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Information Technology Policy

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Govt. Policies - IT Policy

Preamble

This paper presents initial policy recommendations for the development of the information technology (IT) sector in Pakistan. The broad aims of the recommendations are to:

Maintain a consistent focus on IT development in Pakistan;
Provide a basis on which detailed policy and action plans can be developed; and
Identify the nature, scale, and costs of the broad actions required to invigorate and grow the IT industry in the country.

The document provides general guidelines and direction for addressing issues pertaining to local IT development. It is based on detailed recommendations, policy proposals, and action plans, which were developed by specialised workgroups with relevant expertise set up on April 1, 2000 under the aegis of the Information Technology Commission by the Ministry of Science and Technology. The workgroups’ submittals are annexed to this document.

This document discusses key issues related to the development, use, and application of IT in Pakistan—specifically, in the country’s government, education, and economy. Initiatives aimed at enhanced IT-based income generation, improved government and private service provision, exports, fiscal and non-fiscal incentives, infrastructure development, human resource development, standards, privacy and security of information, intellectual property rights and consumer protection, have been given equal importance.

Given the rapidly increasing importance of this sector to the economy, security and overall development of the country, it is important that this policy be accorded a very high priority on the national agenda. Consequently, a professional, fast track approach is recommended for formulating and executing a full-fledged National Information Technology and Action Plan to facilitate rapid and effective implementation and ensure long term sustainability of the initiative. Details of this planned approach are given in the accompanying document entitled The Way Forward: Steps Required for Finalising and Implementing a National IT Policy.

A basic premise of the proposed policy is that the government will play the role of a moderator, rather than a director, in the local IT industry’s development. In this role, the government will forge a co-operative relationship with the industry, working with it and with important users to diffuse IT products, promote greater awareness and usage, and facilitate growth of all aspects of a extensive IT culture in the country.

The development of the IT industry can not depend solely on the government’s IT policies; the broader economic and social of the nation will determine the rate and degree to which the benefits of IT can be exploited. The successful integration of the IT sector with all spheres of the country’s economy will determine the nation’s capability of responding to the challenge posed by a rapidly evolving global IT economy.

Two factors are critical to achieving meaningful progress in developing Pakistan’s IT capabilities: A strong national commitment to the general steps outlined in these recommendations, supported by allocation in principle of the commensurate financial and executive resources estimated herein for accomplishing the task, and an endorsement of the approach to be adopted for developing and implementing a comprehensive National Information Technology Policy and Action Plan as described in the accompanying document.

By adopting a sound IT policy and implementing it according to a comprehensive plan, Pakistan will be positioned to participate fully in the global IT revolution and to reap the considerable socio-economic benefits involved in the years ahead.

We may have missed the first wave of the IT revolution but on the flip side we have an opportunity to catch up in a relatively short time and give results which may seem farfetched today. Inshallah.

1.Vision, Mission, and Goals of the Policy

1.1The Vision

To harness the potential of Information Technology for sustainable development.

1.2 The Mission

Rapidly develop the infrastructure in synchrony with the creation of excellently trained individuals and teams. Direct these at transforming our society into a prosperous and dynamic one—one that values and benefits from the creation and free flow of information and knowledge. Encourage and assist the entrepreneurial spirit, and make the fruits of this technology available to every citizen.

1.3 Goals

To realize the vision behind the IT policy, the following goals have been set:

1. Make the Government a facilitator and an enabler to give a maximum opportunity for the private sector to lead the thrust in development of IT in Pakistan.
2.Develop an extensive pool of trained IT manpower to meet local and export requirements
3.Provide business incentives for both local and foreign investors to ensure the development of Pakistan’s IT sector (including the software, hardware, and service industries) and the use of its products
4.Develop an encouraging legislative and regulatory framework for IT related issues.

5. Rekindle, emphasise, and support the country’s dormant manufacturing and research and development (R&D) potential.

6.Establish an efficient and cost-effective infrastructure that provides equitable access to national and international networks and markets.

7.Set up national databases that are reliable, secure, and easily accessible.

8.Promote the widespread use of IT applications in government organisations and departments for efficiency improvement in functioning and service provision, and to organise and facilitate access to public information.

9.Promote extensive use of IT applications in trade, industry, agriculture, education, health, and other sectors.

10.Encourage and promote the development of quality software that can capture export markets.

11.Develop a tradition of electronic commerce for both national and international transactions.

2. IT Policy Strategies

2.1 Human Resource Development

A major human resource issue in Pakistan is the training, nurturing, and retention of technically skilled manpower. This problem is more severe in the IT field where technology changes are rapid and there is a large loss of trained manpower due to emigration.

Manpower development is imperative for the local IT industry to take root on a large scale in Pakistan, and for the country to achieve and maintain the position of an important player in the international IT market. A large pool of skilled manpower is required for all components of the IT industry, and it has to be geared to meet both local and export needs.

Whereas, a brief working document has been prepared by the IT Steering committee on Education, HRD and Training, a more comprehensive plan for education and human resource development in IT shall be drawn up to meet the present and future needs of manpower. Also, a working group on the same lines shall be established to advise on current and emerging education and training needs.

This following section briefly covers IT education and IT training. IT awareness, a related issue, is addressed separately.

IT education includes degree programmes, while IT training comprises short courses that provide focused hands-on skills in specific IT areas where manpower is needed urgently. Such training could be provided to fresh graduates as well as underemployed youth.

The objectives of the policies proposed for this area are to attract the most able students and faculty to IT, and to ensure quality, quantity, affordability, and market relevance of all IT education and training. Some key proposals for this are creation of a Human Resource Development (HRD) fund, provision of incentives, and encouragement to financial institutions to support IT education.

2.1.1 IT Education

The government and the private sector shall jointly make efforts to meet the growing IT education needs. Specific policy recommendations are:

Include a compulsory Computer Literacy module in the matriculation curriculum for high schools. Make training in the use of IT applications compulsory for all degree courses within the next 3 years.

