Pakistan is emerging as the third most attractive country in Asia Pacific for investment funds looking for options in internet business companies in frontier markets. China and India are perceived to be in a different league altogether.

The pace of growth of internet business firms can reach double digits in the next calendar year as telecom companies receive ordered equipment to successfully streamline their systems to leverage 3/4G licences, and as smart phones become more affordable.

It takes about a year for the full impact of advanced telecom technologies to play out in the society, but it might take a little longer in Pakistan, said a government source.

“The claimant of ‘change’ — the PTI — through its confrontational politics actually delayed ‘change in the making’ by months at least. The benefits of the government’s IT communication sector initiatives is not expected to become visible before July 2015,” he quipped. The 3/4G licences were auctioned this April.

The thrust of Pakistani techies to explore new frontiers has coincided with the tight job market, nudging graduates and entrepreneurs to consider innovative business strategies as opposed to finding a place in the conventional economy.

“The introduction of 3/4G technology and the penetration of smart phones have opened up new vistas for technology companies aspiring to partake in the transformation towards a digitised lifestyle,” a technocrat currently associated with the government said.

“For us, the discovery of Pakistan has proven to be fascinating. It is by far the most attractive country in the region, excluding China and India. The difficult neighborhood and the challenging law and order situation have coloured its image and clouded the positive factors that can attract investors interested in the frontier markets,” Koen Thijssen, the young visiting co-CEO of Asia Internet Holding — a joint venture between Rocket Internet and Qatar-based Ooredoo — told Dawn.

The ecosystem for IT companies in Pakistan is the most business-friendly in the region. It has zero taxes on IT exports till 2016 and allows 100pc repatriation of profits.....

The holding company intends to divert to Pakistan a sizeable portion of the 180m euros it has dedicated for the region over the next four years.

“We invest in ideas. Our business decisions, however, are based on data and market research and our knowledge of proven internet business models around the world,” Koen said. The $5bn, seven-year-old Rocket Internet employs 25,000 people across a network of companies operating in 100 countries. In Pakistan, it supports nine start-ups — including Jovago, Clickbus, Lamudi, Daraz, Carmudi and Foodpanda — and claims that many more are on the way.

He considers the size and composition of the population, growing size of the internet market, rising smart phone penetration, absence of competition and a pool of skilled English speaking young graduates as factors that work in favour of Pakistan.

“This gives you a base to build upon a solid company. Besides, the absence of Amazon, Flipkart and eBay in Pakistan offers great opportunity to get a foothold and enjoy the benefits of early entry in this huge and growing market. We hope to become market leaders in the field,” Koen said.

Officials in relevant ministries and departments sounded confident and disclosed facts on which their optimism is based. From IT fund to virtual university, there are in all 10 federal bodies, with sometimes overlapping mandates, serving the sector with a future.

Numerous private and public mentorship and IT incubator projects are functioning in different cities, with some engaged with global leaders like Google as well.

Asim Shahryar Husain, MD of Pakistan Software Export Board, argued that the ecosystem for IT companies is the most business-friendly in the region.

“Pakistan has zero taxes on IT exports till 2016, allows 100pc repatriation of profits, has a dedicated body to provide ease of business (PSEB), and has 12 IT parks and over 125,000 English-speaking IT professionals and graduates, and this pool is growing every year,” he told this writer over phone from Islamabad.

He added that the country currently has more than 2,000 IT companies, of which 120 are certified in IT quality standards like ISO 9001 and ISO 27001, while 23 are certified with Carnegie Mellon’s CMMi standard. And the quality of these companies and their services is constantly improving.

“Many start-ups are leveraging the domestic penetration of smart phones and hoping for exponential growth of their companies, in tandem with the intensification of Android technology,” said an expert while indicating the market’s potential.

“Pakistan is peculiar in the sense that mobile-commerce here grew faster than e-commerce. The accessibility to the facility to leverage internet has been identified as the key factor. For a business model to deliver, the matching of the need and technology are necessary but not sufficient. Accessibility and affordability are decisive,” commented another IT practitioner.

Published in Dawn, Economic & Business, December 8th , 2014