Pakistan plans to set up knowledge clusters to boost IT sector

September 29, 2022

Aitizaz Hassan

The emergence of knowledge clusters in developed countries has encouraged countries across the globe to initiate special legislations and regimes to enable and protect the growth of knowledge and innovation ecosystem.

Talking to WealthPK, former chairman of Special Technology Zones Authority (STZA) Aamir Hashmi said the emergence of knowledge clusters such as Silicon Valley (United States), Tsukuba Science City (Japan), Z-Park (China) and Daedeok (South Korea), encouraged developing countries to take steps in this direction.

Pakistan has seen significant growth in the technology sector in the last few years. According to nine-month performance report of the STZA, the IT industry has grown 30% on year-over-year (YoY) basis and contributed $3.5 billion to Pakistan’s gross domestic product (GDP) with a projected growth of 100% in the next two to four years.

The report shows that there are over 2,000 registered IT companies in Pakistan employing over 300,000 IT experts, with around 30,000 IT-related graduates entering the job market. The IT exports have crossed $2 billion, excluding the earnings of freelancers and Pakistani companies registered abroad.

The report shows that Pakistani startups joined the big league in 2021 raising $365.87 million which is 450% higher than in 2020. The number of deals also jumped to 82 from 49 the year before, witnessing a surge of 67%.

According to the report, the global technology industry is rapidly expanding with an approximate market size of $5.3 trillion, and a research and development (R&D) budget of $2.2 trillion in 2021, while Pakistan’s IT exports are just clocking around $2 billion and R&D budgets are negligible. Having one of the largest youth populations in the world which has access to smartphones and internet, Pakistan has all the available ingredients to go through a technology and innovation-driven economic transformation.

Aamir Hashmi said that the IT sector in the world is following the path of wealth creation through knowledge-driven solutions and services. He mentioned that one of the most effective policy tools in this regard was enabling the development of technology parks/zones/clusters. Consequently, the growth in such innovation and knowledge clusters accelerated since the 80s.

“To put things into perspective, China (169) is at the top in tech clusters, the US hosts 115 clusters, UK 63, India 23, Iran 16, Egypt 3, Malaysia 5 and Pakistan stands at zero. In 2001, India had $1 billion IT exports with zero knowledge clusters. In 2022, India hosts 23 clusters with more than 100 technology parks and $150 billion IT exports,” he pointed out.

The STZA board of governors has approved cluster strategy to provide immediate support and incentives to IT industry as envisaged under the STZA Act 2021. In this regard, several sectors of Islamabad will soon be declared as zones in collaboration with the Capital Development Authority (CDA) where a significant number of technology companies are already located. A similar exercise is being undertaken in other provinces, particularly in the cities of Karachi, Lahore, and Peshawar, to kickstart the rollout of technology zones.

Credit: Independent News Pakistan-WealthPk