Develop world class bachelors, masters, and PhD programmes in computer science (CS) and related areas of IT. Develop standardised curricula and teaching materials in co-operation with public and private educational institutions, using international benchmarks for reference.

To address the critical shortage of qualified IT faculty, establish Faculty Chairs by attracting foreign and expatriate faculty and arranging faculty refresher courses.

Establish a national educational intranet to enable sharing, among educational institutions, of electronic libraries of teaching and research materials and faculty (through distance learning and video conferencing).

Attract the best students by establishing a scholarship fund for IT education and training.

Establish an Accreditation Council to ensure quality IT education and training. The council will be responsible for collecting data on educational institutions, rating the institutions, and disseminating information on the institutions. The council will also establish curricula, testing guidelines and services for IT education and training. The council will consist of leading academics and IT experts and will be linked to provincial IT Boards through representation on the boards.

Establish an HRD fund (HRDF) to be managed by an Institutional Development Cell within the IT Division. This fund will be utilised to expand and improve the quality of IT education, strengthen existing IT educational institutions, upgrade IT infrastructure (including laboratories, connectivity, and teaching resources), develop faculty, attract visiting faculty of international repute, provide student scholarships, share pooled resources through distance learning programs, and develop linkages with foreign universities and global IT firms. Apart from the government, the Cell will mobilise financing through expatriate Pakistani community, international agencies such as UNIDO, Islamic Development Bank, World Bank, CIDA, and global IT firms such as Microsoft, IBM, and Oracle.

Assign provincial IT Boards the task of working closely with the Accreditation Council and Institutional Development Cell to ensure quality IT education, strengthen IT educational institutions, develop databases, and establish linkages with industry for jobs and internships.

Allow administrative autonomy to IT departments in public universities to enable them to attract and retain qualified faculty and respond quickly to changing requirements of the IT industry.

Promote the setting up of IT universities and institutes of international standards. Encourage collaboration between the government and the private sector, and elicit the assistance of foundations such as the Army Welfare Trust and Shaheen and Bahria Foundation, multinational companies in Pakistan, foreign universities, and other social and welfare organisations. Strengthen existing institutions and establish a number of centres of excellence.

Provide foreign universities incentives to set up distance learning or resident programmes in Pakistan.

2.1.2 IT Training

Investments in IT training are expected to yield quick results. Policy recommendations include:

Ensure high-quality training by assigning the Accreditation Council for IT Education the task of collecting data on training institutions, rating the institutions, and disseminating information on the institutions.

Through the Institutional Development Cell, take steps to strengthen existing IT training institutions and encourage the setting up of new IT training institutes, update curricula, introduce new technologies through linkages with global IT firms, develop strong local faculties, and provide student scholarships. Organise teacher training on a top-priority basis to meet the growing demand for qualified teachers in IT and for upgrading their skills regularly. To rapidly increase the annual production of IT manpower, launch crash training programmes. Use the HRDF to support IT training activities.

To ensure maximum utilisation of existing facilities, encourage public universities to collaborate with the private sector in conducting training programs during vacations and at other times when the facilities are not in use.

Introduce Computer Literacy as a compulsory module in the matriculation curriculum for high schools. Make training in the use of IT applications compulsory for all degree courses within the next 3 years.

Introduce mandatory IT Literacy courses for all levels of civil and military personnel. Make IT literacy a prerequisite for induction into gazetted positions.

Make a special effort to train women and the disabled for IT careers.

2.2 Infrastructure Development

In order to grow, the local IT industry will need a suitable support infrastructure, i.e., telecommunications and information data banks. Required development of the telecommunications sector will entail, for instance, deregulation, liberalisation, privatisation, and the creation of a competitive market. Interest in IT infrastructure now extends beyond telecommunications and human resources to government officials, economists, lawyers, banks, users and the press. National databases are vital for economic wellbeing as they provide quick and easy access to information. Around the world, hi-tech ‘IT Parks’, equipped with the most modern facilities and matchless incentives, are being established to provide a one-stop shop for prospective investors in the IT industry. IT incubators will be encouraged to enable genius to be able to concentrate on development where his/her needs of funding, marketing and managing are taken care of.

Thus, a key enabling factor for the rapid growth of information technology in Pakistan would be a world class IT infrastructure that includes telecommunications facilities, national databases and IT parks. The recommendations presented below will facilitate the establishment of such an infrastructure.

2.2.1 Telecommunications

A close relationship between the government and the private sector is critical for the development of the telecommunications sector. The following telecom policy strategies are based on government-private sector synergy: the two sectors will need to work together to create a modern, sophisticated, efficient, and productive telecommunications sector that provides services to every segment of society at a reasonable cost.

Increase telephone line penetration rate by expanding the existing telecommunications network and providing new ones employing modern technologies—this will minimise the capital cost of expansion. The government will license private telecom operators for supply of basic infrastructure and services.

Develop an integrated, flexible, robust, and reliable transmission network that covers the entire nation and is capable of voice, video, and data transmittal.

Revise rates and tariffs for all telecommunications services down from time to time, so that the cost is reasonable and consistent with the economic realities of the country. Establish the tariff at par with or below charges prevalent in the regional and international markets to remain competitive.

Make all telecommunication companies and carrier network service providers responsive and upgrade rural telecommunications facilities.

Phase in competitiveness in the telecommunications sector. Ensure that full competitiveness is achieved in all telecommunications services and infrastructure provision and these companies are operational by 31 December 2002.

Invite private sector participation on very attractive terms in joint telecommunications development work of the PTCL. This will ensure that the PTCL is adequately equipped for the post deregulation competition phase.

Encourage national concerns to enter the telecommunications fields that are closely associated with the infrastructure needed for an information rich society. Encourage local entrepreneurs to participate actively in the telecommunications sector.

Create an environment in which the government, telecom operators, and regulators work together to ensure that access to advanced telecommunications services is available to all citizens—including commercial consumers, educational institutions, hospitals, libraries, and government functionaries—regardless of their location and at a reasonable cost.

