The government claims that Pakistan is striving to improve innovation and industrial digitisation. However, experts and business leaders assert that the ecosystem has yet to evolve to integrate Pakistan into the global supply chain through digitisation, without which sustainable development will remain a pipedream.

“If we want to break out of the low growth boom and bust cycle, capitalise on our demographic edge and deliver on the promise of affording a decent living standard for masses, digitisation is the way to go. The big question is: how to achieve that? The government lacks focus and the limited public resources are spread thin, whereas the patronage-addicted private sector is reluctant,” an expert argues.

Nadeem Hussain, founder of Planet N and one of the proponents of digitisation in Pakistan, shared his opinion. “Our traditional industry has not innovated since the earth cooled. This is largely because most don’t see the business through the lens of the end consumer. Success is measured by the bottom line, not customer satisfaction.”

He blamed the lack of interest in Pakistani businesses on naivety and greed. “No, I don’t see a correlation between lack of automation and patronage. The principal causes are lack of vision and lack of hunger to innovate. The comparison is with banks. They are just lazy lenders.”

Unlike production of goods, the IT sector is neither energy-intensive nor reliant on imported inputs and thus can generate a significant number of jobs in the knowledge sector

The federal government challenged the perception of the lack of focus at the official level. Junaid Imam, spokesperson and member of IT, Ministry of Information and Telecommunication, shared his assessment of the level of digitisation in industry, identified barriers and mentioned government efforts to promote it.

“No empirical evidence exists indicating the exact level of digitisation in Pakistan. However, rough estimates suggest that this number will not be more than 20 per cent. In our opinion, which is supported by a recent DHL report, new technologies are developing so quickly that businesses find it challenging to keep up with the pace of innovations and best practices. Furthermore, frequent upgradation of systems also requires capital and technical know-how, which makes companies not sold to the idea of digitisation reluctant. Besides, many companies are unaware of the true benefits.

“In Pakistan, the ecosystem is not necessarily hostile. However, due to rapid change, policies usually lag behind in catering to new scenarios. The government, however, is trying to amend the regulations for easy and quick adoption. To this end, we came up with the cybersecurity policy, cloud-first policy, right-of-way policy and data protection bill to name a few. Additionally, reforms require buy-in from all relevant stakeholders, which is time-consuming.

“To nudge small and medium enterprises towards digitisation, we are working on Digital Pakistan Policy that will provide financial and other incentives, identify sectors/projects to focus on and suggest policy interventions for ease and cost-cutting.”

Sharing his thoughts, Ehsan Malik, CEO of the Pakistan Business Council, said: “For Pakistan to achieve anywhere near the percentage of GDP that India earns from the export of its IT and IT-enabled services, it would need to develop a supportive ecosystem of good connectivity, consistent fiscal policy, incentives at par, if not higher than for export of goods and a well-trained human resource pool.

“The size and number of formal players would need to increase substantially, as would their reach in key markets. Scale can be promoted through reliance by the government on local IT developers for the badly needed digitisation of its processes.

“Unlike for production of goods, the IT sector is neither energy-intensive nor reliant on imported inputs. It can generate a significant number of jobs in the knowledge sector which can be deployed both for the export of services and for the export of manpower abroad. A major reason for the success of the Indian IT industry is the presence of its IT professionals in the West.”

The world is witnessing digital technologies adoption in businesses, particularly manufacturing industries. This policy-driven path to institutionalise innovation systems in manufacturing is often referred to as Industry 4.0. Observers in the relevant circles believe the fast proliferation of new technology is revolutionising society akin to the 18th Century industrial revolution.

Published in Dawn, The Business and Finance Weekly, October 3rd, 2022

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