Speaking at the groundbreaking ceremony of Pakistan’s Digital City-Special Technology Zone (STZ) at Pak-Austria Institute of Applied Sciences, Haripur, Prime Minister Imran Khan said time would prove that digital projects such as this STZ would have a far-reaching positive impact on the country’s prosperity index. The first-ever state-of-the-art information technology project in the country, as described by Prime Minister Khan, it will be completed at a cost of Rs1.31 billion.
The project would facilitate collaboration among academia, researchers and industry from within the country and abroad. And the beneficiaries would be industries in the electronics sector, software houses, mobile phones, technology incubators and computer manufacturers.
Pakistan has seen ‘massive improvements’ on the commerce front and business-to-business (B2B) areas, Systems Ltd CEO Asif Peer told participants of a dialogue titled ‘Looking ahead — Pakistan’s path to a digital economy’. Despite all the improvements, he says we have still a long way to go. “Our companies are mulling optimisation instead of transformation.”
He explains: optimisation means achieving operational excellence in the short-term while transformation is looking at your position in this economy and your sector and how you can have an impact on it through digitalisation. Transformation is about securing long-term fruitful results.
Mr Peer underscored that about 49 per cent of decision-makers in businesses (globally) perceive that technology will close the gap between large and small organisations.
However, according to a recent study by the World Bank titled ‘Anti-trust and digital platforms’ in developed economies, large platforms getting bigger have access to larger amounts of user data. And data is a major factor of production for digital businesses. Smaller firms would have a harder time competing. This trend, if not checked, will make the arduous task of sustainable economic growth more challenging.
The Securities and Exchange Commission of Pakistan (SECP) has recently urged the corporate sector to adopt digitalisation, citing that it will not only enhance their efficiency but also help maintain a green environment. Through digitalisation and automation, the SECP says it had improved its efficiency and slashed the overall stationary usage by 55pc and paper consumption by 27pc, saving 38 trees in 2021. It takes 24 trees to make a ton of paper, according to Food and Agriculture Organisation research.
Finance Minister Shaukat Tarin says the government will use technology not only to bring potential individuals into the tax net but also to protect taxpayers from harassment by officials of the Federal Board of Revenue (FBR). The introduction of the Track and Trace System, he adds, will also help FBR raise maximum taxes on the actual supply of products like tobacco and cigarettes etc.
Pakistan has more than 300,000 IT professionals, produces 25,000 IT graduates annually and has nurtured 700 tech start-ups since 2010, according to s Google-commissioned research report ‘Unlocking Pakistan’s digital potential’. The report released in late November 2021 says the country has a thriving technology sector. Technology exports have grown 15pc per year since 2020 and are expected to reach $3.5bn in 2022. Pakistan’s online population has grown rapidly and the internet penetration was 54pc in 2021.
During July-December 2022, the import of mobile phones alone was worth over $1bn. And foreign direct investment in IT shot up to $89.7m from $26.1m recorded in the same period last year. IT professionals find it easier to secure a job in developed economies or work from home for foreign IT firms.
Innovations in technology have improved the efficiency, reliability and speed of many tasks earlier done by humans. But recent research in advanced countries which Pakistan has to take note of, demonstrates these innovations tend to serve the few and leave many behind. These studies are focused on the impact of robots, the use of ‘so-so technologies’ and technology-driven inequality.
And in Pakistan, there are also bottlenecks in inducting IT in some segments and sub-segments of the economy.
“We cannot talk about digital future without thinking about digitalised agriculture and food system,” says Country Director of Bank Alfalah Dr Ayesha Khan. Pointing out that around 90pc of the farmers possessed small landholdings (an area of less than five acres), she said they could not afford to access technology to optimise their operations. And they are forced to use low yielding varieties of seed and stick to obsolete farm practices.
It is extremely unjust to impose a 17pc sales tax on household sewing machines, mostly used by self-employed women who work from home to earn a living, says a joint statement by the Business Group and the Karachi Chamber of Commerce and Industry, urging the government to revisit the mini-budget. The decision is in sharp contrast to the PTI government’s priority to promote and nurture self-employment.
Based on demographic and business data details, leading US researchers have identified four factors that are contributing to inequality and making the future economic outlook unpredictable. Among these, technology is the most significant contributor to rising inequality, others being public policy, globalisation and weakening of the trade unions.
Half or more than half of the (income) gap among American employees over the last 40 years is attributable to the automation of tasks formerly done by human workers especially those without college degrees, according to research by Daron Acemoglu at the Massachusetts Institute of Technology (MIT). This Turkish-born American, says a New York Times analyst, is an influential economist.
Today there is excessive investment in ‘so-so technologies’ replacing workers which helps to explain the sluggish productivity growth in the US economy, according to the findings of the MIT scholar’s research published last year with his frequent collaborator Pascual Restrepo, an economist with Boston University. Mr Acemoglu believes truly significant technologies create new jobs elsewhere, lifting employment and wages.
In their paper ‘Steering Economic Progress’ Anton Korinek, an economist at the University of Virginia and Joseph Stiglitz, Nobel economist at Columbia University, recommend steps including nudges for entrepreneurs and tax changes to pursue labour-friendly innovations. “We need to redirect technology so that it works for the people and not against them,” says Mr Acemoglu.
Deviating from standard economic theories his research led him to conclude that inequalities were ‘greater than I assumed,’ adding ‘it has made me less optimistic about the future.”
Published in Dawn, The Business and Finance Weekly, January 24th, 2022