Work and expand connectivity with other countries, using existing regional and global satellite and Fibre links.

Take appropriate actions to launch Pakistan’s own satellite at the earliest.

2.2.2 Databases

Databases provide quick and easy access to national information, which greatly facilitates the work and increases the productivity of businesses and institutions. Access to such databases is essential for co-ordinated and informed decision-making and for efficient planning. National databases are thus an important part of the IT sector infrastructure.

Both the government and the private sector should be encouraged to participate in the development of national databases. The main recommendations for policy for this area are:

Encourage and accelerate government-private partnership in establishment of comprehensive databases.

Through the Computer Society of Pakistan and PCB, set standards to ensure that databases are developed on non-propriety platforms, especially in the government sector.

Ensure open and equitable access to databases

2.2.3 Technology Parks

Technology parks (TPs) should be set up to provide one-window services to domestic and foreign companies that seek to engage in IT business in Pakistan. The TPs should cover and provide land, utilities, telecom, and other infrastructure facilities of international standard at low costs. Efficiently functioning TPs will attract local as well as foreign and multinational entrepreneurs.

Recommendations for the development of Technology Parks are:

Encourage the private sector to set up such parks on BOT/BOO basis.

Do the same for IT Incubation centers

Charge the lower utility and infrastructure rates for bulk consumers to TP users.

Expedite TP projects in Karachi and Lahore similar to the one that is already under way in Islamabad.

Locate some TPs in less developed parts of the country and provide additional incentives here, for instance free government land.

2.3 Software Industry Development

Software development is a high growth industry with an annual growth rate exceeding 50 percent. The industry forms a major segment of the vast information technology market and will continue to do so in the future. A developed software industry with a focus on exports (in addition to the local market) would mean better employment opportunities, reduced ‘brain drain’ (emigration of professionals), foreign exchange earnings, improvement in per capita income, and higher standards of living leading to a better quality of life.

The policy recommendations presented for this area, therefore, seek to promote local software development for local needs as well as export.

2.3.1 Development of Local Software Industry

A developed local software industry will not only meet Pakistan’s own needs, but will also serve as a training ground for capturing export markets. Key policy recommendations for developing the local industry are:

Outsource Government software projects including mass Data entry, Digitisation and GIS projects to the Private sector.

Provide preference to the Private sector software development for government and non-classified Defence projects.

Phase the government out of software development so the private sector can take over.

For software work requiring expertise that is not locally available, engage foreign companies only if a local partner is involved to ensure the transfer of technology.

Accord a high priority to development of local-language software to improve IT usage. Such software can also be exported to other countries where these languages are used.

2.3.2 Promotion of Software Export

Rising costs in developed countries have significantly increased software development outsourcing. This has enabled other countries, especially those in Asia (such as India and China), to tap offshore software development business. So far, Pakistan has not been able to secure any significant share of the global software market.

The following policy actions are recommended to promote software exports, private sector investments, and attract foreign direct investment (FDI):

A Software Development Fund should be established to support promotion, expansion, and improvement of the software industry.

In all countries with a software export potential, appoint IT specialists at Pakistani embassies, commercial consulates, and Export Promotion Bureau (EPB) offices. The IT specialists should be responsible for promoting Pakistani IT products. Where IT specialists are not available, assign this responsibility to trained commercial counsellors. These individuals should report to and co-ordinate with the Pakistan Software Export Board (PSEB), Pakistan Software Houses Association (PASHA), CSP. For some large markets, e.g., the USA and EU markets, hire consultants to manage the effort, with the IT specialist doing the co-ordination work. These IT specialists will help find niche markets, provide market intelligence, and develop laws and guidelines regarding target markets.

Provide software exporters a one-window governmental interface through PSEB.

Encourage software export projects in IT service areas that require minimum time and can be started with currently available skills. These include operational activities for banks and airlines offices, medical and legal encryption, data entry, data conversion, data warehousing, and call centres. Each of the above has potential to show immediate returns.

Encourage the hiring of women to help reduce unemployment and to utilise this largely untapped human resource. Women can be hired in large numbers in both the low-end data entry market and the high-end job market.

Simplify all governmental procedures related to software exports and recording of revenue for exports with the State Bank of Pakistan (SBP). Review rules, regulations, SROs and modify those that create obstacles for software exporters. Remove restrictions on foreign remittances and flow of funds.

Encourage the setting up of TPs and silicon cities with subsidised and world class infrastructure facilities for establishing software and related services organisations. Provide infrastructure help outside the TPs.

Encourage expatriate IT professionals to return to Pakistan and establish software houses or extend assistance to the local industry in the form of assignments from abroad.

Encourage equity participation of banks in software projects by setting up venture capital funds. Set up venture capital funds at the federal and provincial levels to encourage private local and foreign funds to establish privately managed venture capital funds.

Encourage banks, DFIs, and SMEADA to recognise software development as a priority industry. Major banks should have IT financing cells for smooth and transparent processing of loans and funding based on cash flows, future earnings, working capital financing, etc.

Assist and give incentives to private companies for acquiring ISO/SEI and other certification for quality standards for the software industry.

Encourage the setting up of a ‘content industry’, comprising intellectual property such as encyclopaedias, compositions, photographs, and other information of international interest.

Fix yearly targets for software export and equip the PSEB to perform its role effectively in export marketing. PSEB will be the focal point for all software related export activities and it will work together with the Pakistan Software Houses Association (PASHA), software exporters, CSP, EPB, the government, and foreign missions to ensure that export marketing activities have a synergetic effect. Earmark adequate funds and provide infrastructure to carry out software exports activities.

In addition, put in place a mechanism to monitor PSEB’s progress and restrict its activities to facilitation rather than active involvement in competitive activities with local software companies.

Encourage local business to invest in the software industry. Conduct awareness campaigns to highlight the immense potential and high returns from this industry.

Encourage major hardware and software vendors operating in Pakistan to set up software facilities and bring in international business through their established channels.

