PTA and SBP Laws Not Conducive Enough to Bring Foreign Investment into IT Sector: Experts

The policy and regulatory facilitation could help the digital economy of Pakistan to grow and reach its best potential and hence, to contribute to the national economy more robustly, trade and economy experts said this while speaking at public-private dialogue on ‘Pakistan in digital trade – challenges and opportunities’ organized by the Sustainable Development Policy Institute (SDPI).

Member Prime Minister’s Task Force on IT, Pervez Iftikhar, while presenting an overview of IT and Telecom sector in Pakistan, opined that the regulations of Pakistan Telecommunication Authority (PTA) and State Bank of Pakistan (SBP) at present are not conducive enough to bring investment in this sector from abroad.

“The processes are tedious, and the availability of market data desired by investors is missing”, he said.

He added further that the public sector is not investing own budget in the production and facilitation of digital technologies and data protection law much desired by local and foreign investors is still awaited. Therefore, such a regime is encouraging even the local Pakistani firms to keep their data services outside of Pakistan, he said.

Pakistan Software Export Board (PSEB) Managing Director Osman Nasir was of the view that the lack of venture capital and comprehensive insurance framework in the digital sector is discouraging investors. He said that the double taxation treaties also need to be promoted to boost trade-in-services in addition to an efficient judicial system.

“PSEB [Pakistan Software Export Board] is helping to set up a private trading index for technology companies on PSX [Pakistan Stock Exchange],” he said, adding that PSEB is also working to address any adverse perceptions about Pakistan as an investment destination.

SDPI Joint Executive Director Dr Vaqar Ahmed emphasized that the digital economy requires allowing greater trade in IT and ICT products and the promotion of stronger digital infrastructure. He explained that the government’s response to crises like Covid-19 and monsoon rains remained weak in some regions of the country due to poor internet connectivity.

He said,

The bottlenecks preventing global brands in IT sector to come to Pakistan include high fixed and sunk costs, weak data protection, complex tax regime, lack of trained human resources, discrimination in public procurement, and inability of local lending institutions to understanding financing needs of firms”.

Both federal and provincial governments along with regulators should work together to make digital technologies accessible and affordable for all and rules and regulations in the digital sector should be in line with international practices, he added.

Mr Rafay Khan, an economist associated with the World Bank, said on the occasion that the digitization at firms’ level has taken place due to Covid19. However, many of the firms were still not able to adopt digital technologies due to weak financial and human resources. Gonzalo Varela, Senior Economist of the World Bank was of the view that the tax regime in the IT sector needs improvement and visa issues faced by Pakistani entrepreneurs also need to be resolved.

PTA Director-General Arif Sargana informed the participants that PTA is working to promote cloud services for greater data storage. Moreover, the Government of Pakistan is focused on the implementation of ‘Digital Pakistan Vision’ and IT-related exports are now on the rise as a result.

Senior Corporate Lawyer Saira Khalid highlighted the need of building consumers’ confidence in online transactions, which is currently very low. She was also of the opinion that the laws protecting investors in the e-commerce sector need to be fully implemented.



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