem has also experienced a remarkable growth encouraging our youth for startup business. Supported by a network of National Incubation Centers (NICs), Business Incubation Centers (BICs), and other incubators and accelerators, the ecosystem provides critical infrastructure, support, resources, mentorship, and networking to startups. This nurturing environment has attracted local and international investors, thereby increasing funding opportunities for startups. NICs have emerged as key hubs for innovation and entrepreneurship in Pakistan. They offer a conducive environment for startups to develop their ideas, access mentorship, and connect with industry experts. Currently, NICs support over 1300 startups and initiatives, underlining the government's commitment to building a strong startup ecosystem and bright future for the youth of the country.


Spearheading efforts for an investor-friendly environment, Pakistan's IT sector is poised for an exponential growth, with the SIFC playing a pivotal role in addressing procedural issues, policy reforms, and investor concerns. IT is among the core identified areas with the potential for exponential growth.


The National IT Seminar marked the launching of several IT-related projects, including ‘Tech Destination Pakistan’, ‘Tech Lift Boot Camp’, ‘First Knowledge Park for Women’, ‘Agri-Tech Incubator’, and ‘Center of Excellence in Gaming and Animation’. These initiatives aim to harness the potential of our youth and drive digitalization in Pakistan. The seminar was attended by diplomats and investors hailing from the Gulf nations, China, and the European Union, the Chief Ministers of Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan. The participants appreciated the role and efforts of the civil and military experts in the development of this important sector, which will open a gateway to economic prosperity. SIFC aims to align the activities of various stakeholders and establish a favorable environment for the advancement of IT and digitalization in Pakistan. 
The government's sincere support for the empowerment of youth in IT sector is evident through its collaboration with local and foreign IT companies and academic institutions. Over the years, the government has introduced several initiatives in this sector for youth to participate, but due to lack of structural reforms, these initiatives could not bear any fruits. The recent policy shift, allowing IT companies to retain and freely use 50 percent of their revenue in dollars, up from 35 percent, further demonstrates its commitment to adopting a favorable environment for IT growth. The Government of Pakistan has also decided to host the Digital Direct Foreign Investment Summit every year and will be working with Digital Corporation Organization (DCO) for a ‘digital passport’ for Pakistani companies, which will enable them to quickly start a business in DCO member countries, starting with Saudi Arabia.
Pakistan has signed a Memorandum of Understanding (MoU) with Saudi Arabia, facilitating collaboration in various IT and technology sectors. The two countries aim to strengthen their digital economies, promote Small and Medium-Sized Enterprises (SMEs) and startups, enhance their digital infrastructure and connectivity, promote joint ventures with Saudi companies, and establish a startup exchange program with the top Saudi tech incubators. Additionally, both countries will work on establishing close cooperation to set up a chip manufacturing industry in Pakistan and work on electric vehicles, lithium-ion batteries, agriculture technology, and mining technologies. Saudi Arabia plans to establish a special desk to expedite the registration of Pakistani IT firms wanting to establish themselves there. Both countries are looking to establish a separate Special Task Force to promote this digital IT collaboration.


The National IT Seminar marked the launching of several IT-related projects, including ‘Tech Destination Pakistan’, ‘Tech Lift Boot Camp’, ‘First Knowledge Park for Women’, ‘Agri-Tech Incubator’, and ‘Center of Excellence in Gaming and Animation’. These initiatives aim to harness the potential of our youth and drive digitalization in Pakistan.


The two countries will support cooperation in e-governance, smart infrastructure, e-health, e-education, and emerging technologies such as Artificial Intelligence (AI), Internet of Things (IoT), robotics, cloud computing, e-gaming, and block chain. Additionally, the aim of this MoU is to devote more youth to research and innovation, which can be achieved through the development of joint projects, training, utilization of IT incubation centers, and IT hubs. The two countries have vowed to develop their digital infrastructure by enhancing the connectivity of their fiber optic networks, data centers, and cloud computing. The MoU will encourage participation in each other's international events and the exchange of information between their private and public enterprises in IT development and electronics. Saudi Arabia's SMEs General Authority, 'Monsha'at', will work with Pakistan to support its IT companies and startups in scaling their businesses. The USD 100 million Saudi-Pakistan Tech House project was announced earlier this year with the aim of strengthening strategic partnerships between IT firms in both countries.