Establish an Export Market Development Fund to create a favourable market image of Pakistan’s software industry. These funds should be used for participation in software related fairs, single country exhibitions, and investment seminars. This can be managed by EPB in consultation with PSEB, CSP and PASHA.

Prepare excellent marketing materials using multimedia to highlight Pakistani software expertise, government initiatives, incentives, and necessary statistics. This will effect direct contact with target markets and will create a good image of Pakistan’s software industry.

Assist entrepreneurs locally and abroad in obtaining visas and work permits. Major diplomatic efforts should be made where required.

2.4 Hardware Industry Development

In the context of information technology, the hardware industry can be defined as "design, development and production of computers, communications and related products, modules, components and hardware related services."The importance of a developed and thriving hardware industry cannot be overlooked in today’s high-tech environment. Development of this industry will enable Pakistan to achieve self-sufficiency, facilitate technology transfer, attract expatriate IT professionals, earn foreign exchange through exports of products and services, and establish state-of-the-art development and design centres locally.

The policy recommendations for this area do not seek to initiate aggressive competition with developed countries. Rather, they focus on developing the areas that are within Pakistan’s reach, in terms of technology and resources, and in which the country could have a comparative advantage.

It is recommended that the concessions incorporated in policy for the software industry be extended to the hardware industry—the benefits that will accrue will more than compensate for the government’s expenditure.

General recommendations for this industry are provided below, divided into two important categories: manufacturing and R&D.

2.4.1 Manufacturing

Establish a Hardware Development Fund (HDF) to finance IT hardware related R&D and manufacturing activities. The HDF’s operation should be supervised by an IT Board (ITB), with private participation. This board will provide the industry a single platform for addressing problems.

Bring duties and taxes for hardware products in line with WTO’s Information Technology Agreement (ITA).

Encourage all public sector manufacturing and R&D establishments to handle private sector business.

If a hardware product is produced locally, bind the private or public sector consumer to ensure 50 percent of the relevant project value content to the local manufacturer. If a product has to be procured from international sources, bind the customer to ensure technology transfer: at least 20 percent of the value addition should take place locally, under license, in an existing production set-up.

Gradually enhance the depth of production to increase local value addition and attain competitiveness in the international market.

Transfer the management control of existing manufacturing concerns in the public sector to the private sector through equity participation or long-term lease.

Encourage FDIs to set up hardware manufacturing or assembly facilities; the emphasis should be on producing primary hardware components.

Ensure strict implementation of regulations and policies, using heavy penalties to deter non-compliance.

Establish a syndicate of IT hardware manufacturers to act as a unified interface.

2.4.2 Technology Transfer and R&D

Employ R&D centres to develop the high-tech areas where there are restrictions or difficulties in technology transfer.

Encourage and fund R&D in universities and engineering colleges. Make it attractive for industries to set up R&D centres at university level, through faculty chairs.

Encourage expatriate IT experts and educationists to spend their annual vacations in Pakistan to transfer their knowledge and share their experiences with local universities. Fund such visits using the HDF.

Establish a reliable online repository of scientific information, that can be accessed easily from all major cities of Pakistan.

Inculcate the spirit of innovation in Pakistan’s students and young professionals: organise countrywide competitions at all levels—from primary schools to premier R&D centres—to stimulate innovative thought.

Establish a premier think-tank institute based on public and private sector partnership. It is suggested that this institute work in close collaboration with a similar set-up outside Pakistan and is close to a nucleus of R&D activity in this field.

2.5 The Internet

The Internet is likely to continue to revolutionise the way people communicate and access information. Because it represents such a powerful communication tool, the environment in which the Internet operates must be understood and regulated differently from traditional communication media. Three general principles should be adopted if the Internet is to grow in Pakistan: existing regulatory structures should not be forced on it, competition in Internet growth should be encouraged, and unnecessary regulations should be avoided.

To expand provision and use of the Internet in Pakistan, it is necessary to provide low-cost and reliable access to the international bandwidth, reliable local bandwidth connectivity, low-cost access to network equipment, widespread public access to networked computers, a base of educated and trained users and providers, and support for the development of national Internet content.

The aspects that need to be considered in this regard are discussed below.

2.5.1 Market Development

Although the Internet industry is not easily classified into tidy segments, three main categories of Internet service providers can be distinguished in Pakistan:

Backbone Service providers

Internet access and service providers, and

Content providers and other value-added service providers.

It is important to note that many internet service providers (ISPs) also fall into one or both of the other two categories.

To ensure that the Internet market develops:

Create a regulatory environment that allows for as much competition as possible. Ideally, this should extend as far as the provision of physical network infrastructure.

To ensure quality, ensure service level agreements between the ISP and the customer, and between the backbone/access provider and the ISP.

Encourage PTCL and new carriers in the private sector to develop into backbone providers. If such telecommunications operators function as Internet access providers and/or content providers, they should do so through a subsidiary company. In addition, the Internet services provided by such subsidiary companies should be cost based. Moreover, income derived from other services of the carriers should not be used to cross-subsidise their Internet services. This will ensure transparency and fair competition.

Permit and encourage existing and future ISPs to provide backbone and peering services. Encourage them to set up different nation-wide physical delivery and access mechanisms via IP Radio, Fibre and Microwave

Make the licensing procedure as simple as possible, low-priced, and free of ponderous royalty structures, as these costs will ultimately be passed on to consumers.

Establish a robust and reliable Network Access and Peering Points to route country traffic on the Internet.

Remove the anomaly of tax deduction at source for bandwidth purchase by ISPs, PTCL and other telecommunications service providers.

2.5.2 Availability

The rapid roll-out of new telecommunications infrastructure is critical to the rapid growth of the Internet in Pakistan. It is, therefore, important that any telecommunications framework encourages the development of ‘alternative physical delivery mechanisms’. This strategy is expected to effect a major improvement in the penetration of the basic infrastructure and Internet accessibility. Some of the alternative delivery mechanisms that must be explored are:

Wireless Technologies. Wireless technologies are a particularly important way of addressing local loop capacity because of their rapid roll-out, greater reliability, and lower maintenance cost.

