According to a study released by Gallup Pakistan For World Bank Group “Digital Pakistan: A Business and Trade Assessment”, a combination of economic, political and other external factors make Pakistan less attractive to foreign IT investors.
World Bank with the collaboration of Gallup Pakistan prepared an assessment report that reveals that Pakistan has become less attractive for foreign IT investors due to poor economic conditions, political instability and policy obstacles. Besides the main policy barriers, limited market entry, cost escalation, and low ability to compete in the competitive environment limit the country’s IT sector potential.
The World Bank report is titled “Economical Policy for Export Competitiveness Digital Pakistan: A Business and Trade Assessment” and highlights the main issues Pakistan’s IT sector is facing at the moment.
According to report Pakistan ranks 37 out of 50 in AT Kearney’s Global Services Location Index 2019, while the arch-rival India captures the top spot, Sri Lanka is at 25 and Bangladesh is at 32.
According to the Digital Trade Restrictiveness Index (DTRI), Pakistan follows controlled digital trade policies. Pakistan is in the top 5 list of countries with most restrictions for tariffs, taxations, trade defense, and subsidization policy.
World Bank Report Underlines key IT sector problems plaguing Pakistan
Fluctuation in macroeconomics and security risks are the key elements of low foreign IT investment.
Although, Pakistan is growing reasonably well in the IT industry as the recent surge in IT and ITeS export remittances shows but in comparison to other countries Pakistan’s rank is still low.
Pakistan also controls its foreign commercial services content in its domestic market and the government also filters legal content. The worry moment for Pakistan’s IT services exports is the rush of stringent data rules applied by several countries around the world.
The data localization actions will eventually result in discouragement in the growth of high value-added and content-intensive activities. Through these actions, Pakistan will suffer through a reduction in service trade among countries.
Work permit and getting a visa for entering are also an obstacle for Pakistani firms.
Pakistan IT services firms also face problems in the domestic market as well, as one of the main obstacles is the lack of electricity and another one is IT infrastructure. Apart from these two issues Pakistan IT firms also face mismanagement while securing intellectual property rights.
The government of Pakistan needs to step up and make reforms in light of the World Bank report so the IT industry can flourish. In order to do so the government should focus on;
- Regulatory capabilities and governance
- Sector-specific policies
- Complementary supporting policies