Pakistan Aims to Double IT Industry in Two Years With Tech Zones

Pakistan intends to increase its IT industry in the next two years by building specialized tech zones around the country, after losing out on technological revolutions that enabled nations such as India and the Philippines become global back-end operators.

According to Amer Hashmi, the chairman of the government agency in charge of creating scientific and technology zones, the world's fifth most populated nation intends to create a dozen such zones by next year. It is giving a 10-year exemption from corporation tax and imports of any equipment or building materials required for the regions, which will provide a “catapult push” to Pakistan's IT industry, perhaps doubling its size. It will provide a "catapult boost" to Pakistan's IT industry, perhaps doubling its size to $6 billion in two years, he added.

Pakistan is counting on the new innovation zones to provide jobs for its large number of young people (almost two-thirds of the country's population is under 30). According to the Oxford Internet Institute's Online Labour Index, it already has the world's third-largest gig economy, trailing only India and Bangladesh. A surge of foreign funding into companies ranging from fintech to e-commerce, which began during the coronavirus epidemic, is also driving demand for specialized zones to service these industries.

The effort began when Prime Minister Imran Khan asked why Pakistan was missing out on the digital boom during a meeting last year. Using his own entrepreneurial experience, Hashmi informed the prime minister that the South Asian country required a tech eco-system and an enabling climate.

Hashmi, who quit his position at International Business Machines Corp. in Canada to return to Pakistan to start a technology firm, had to deal with bribe seekers and delays in establishing his own fiber network and data centers. According to him, the new regions would not have such difficulties and will be a plug-and-play approach.

“How do you get a Google, Microsoft, or Amazon? You ought to attract them, and to do so, you have to offer unique incentives, which I believe we would have been the last in the area to do,” Hashmi, now head of the Special Technology Zones Authority, said in an interview. “They were given by Dubai Internet City. They have all of the major corporations.”

Cash-strapped Pakistan has attempted to launch such initiatives on many occasions in the past. It intended to invest $1 billion to create dozens of software parks in 2006, but that initiative failed. This time, the government's efforts will focus on obtaining worldwide investment to guarantee that the project gets off to a good start.

Hashmi stated that about a half-dozen global corporations and 50 local firms have indicated interest in establishing themselves in designated zones, and that up to $1.5 billion in private investment will flow into these initiatives over the next two years. He is also persuading the government, which is investing millions of dollars in technological initiatives, to award more contracts to local businesses. “Pakistan can’t have a full blown tech explosion. We don’t have the money,” said Habibullah Khan, founder at Penumbra, a digital marketing agency that also assists startups. “The latest public-private partnership model makes clear sense.” TPL Corp. is constructing one such tech zone in Karachi, Pakistan's commercial metropolis.

The country's newly appointed finance minister has also promised to promote the IT industry, which he believes would help diversify exports and help the country break out of its recurring boom and bust cycles. In a May interview, Shaukat Tarin stated that the sector has the potential to be a game changer and that it will be granted "whatever they want."