Electricity Supply Grid. The use of an electricity grid should be investigated since the penetration of electricity in Pakistan is much greater than telecommunications, especially for rural areas.

Satellite Operations. A number of international satellite operators have already begun to provide high-speed Internet access. These services should be encouraged to overcome bandwidth limitations, not only in urban areas but also in the rural and suburban areas, for basic Internet connectivity.

Cable TV. Convergence of voice, data, and video transmittal has opened up new opportunities for quick access of users and operators. Cable TV is expanding very fast and infrastructure for it is being laid. Regulations should be put in place to allow cable operators to offer Internet services.

2.6 Incentives

The government will need to invest in various fiscal and non-fiscal incentives to nurture, develop, and promote the use of information technology in organisations, to increase their efficiency and productivity. Most of the non-fiscal incentives have been discussed earlier. This section discusses the broad fiscal and non-fiscal incentives required for IT awareness and promotion. A detailed list of these incentives is annexed.

2.6.1 Fiscal Incentives

Declare information technology as ‘Infrastructure Facility’.

Extend existing incentives to specific sectors of the IT Industry to the entire IT industry; their selective application will only encourage corruption and time consuming procedures will discourage the intended beneficiaries.

At the centre of development of the IT sector is the venture capital industry. The willingness of venture capital funds to incubate IT companies has been crucial for the IT industry. Frame proper regulations and incentives for encouraging venture capital investments and setting up private funds. This could be monitored and regulated through the establishment of a venture capital industry association. A vibrant venture capital sector can leverage innovation, promote technology, and harness the ongoing knowledge explosion.

Set up Venture Capital Funds for low-interest loans and investment in equity for companies set up by enterprising and qualified people in software, hardware design, and human resource development. Additionally, give the Venture Capital companies income tax concessions by allowing them to set off losses in one invested company against profits in another company during a particular year, tax breaks, and allowance to redeem all their paid-up capital.

Encourage investments in all phases of IT businesses, like idea generation, start-up, growth ramp-up, and exit process.

Direct the nationalised banks, other banks, and investment funds to create an underwriting fund so that the public offer of IT companies can arrange for a portion of their capital to be underwritten.

Ask public sector non-banking and investment financial institutions, such as NIT, to put up at least 20 percent of the public offers of telecommunications, software, and other IT related companies.

Frame a special listing procedures through the Securities and Exchange Commission of Pakistan (SECP) to attract dotcom and e-businesses and enable IT companies to be listed on stock exchanges of Pakistan. The procedures may include removing minimum public offer percentage, profit track record, and age of company. Frame special guidelines for the establishment of Over the Counter (OTC) exchanges at the stock exchange to help list small capital companies with high volatility.

Give commercial and investment banks special tax concessions on earnings from investments in IT ventures. Establish a special pool of debt for IT companies.

Give special incentives to foreign universities and companies for setting up development and educational centres in Pakistan by venture capital funding.

Establish an Export Market Development Fund, managed by EPB, to provide marketing support to IT exporting companies, with matching grants from the government.

Enhance the limits for export refinance facility for software exports based on previous years’ performance, to help finance establish software companies.

Redefine ‘IT industry’ to include provision of hardware, software, training/consultancy/education, telecommunications equipment, and allied products.

To facilitate the capital accumulation required for international marketing, give IT exporters a seven-year tax holiday.

For duty and tariff purposes, treat IT hardware, software, and related equipment (e.g., radio modems, routers, autoteller machines [ATM], electronic components and consumables, power generators, air-conditioners) as one category.

Exempt computers and related hardware, peripherals (including communication hardware and software), software development tools, and test equipment from all duties, taxes, surcharges, octroi, etc.

Make the re-import of repaired IT equipment or re-import of recorded or packaged software easy and transparent, simplifying documentation procedures.

Ensure that all equipment/software tools being imported for IT exports are swiftly cleared.

Provide incentives to experienced local and overseas IT professionals (at least 5 years’ experience in the related field) by exempting them from income tax.

Allowing 100% depreciation for hardware, software, and other equipment in the first year of its use in the IT industry.

2.6.2 IT Promotion & Awareness

A massive IT promotion and awareness campaign should be undertaken. A national strategy should be worked out and the structure for its implementation put in place. This will include:

Provision of continued support and funds by EPB for the participation in world IT/computer trade fairs, which is vital for the IT industry.

Presence of IT specialists in embassies, commercial consulates, and EPB offices in countries with software export potential. Consultants may be hired for larger markets, like the United States.

Review of government policy to ensure that service providers can compete in the provision of telecommunications services to rural areas, where appropriate.

Extensive usage of the electronic media to aid in the awareness drive. The drive would be aimed at enabling the citizens to utilise available data on official networks.

Promotion of IT use by the prime minister, ministers, and all other key figures who can influence public opinion at all public and private forums. Ministers of concerned ministries can be made to ensure that the departments under their control automate their work on a priority basis.

Declaration of the next fiscal year as ‘IT Year’.

Organisation of special events during this year, such as a National IT Conference cum computer exhibition in major cities, mobile computer exhibitions, international conferences and exhibitions, IT competitions at various levels, and special programmes on electronic media.

Evaluation of the performance of ministries on the basis of IT implementation and simplification of work methodology for the general public.

2.7 IT Usage

2.7.1 IT in Government

To embark on an aggressive programme to improve efficiency and provide quality services to the citizens of Pakistan, information technology must be inducted at all levels of government. This induction and its effective utilisation will also help in motivating others to follow suit, since the government has a large bearing on all segments of the society.

The main features of such a programme could include the following:

On the pattern of the IT Division, each provincial government shall create an IT Department to plan, co-ordinate, and implement government IT projects. The Departments shall be staffed with IT professionals. Special pay scales/contracts shall be introduced for IT professionals.

An expenditure head for IT Services shall be created in the budget books, and provincial as well as federal IT departments will be allocated a substantial sum annually for developing IT infrastructure and conducting training at all levels in the government.

