Muneeb ur Rehman

Pakistan can benefit greatly from attracting foreign direct investment (FDI) in the information technology sector, as it would facilitate technology transfer, foster innovative practices, and create employment opportunities for its digitally literate youth, said a renowned business expert. Pakistan continues to fall behind many countries in attracting FDI. According to a report of the Ministry of IT and Telecom, Pakistan recorded a total FDI inflow of $3.2 billion during the fiscal year 2021-22, whereas India witnessed a significantly higher inflow of $59.6 billion. The IT sector in Pakistan received a relatively modest inflow of $73.4 million during FY22, with the majority of FDI directed towards the IT services sector.

“FDI inflows in IT have a strong correlation with economic growth and development, as they facilitate the introduction of new technologies, generate employment opportunities, and yield positive spillover effects on the overall economy,” said Kamran Mirza, Chief Executive of Pakistan Business Council (PBC), while talking to WealthPK. According to the State Bank of Pakistan (SBP), the IT sector attracted $1.7 million investment during April FY23, whereas the outflow was $0.5 million. “Moreover, a significant export potential exists within the IT sector in Pakistan owing to the expanding digital infrastructure,” Kamran said.

“By implementing strategic incentives, Pakistan can export IT services such as hardware and software consultancy, computer maintenance and repair to trading nations,” he emphasised. Kamran proposed the implementation of a clustered model for IT projects supported by foreign investors. “The aim is to fully exploit the potential of these projects by bringing together various components of the ICT (information and communication technology) and hi-tech science value chain, such as academia, scientific institutes, incubators, accelerators, and globally recognised tech/tech-enabled solution brands, within a single geographic location,” he elaborated.

Highlighting the efforts of Asian countries that successfully attracted FDI, he said that they have achieved significant progress by addressing bottlenecks within their administrative structures. For instance, he said, countries like Malaysia and Bangladesh have introduced streamlined processes, such as single-window operations, for investors. Additionally, they have taken steps to minimise bureaucratic hurdles in relevant government departments. The inflow of FDI into the IT sector holds great promise in terms of job creation and introduction of innovative technologies within the country.

Credit: INP-WealthPk