The information technology sector received more attention when it was identified as one of the five key sectors that underpin Pakistan's economic recovery by the recently established Special Investment Facilitation Council. Investment prospects exist for the establishment of special technology zones (STZs) under the SIFC's auspices at seven desirable locations: Lahore, Peshawar, Swat, Abbottabad, Haripur, Islamabad, and Karachi. Additionally, the Ministry of Information Technology & Telecommunication is working on a project to create 25 software technology parks (STPs) across Pakistan by repurposing publicly or privately owned dilapidated or unusable office buildings, factories, or warehouses and offering IT-enabled workspaces at reasonable prices to IT and ITeS companies.
The Special Technology Zones Authority Act, 2021 established a Special Technology Zones Authority that offers ten-year incentives to zone developers and STZ companies. Tax breaks under the Income Tax Ordinance of 2001 and the Sales Tax Act of 1990 are among these incentives. Imports of capital goods are tax-free. There are no requirements for property taxes. The most significant benefit is the freedom to repatriate profits and investments.
Since more and more companies and start-ups would be enticed to relocate their offices within these zones in order to take advantage of tax savings, it is undeniable that the development of STZs/STPs is crucial to catalyze the creation of digital and IT-related commerce.
But at most, these are merely infrastructural advancements that provide a favorable atmosphere for the establishment of enterprises. The next stage would be to maintain their existence when IT companies relocate their headquarters to the proposed STZs or startup companies take up rental spaces in STZ structures. So how do they create companies to make sure they survive? How can we accomplish the objective of greater IT services exports in the absence of business opportunities?
How can we accomplish the objective of greater IT services exports in the absence of business opportunities?
So obviously, something is lacking. Large buildings do not ensure economic activity during those quarters; instead, chances for our tech entrepreneurs must be created through a longer-term plan. Thus, we would require the following:
Digital trade policy: Although there is no precise meaning for the phrase "digital trade," it is generally understood to indicate "commerce enabled by electronic means in both goods and services." The G7's Digital Trade Principles address the following five areas: Safeguards for workers, consumers, and enterprises; (2) open digital markets; (3) digital trading systems; (4) equitable and inclusive global governance; and (5) data free flow with trust.
Although the exact size of this industry is unknown, the Organization for Economic Cooperation and Development calculates that it accounts for about 25% of global trade. But, because of how swiftly this industry is growing, domestic regulations will become more stringent, making it harder for people and companies to take advantage of some new and emerging opportunities.
How should these issues be resolved? How might such issues not impair a start-up's performance? How will our domestic companies handle cross-border regulatory requirements, as breaking them may make it more difficult for them to conduct business with their clients? For sustainable growth in this sector, our nation needs a strong and dynamic digital trade strategy that addresses all of these major challenges as well as other relevant ones.
Digital economy/trade agreements: While digital trade agreements would grant our IT entrepreneurs preferential access to bilateral markets, digital trade policies would give them a comprehensive and competitive edge that would enable them to compete on a global scale.How ought these problems to be settled? How could such problems not affect the performance of a start-up? Regarding cross-border regulatory standards, how will our domestic companies handle them, since breaching them can make it harder for them to do business with their clients? Our country needs a robust and dynamic digital trade policy that tackles all of these significant issues as well as other pertinent ones in order to see sustainable growth in this industry.
Digital economy/trade agreements: Digital trade policies would provide our IT entrepreneurs with a complete and competitive edge that would allow them to compete on a global scale, while digital trade agreements would offer them privileged access to bilateral markets.Ultimately, the role of the government should not be to provide work; rather, it should foster an atmosphere in which companies can prosper and generate employment. STPs and STZs are undoubtedly helpful, but they are only one piece of the puzzle; numerous other issues must also be resolved if Pakistani businesses are to remain competitive in the long run and maintain the momentum of IT-related trade with other countries.
Thus, in addition to the STZ project, the focus should also be on gaining greater market access and international business prospects. The road to recovery is long and the times are difficult, but one must keep in mind that "a smooth sea never made a skilled sailor."
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