Working Groups shall be formed to create awareness in all Government organisations about the utility of computers and IT.

IT literacy shall be made a mandatory requirement for all future government employment, and a column shall be introduced in the ACR form for assessment of IT knowledge and utilisation by government employees.

The Internet and Intranet email shall be utilised for inter-office communication. (Necessary security, digital authentication and legal cover shall be provided to secure the validity of such communications.)

The IT departments shall prequalify private firms to provide IT consultancy services and products to the government. Computer and office automation training for all management and secretarial staff shall be taken up on a priority basis and should be outsourced to the private sector.

National databases of economic activities shall be prepared to provide facts for different policies framed by the government. These databases shall be made accessible to the public through the Internet, in accordance with the Laws of Pakistan. This will lead to transparency in Government transactions and various bidding processes.

Representation from the private sector and the provincial governments shall continue in the IT Commission in generating new concepts, solving IT related problems, and ensuring the due participation of all stakeholders in ongoing as well as future efforts towards IT implementation. The IT Commission will provide inputs on a continuous basis. The existing composition of the IT Commission shall be expanded and the groups formed for formulation of the IT Policy shall continue to work as associate members of the IT Commission.

2.7.2 IT in the Economy

Revolutionary advances in information technology have facilitated economic and social changes that are transforming business and society. A new kind of economy—the ‘information economy’—is emerging. In current jargon this is known as e-Commerce.

In the new economy, information is a critical resource and the basis for competition. Old ways of doing business are being attacked and sometimes defeated. At the social level, a corresponding change has set in. Society's information capabilities are pervasive, making it substantially different from an industrial society. It is much more competitive, more democratic, less centralised, less stable, more capable of addressing individual needs, and friendlier to the environment.

These changes dictate a major agenda of structural adjustment. Advanced countries are aggressively pursuing their version of the agenda, and developing countries like Pakistan must follow suit or risk falling further behind. The information adjustment required must achieve macroeconomic and political balance while the economy struggles with uncontrolled information flows and global competition, trade, and investment.

Broad policy recommendations for the sector are:

Harness information and information technology for sustainable economic development.

Effect systemic improvements in the functioning and competitiveness of key sectors of the economy through strategic information policies and systems. Typical among the strategic systems are sector-wide information systems for education, health, public sector management and transportation, electronic payments, university and science networks, trade facilitation, property and business registries, disaster prevention and management, and national statistics.

Develop new ways to use information technology to help solve the most pressing problems of human and economic development—education, health, poverty alleviation, rural development, and care for the environment.

Where the private sector can provide investment and services, the government acts as a catalyst for the formation of markets. In information projects, where market failures are more frequent, provide government financing and incentives. When the private sector requires initial assistance to adjust to a highly competitive information economy, provide assistance and incentives to empower private firms, which comprise the main engine for growth.

The private sector is pre-eminent in deployment of the information infrastructure through the provision of goods and services on a competitive basis. Allow the private sector to satisfy market demands and, occasionally, give it an initial boost.

Communities and non-governmental organisations often have the best local connections for efficient and appropriate development efforts. Encourage alliances that work through these agents.

Provide safeguards for the privacy of individuals and the confidentiality of transactions against all possible encroachers, including the State.

Establish a high-profile Electronic Commerce Council of Pakistan (ECCP), headed by the Minister of Commerce, to govern all the electronic commerce (EC) affairs in Pakistan.

Establish specialised work groups for planning and implementing different aspects of electronic commerce, such as awareness, promotion, education and training; EC infrastructure implementation; EDI; the Internet and other emerging technologies for EC services; and laws, regulations, and standards for EC. The groups should work in consultation with the government, businesses and EC organisations.

2.7.3 IT in Education

Education determines, more than anything else, a country's prospects for human development and competitiveness. Fortunately, the information revolution offers some extraordinary opportunities in education. The following measures should be taken to avail these opportunities:

The education sector is responsible for delivering a work force skilled in the use of information systems and a technical corps able to produce and maintain information products and services—create appropriate policies and incentives for this to occur.

Make participation by rural and poor segments of society in IT education a strategic priority for both social and economic development.

Launch a scheme for providing low-priced computers and Internet connectivity to universities, colleges and schools through a public-private sector initiative.

Network all universities, engineering and medical colleges, and institutions of higher learning in the country for improved quality of education.

Set up electronic libraries to ensure economical and equitable access to world information.

Encourage educational facilities to computerise their registration, examinations, accounting, and other activities.

Encourage educational facilities to adopt computer assisted learning and other IT tools to aid in the teaching process.

Establish virtual classroom education programs, using online, Internet and/or video facilities, to provide distance learning to a large number of individuals. Set up ‘Smart Schools’.

2.8 Legislation and Regulations

2.8.1 Legislation

To provide protection and enhance confidence of users, providers, and facilitators of information services, the Ministry of Law should frame legislation based on the recommendations of the steering group comprising IT and legal experts. The UNCITRAL model laws should be kept in mind while drafting laws.

Actions in the following areas should be considered on a priority basis:

Digital Signature Act
Laws should be enacted and/or amended to recognise digital IDs, signature certificates, and electronic authentication and verification.

Computer Crimes Act

Tele-Medicine Development Act
This should cover the legal issues involved in professional services provided electronically by practitioners in another country. Adequate provision should be made for covering liabilities associated with directly accessed information and services such as medical information or advice.

Tele-Education Act

Intellectual Property/Copyright Act + consumer protection act
The copy rights laws should be strictly enforced to protect intellectual property rights of software developers and IT service providers while at the same time protecting the rights of the consumers

Multimedia Convergence Act

Electronic Government Act

Electronic Commerce Act

Protection of privacy, security, and confidentiality.

Admissibility of copies of electronic records in an administrative or court proceeding.

Review of existing laws to remove any contradictions that may hinder the implementation of IT programs.

Assignment of at least one position in the government to develop an expertise, references, and contacts for changing government statutes to accommodate electronic commerce. The government should seek legislative approval of minor changes to statutes that will encourage electronic commerce, and revise statutes that mandate a paper-based or manual process.

