A report published earlier this year revealed that the success rate of startups in Pakistan is less than 3 percent. However, this incredibly low success rate is not a phenomenon just limited to Pakistan. In fact, statistics covering 2021 reveal, 90 percent of startups around the globe face failure.
The tendency to fail or to succeed is based on the nature of a business itself. Nonetheless, a risk-taking mindset needs to be emphasized and encouraged to keep the entrepreneurial spirit alive — the spirit often found missing among investors in Pakistan due to issues of political instability, inconsistent economic growth, and financial crises.
An ever-mounting hesitation among investors and entrepreneurs to take risks and kickstart groundbreaking ideas is what makes Pakistan lag behind. Countries including China and Malaysia have successfully transformed their economies and a major determinant of their success has been their ability to identify and control the risk factors, encouraging investors to step in.
Pakistan is now set to pursue a similar mission. The government here has identified the need to develop a technology-driven knowledge ecosystem to encourage innovation and entrepreneurship, and a product of their commitment to this vision is the Special Technology Zones Authority (STZA). The STZA is focused on providing legislative and institutional support to investors, builders, and technology companies – primarily in taking the risk needed – for futuristic entrepreneurship to flourish.
One way in which the STZA claims to develop trust among investors is by providing legal fiscal incentives. On Tuesday, 28 September, the Senate Standing Committee on Information Technology and Telecommunication unanimously passed the Special Technology Zones Authority Bill, 2021. The bill offers a 10-year tax exemption to zone developers and enterprises to boost the sector by attracting foreign direct investment.
Warda Malik, Manager Global Linkages and Partnerships, STZA, is optimistic about the results of the new policy. In a statement, she said, “Once this becomes an act, the investors are given the confidence that this is the right place to put their money in, making it a game-changer for the technology sector of Pakistan.”
While expanding on the ways in which the STZA is keen to develop trust among investors, Warda referred to STZA as a ‘customer-oriented authority’ proactively working toward ensuring a promising environment for the customers. She explained,
When presenting to the investors, it’s almost like we are selling ourselves to them (the investors). The focus is not just on why you should invest in Pakistan, but also why they should work with us and why working with the STZA will be different from interactions they’ve had with the public sector earlier.
This assurance of resources and trustworthy interactions has led to an impressive amount of interest being shown in the STZA from the local as well as the global market.
Another way in which the STZA claims to be encouraging investors is by promoting a culture of rewarding new ideas and initiatives. “When you give people the resources [required] and also give them a space to make mistakes, that is called an entrepreneurial mindset,” added Warda. She said that instead of assuming failure and discouraging new ideas, the authority was keen on promoting innovative solutions and looking at failures as merely a learning experience. She maintained that this was a mindset instilled within their team members as well as was aimed to be practiced within the entrepreneurial landscape to keep both businesses and investors going.
Warda said the STZA was putting efforts to make risk-taking easier for investors by demonstrating the potential of using an “ecosystem approach.” She stated,
We are very keen to reinforce that we want to work with everyone who is already in the ecosystem and attract new potential. This includes tech conglomerates, R&D facilities, startups and incubators as well as the learning sector comprising universities and research centers.
With the help of such collaborations between the government, industry, and academia, they believe that the entrepreneurs will be given access to high-quality resources and the business will be given a great opportunity to expand.
To further emphasize the STZA’s role to utilize existing components of the ecosystem and facilitate businesses, she added,
If a startup is making 5 million, we would think of how you can help it make 500 million instead. How do we give them the ground to grow and scale? and the answer is by building the knowledge ecosystem and connecting them with the right resources.
Therefore, what Pakistan needs is not guaranteed results of success for any investment made, but a pathway to successfully approach risks through careful planning and identify underlying strategies to mitigate those risks. Developing trust among investors is like the first step toward a futuristic entrepreneurial landscape in Pakistan, and initiatives like the STZA are only a stepping stone toward it.