If you asked Barkan Saeed what the most exciting thing to happen to him last week was, he would have undoubtedly placed the federal cabinet’s approval of the Digital Pakistan Policy high on his list.
Mr Saeed, chairman of the Pakistan Software Houses Association (P@SHA), enthusiastically expresses the sentiments of his sector, stating: “You cannot believe how excited the industry is. I’m getting messages from all the big players talking about what a fantastic thing has happened. What has been approved is revolutionary.”
While groundbreaking in that the policy incentivises certain areas of the sector, it also conveniently fails to appropriately address major data protection and content regulation issues.
For members of P@SHA and the sector it represents, the Cabinet’s May 23 approval of Pakistan’s first digital policy not only acknowledges the sector’s potential and contribution to the economy, but also endeavours to sweeten the pot by providing necessary incentives to maintain the industry’s growth momentum.
As the policy becomes legislation, issues of data protection and content regulation must not be relegated to the back burner
With organic, non-incentivised growth of the information technology industry touted at 30-35 per cent in the past year alone and total revenue at $3.3 billion as per the 2016-17 economic survey — owing to about 5,899 companies registered with the Securities and Exchange Commission of Pakistan in the sector to date — it is no wonder the Pakistan Muslim League-Nawaz government has decided, as a parting stroke, to agree to the industry’s list of demands.
These incentives include an extension of the already in effect tax holiday till 2025, a 5pc cash reward on IT exports, announcement of a reduced sales tax of 5pc on IT-enabled services (ITeS) within federal areas, commercial loans for tech companies at preferential rates and special economic zones (SEZs) for IT companies to operate in.
The policy has also ratified the World Trade Organisation’s Information Technology Agreement which aims to eliminate tariff barriers on imports of ICT products.
Elaborating on the need for incentives, Mr Saeed says: “In ITeS, a lot of money never comes back to Pakistan, as businessmen are wary of dealing with the Federal Board of Revenue.
“And the tax structure for the industry was such that a lot of potential client companies had started developing software in-house or outsourcing to other countries.”
Discussing the possibility of the provinces duplicating incentives that fall within their purview, it soon became clear that the industry viewed two provinces with comfort and one with trepidation.
Punjab, with its well-established Chief Minister Shehbaz Sharif and Chairman of the Punjab Information Technology Board Dr Umar Saif, was expected to duplicate the incentives before May 31; Khyber Pakhtunkhwa, with its desire to emulate Punjab, would eventually follow.
In Sindh, however, the question was: who does one talk to? With no clear IT minister, should the Sindh Revenue Authority be approached? Or the chief minister? Or Bilawal Bhutto?
Quite a few of the digital policy’s aims — infrastructure and human resource development, promoting entrepreneurship, augmenting software exports and encouraging innovation — can be addressed easily through the IT special economic zones being pursued parallel to the digital policy.
But considering the fact that elections are just around the corner, questions regarding the implementation of both the SEZs and the actual policy are now up in the air. Not to be confused with the Silicon Valley model, the proposed SEZs are more in line with China’s IT cities or parks.
“Imagine if in Karachi alone you have 10-15 acres of land with 40-50 companies, hotels and an innovative atmosphere; anybody coming there will see that Pakistan’s tech industry is very vibrant, which in turn will encourage investment,” adds Mr Saeed, who is working with the government on the SEZs as well.
If so much effort is being put to attract international investors, it is also compulsory for the government to ensure all steps are being taken to meet global digital standards, foremost being data protection.
The General Data Protection Regulation (GDPR), the European Union’s privacy law that came into effect on May 25, protects individuals in Europe even if their data is processed elsewhere. It has already contributed to changes in data collection, with companies such as Google and Facebook making changes globally.
Article 33 of the GDPR states that in the event of a personal data breach, data controllers must notify the appropriate supervisory authority “without undue delay and, where, feasible, not later than 72 hours.”
For Pakistan though, “the biggest concern is that we have no data protection right now. The digital policy aims to link all citizen data in one big cloud, but what surety do we have that this data will be secure?” queries Asad Baig, founder of Media Matters for Democracy, mentioning the infamous Cambridge Analytica case.
One is reminded of the recent Careem data hack scandal where users were warned in April that their personal data had been compromised in a massive cyber-security breach on Jan 14, 2018.
Another glaring omission in the policy is the failure to address the government’s role in content regulation; Mr Baig states that right now the Prevention of Electronic Crimes Act 2016 is vague on the issue.
When asked whether content regulation could actually affect the business environment or whether it was merely an issue of freedom of expression, Mr Baig pointed out that both subjects are intrinsically linked.
“The cyber space environment is ascertained by whether a country has open internet, how protective polices are and so on. And people who don’t understand the nature of a digital business can move the government against them without clearly defined regulations.”
To remain relevant in the international arena, it is imperative that when Pakistan does flesh out its digital policy, it does so keeping global trends and standards in mind.
Published in Dawn, The Business and Finance Weekly, May 28th, 2018
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