2.8.2 Regulations

A regulatory framework is essential to avoid violating policy goals and direction, incorporate social and consumer concerns in the deployment of new products and services, and safeguard precious national resources. It must be ensured that regulations do not stifle industry investment and growth.

In devising a useful regulatory framework, the following measures should be taken:

Focus on creating a fair and competitive environment, based on a free market, open access, and intellectual property rights.

Make optimum use of existing investments in networks. Remove restrictions on voice transmittal, video telephony through Internet, intranet, or other data communication links.

Give network operators the freedom to build their own backbone and local access. Encourage combined and collaborative efforts in this regard.

Facilitate rapid deployment of infrastructure for promotion of IT services.

Resolve issues in the use of electronic signatures. Electronic signatures will streamline many internal processes and will position Pakistan for a method of authentication/verification of electronic communications on a national and international level.

Up to a specified level, allow full rights of encryption.

Review government management and procurement policies to encourage competition among telecommunication services providers in technical service standards, prices, and development of broader band services.

Through the ITC or PTA, ensure that the Authorised Service Providers meet network standards.

2.8.3 Standards

The government should consider standards on an ongoing basis as part of a continuing IT planning process. To determine where to standardise, the process should consider costs and benefits. Benefits may include:

Easier sharing of data,

Easier sharing of skills,

Economic usage of resources, and

Improved product quality.

The relevant steering group will study, review, and recommend standards to be adopted in the use of It by the government and the private sector.

The government shall carefully consider the costs and benefits of standardisation in technologies where there are many reasonable standardisation alternatives and/or no clearly dominant standard exists. These considerations shall be settled through an open, visible process with broad participation from relevant government representatives and public and private sector organisations.

Standards should be published on a regular basis. The publications can be used as guidelines by government, and public and private sector organisations throughout the country. Where specific standards are identified as critical to the development and deployment of a countrywide infrastructure, compliance with these should be made mandatory.

Apart from participation in international standardisation activities, the government shall recommend standards and guidelines for the following:

Two-way electronic business transactions,

Countrywide electronic mail exchange,

Non-refutable electronic signatures,

Classification of information,

Videoconferencing systems, and

Minimum encryption standards for data requiring various levels of security.

2.8.4 Urdu and regional language software development

A focused effort to standardize the Urdu code plate will be done in the next few weeks and a concerted plan to encourage the development of open source and licensable Urdu software is being launched. This will enable plug-ins for popular office and e-mail packages to be made available. This initiative is expected to drive the development of other Urdu and Regional software packages for word processing and data base applications.
 
Current IT initiative

 

The present initiative undertaken by the Ministry of Science and Technology (MoST) has revived serious interest in developing the IT industry in Pakistan. Under the auspices of the MoSt and the IT Commission, ten working groups were formed at a meeting on IT Policy chaired by the Minister, Science and Technology, Dr. Atta ur Rehman on April 1, 2000. The results of this initial policy discussion have resulted in the compilation of the National Information Technology Policy and Action Plan Recommendations. This draft document outlines the areas in which further development and resource allocation is required and defines the scope of evolving and implementing meaningful progress. It will also form the basis on which specific policy recommendations will be further elaborated, plans of action defined, and implementation arrangements formulated. A two-pronged phased approach is recommended:

1.Identification and immediate implementation of a short-term action plan (STAP), lasting for at least one year, that can help remove some of the existing barriers to IT usage and facilitate growth.

2.Institute a well-defined process whereby a National IT Policy and Action Plan can be formulated, implementation arrangements designed and established, and administrative and management capacity building for supporting a more vibrant IT sector initiated. This process will help define a more stable and detailed longer-term strategy by following a systematic, phased process as defined later below.

Back to top Short Term Action Plan (STAP) for the IT Sector Over the course of the previous deliberations on the IT sector in Pakistan, numerous policy, regulatory, tariff, and operational impediments to the widespread adoption of an IT culture by all sectors of Pakistani society have been identified and ready solutions suggested for removing such bottlenecks and barriers. For instance, the issue of Internet bandwidth pricing had been long festering within the IT community, and lower tariffs in accordance with international norms had been a persistent demand of both end users and Internet service providers in the country. The recent reduction of 53% in Internet bandwidth tariff announced by the Minister for Science and Technology after consultations with the Pakistan Telecommunications Company Ltd. (PTCL) and the agreement with the Internet Service Providers of Pakistan (ISPAK) to pass the entire resultant cost savings through to the consumer has been widely hailed as a step in the right direction. It is therefore recommended that a Short Term Action Plan (STAP) be drawn up by the IT Commission, in consultation with relevant stakeholders and technical experts, on which item-wise action can be initiated and monitored by the Ministry of Science and Technology. The STAP would be an open, action-specific document that could be amended and enlarged as the need arises over of one year of implementation, after which the it would be succeeded by the National IT Policy and Action Plan.