The Government of Pakistan has also decided to host the Digital Direct Foreign Investment Summit every year and will be working with Digital Corporation Organization (DCO) for a ‘digital passport’ for Pakistani companies, which will enable them to quickly start a business in DCO member countries, starting with Saudi Arabia.


In a groundbreaking announcement, Pakistan's government has set the wheels in motion for the country's 5G network, promising to launch it in just ten months. The preparations for 5G have already begun, with Pakistan's interim government taking proactive steps to pave the way for this momentous shift in technology. Allocating suitable spectrum bands for 5G services is a crucial initial phase, and the government is leaving no stone unturned in this endeavor. A spectrum auction, expected to take place by August next year, is projected to generate millions of dollars. The impending launch of 5G signifies Pakistan's progression towards joining the global community of countries with 5G capabilities, enhancing connectivity and innovation on a national scale. In preparation for the 5G rollout, SIFC has revealed an extensive business plan. This strategy takes into account the need to reduce infrastructure development costs for telecom operators, fostering a favorable environment for innovation and growth. Recognizing the importance of international expertise, the SIFC plans to hire an international consultant. This consultant will play a pivotal role in advising the government and helping to shape the future of 5G in Pakistan. 
Additionally, initiatives such as the National Space Policy, the establishment of the National Cyber Crime Investigation Agency, and the Telecom Tribunal underscore the government's commitment to technological advancements and cybersecurity. Collaborations with Japan and active participation in international conferences further signal a global perspective. Notably, female-led startups, supported by the World Bank’s We-Fi program, have raised over USD 5.6 million, showcasing the significant role of women entrepreneurs. The Pak-Qatar IT Conference solidified partnerships between Pakistani and Qatari companies, while the presence of 36 registered Pakistani companies with the Qatar Financial Centre highlights the international reach of Pakistan's IT prowess. Overall, these developments underscore Pakistan's emergence as a tech-savvy nation with a thriving IT ecosystem while encouraging the youth to show active participations in these initiatives.
Pakistan is a land of untapped opportunities, with massive innovation potential. It is through initiatives like SIFC that necessary policy reforms can be introduced, critical for the growth of the IT sector. The country's young, tech-savvy population is ready to take on the challenges and opportunities of the digital age. One of the primary challenges that must be addressed is the current business environment, marked by taxation and other issues that make foreign investors hesitant. The key to success, as many experts suggest, is to first nurture local entrepreneurs and provide them with the incentives needed to strengthen the IT sector. Once the local ecosystem is thriving, international investors are more likely to follow suit. To achieve the targets set by SIFC, a comprehensive set of short, medium, and long-term policies must be put into action. 


In preparation for the 5G rollout, SIFC has revealed an extensive business plan. This strategy takes into account the need to reduce infrastructure development costs for telecom operators, fostering a favorable environment for innovation and growth.


The vision is clear that Pakistan's IT sector can contribute USD 50 billion to the economy within three to five years. But to make this vision a reality, the right policies and approaches are essential. It's worth noting that similar policies and programs have been launched in the past, but the results fell short due to a lack of an encouraging environment for international investors. Pakistan holds significant untapped potential for innovation and growth within its IT sector. Initiatives like SIFC are crucial in introducing necessary policy reforms to encourage youth. The IT sector in Pakistan is on the verge of becoming the country's third-largest export sector, after textiles and rice. With the government's investor-friendly approach and continued support for startups and international collaborations, Pakistan's IT industry is well-positioned for a prosperous future. The IT industry in Pakistan is at the forefront of economic development, with the government, stakeholders, and international partners working collaboratively to create a thriving digital ecosystem. As Pakistan's IT sector continues to grow and encourages the youth to work more diligently, it promises not only economic prosperity but also positions the country as a global player in the world of technology and innovation.


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