STAP Criteria

# The basic criteria applicable to all STAP elements would include the following: A maximum limit of one-year from the date of initial STAP approval for the implementation of the recommended measures. For one-off measures (e.g., tariff or tax adjustment), final implementation must be obtainable within this period, while for continuing actions (e.g., provision of venture capital), their immediate objectives and operation must be realizable within this period.
# Actions must be achievable at low- or no-cost. Examples include changes in IT regulations and legislation or removal of other artificial constraints to IT activities. When evaluating costs, losses in direct GoP revenues will be discounted, but overall economic costs should be considered to the extent possible. This 'no regrets' approach will ensure that excessive investment is not undertaken without a proper assessment of returns and opportunity costs, but actions which are justifiable even in the absence of specific IT goals can be undertaken promptly based purely on their intrinsic merit and overall benefits.
#Actions and their implications must be reversible, if required, and not carry permanent long-term implications. This would ensure that resources are not wasted on initiatives that a more thorough assessment could find unnecessary or counterproductive, nor lock the country on to high-cost options from which it may become difficult to depart. Again, many policy measures, by virtue of being amenable to revision, would qualify but care must be taken that frequent policy changes can also carry a significant hidden costs. Virtually all barrier removal exercises, however, would be suitable candidates for the STAP.
#Actions must be sustainable in the longer term. Decisions must not be taken on a one-year performance basis, but must consider how desired objectives can continue to be met in the future. Even low-cost investment decisions must not be made without evaluating recurring operational, management, and replacement costs for the future. Policy measures must similarly be in line with the perceived long-term interests of the country and not subject to substantial revision later.
#Activities must initially focus on barrier removal and IT facilitation, rather than being oriented towards capability building, investment, or capacity growth which would be better addressed by the National IT Policy and Action Plan. The emphasis in the STAP should be on how existing resources, infrastructure, and IT talent can better be utilized in moving the industry forward, creating greater public awareness, and improving the efficiency of IT-based service provision. National IT Policy and Action Plan A sequential approach will be adopted in evolving and implementing an effective, dynamic and responsive National IT Policy and Action Plan.

The main components of this approach would consist of the following stages: Undertake Core Planning
Through official notification, a group of four to six professionals will be formed to undertake preparatory activities in the absence of a suitable capability in the IT Division of MoST. The IT Commission will act as a steering committee for the core planning exercise. This group or organization will, over a period of 30 days, carry out the following functions and submit its recommendations to the MoST:

1.Set out a detailed process and timeline for the formulation, review, and approval of the proposed National IT Policy and Action Plan.

2.Create a database of IT and related management and technical expertise available within and outside the country to assist in the planning process, and make initial contact whenever necessary.

3.Establish detailed terms of reference for the preparation of the National IT Policy and Action Plan, including definition of scope.

4.Identify members of a National Task Force (see below) representing key stakeholders in the IT sector, along with appropriate management and planning expertise, who would undertake the preparation of the National IT Policy and Action Plan. Selection criteria for members of the National Task Force and its constituent Technical Working Groups must be developed to ensure adequate qualifications and expertise and stakeholder representation.

5.Estimate financial and other resource requirements necessary for the National Task Force to meet its stated objectives, and for concurrent support activities including logistics, meetings, secretariat expenses, and information dissemination.

Back to top Establish Task Force for IT Policy and Plan Formulation Based on the recommendations of the core planning exercise, the Most will constitute a National Task Force on IT Policy and Plan Formulation through government notification for a term of six months. The Task Force, comprising of approximately twelve representatives from the private sector, academia, government, and policy consultants will be contracted to carry out an intensive planning process, including research and compilation of baseline information, according to approved terms of reference. Back to top Review of Draft Policy and Plan The draft National IT Policy and Action Plan will be subjected to intensive internal and external review before it is finalized. For this purpose, several concurrent review mechanisms will be employed, so as to obtain maximum feedback and suggestions from a diverse and geographically dispersed IT community within a short period of one month:

1.For general public commentary, the draft policy and plan documents will be made available in their entirety on the Web, accompanied by an appropriate advertisement campaign in the print and electronic media to solicit public interest.

2.In addition, a formal peer review panel of independent experts not associated with the Task Force will be constituted based on the database of IT expertise prepared earlier, and may include foreign as well as local members. This panel could have up to twenty reviewers selected from various fields relevant to the IT Plan. The peer review will be partly structured, in which respondents will be asked specific questions about general policy adequacy and will rank the draft on predefined criteria, and partly based on detailed comments from the individuals.

3.In order to expedite subsequent government approval, the draft recommendations will also be circulated within various relevant government ministries, provincial departments, and line agencies for comments. Important amongst these would be the Ministry of Finance, the Central Board of Revenue, the Ministry of Education and Manpower, the Ministry of Commerce, the Ministry of Industries, the Ministry of Law, PTCL, NTC, SCO, Provincial IT Boards, EPB, PSEB, and prominent public academic and training institutions.

4.The Most, IT Commission, the Pakistan Computer Bureau, and other relevant organizations will conduct seminars and debate on national media in which a dialog on the strengths and weaknesses of the draft can be carried out.

Back to top Policy And Plan Approval The final National IT Policy and Action Plan will be submitted to various government departments and line agencies for relevant approval and concurrence. Since a detailed review within the government will have preceded this approval, such a process should not entail more than two weeks.
Establish Management and Monitoring Capability The administrative changes required to effectively support the new National IT Policy and Action Plan will be undertaken swiftly once approval and necessary financing has been obtained. These reforms will be based on the recommendations made by the Task Force and included in the Plan document and will, at a minimum, aim at the creation of a technically competent IT Division within the MoST and rationalizing and strengthening of the IT Commission, the Pakistan Computer Bureau, the Pakistan Software Export Board, and the provincial IT boards. Plan Implementation The National IT Policy and Action Plan will be implemented according to well-defined phased targets and objectives. To ensure that the plan meets its objectives consistently and that suitable midcourse corrections can be incorporated in a timely manner, a mechanism will be set up involving the government, private sector, academia and other national representatives to coordinate and implement the policy and plan elements and provide strategic oversight over the longer term. A formal broad policy and plan review will be conducted under this mechanism every six months, with more area-specific monitoring carried out on a monthly basis.
Outputs

At the end of the first year, the Government of Pakistan will have:

1.Instituted, for the first time, a clear and comprehensive National IT Policy and Action Plan comparable in quality and scope with the best globally. This will not only greatly encourage and guide the local IT industry’s growth, but will help attract serious international attention towards Pakistan as an IT market and resource base.

2.An effective planning, implementation and monitoring mechanism in place, the lack of which had stifled all previous national IT initiatives.

3.Ensured that many of the long-pending actions required for facilitating IT business in Pakistan are implemented without further delay under the STAP, providing a ready momentum on which longer term accelerated growth can take place.

4. Estimate financial and other resource requirements necessary for the National Task Force to meet its stated objectives, and for concurrent support activities including logistics, meetings, secretariat expenses, and information dissemination.

 

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