Unlocking the potential

LAHORE: We have gone a long way in information technology but experts think that the IT sector of Pakistan is performing far below our current potential. With some effort we can increase our IT exports five times.

The IT industry of the country is at a take off stage. “Our IT exports of $2-3 billion are dismally low than our current potential. With the right policies IT exports could reach $10-15 billion” said Umair Azam, CEO Integration Xperts whose company is providing software solutions to domestic and foreign companies.

He said the government, bureaucracy, State Bank of Pakistan and the technology companies would have to fine tune their policies to benefit from this hanging fruit. The Overseas Chamber of Commerce and Industry in its recent study revealed that digitization can add $60 billion in our GDP within seven to eight years. Pakistan is still a cash-based economy with less than 5.0 percent merchants accepting digital payments.

This has to change. Indonesia by encouraging international e-commerce companies to set up their regional offices attained an e-commerce market worth $30 billion annually which supports 26 million direct and indirect jobs.

The OCIC report states that the Indonesian e-commerce market is expected to increase to $54 billion by 2025. It further states that digitization in Pakistan could lead to creation of innovative jobs for 23 million Pakistanis. It further stated that 10 percent increase in 1.4 percent of GDP.

The Integration Xperts CEO said these are the actions that the IT industry expects from the government of Pakistan. He said the technological companies in Pakistan operate with the mindset of doing projects all alone.

He said this is not an efficient way. The Indian companies outsource a sizable chunk of their project to smaller companies. This saves the cost of maintaining a large workforce that sits idle when a big project is complete, he added.

Information technology can help curb the delays that frequently occur in public organizations due to manual handling of files which takes days to gather the required information whereas the relevant IT solutions can accomplish the tasks with a single click. We cannot blame the bureaucracy for all delays as in order to process any application they have to seek information from different files or departments.

Moreover, where governments conduct their day to day affairs digitally, the private sector also adopts the technology as well for better coordination with the government authorities.

Azam said adopting technology in the public sector is a big challenge not only in Pakistan but in many developed economies. Its acceptance accelerates when bureaucrats realize that it is the most efficient way of doing things.

The government of Punjab did a fine job in digitizing its various functions in health, education and public security. Most of the software was developed in-house by the Punjab Information Technology Board. Most of its software was highly innovative.

But the drawback with public sector software development is that the bureaucracy does not keep pace with changing technology and updating the technology. The function of the government should be to spell out its needs and outsource software development and concentrate on execution.

At the federal level the income tax filing through the internet has made it easier for every taxpayer to file returns online even without the help of a tax consultant. The sales tax returns are filed every month online by the sales tax registered persons. Sindh has lately accelerated its digitization efforts and KP is not far behind.

The largest revenue potential in Pakistan lies in bringing medium sized retailers into the tax net. Out of over 2.2 million retailers in Pakistan around 500,000 retailers are not connected with the FBR through the point of sales system.

Experts have evaluated that the average monthly sales of these retailers is around Rs500,000. If they adopt a point of sales regime the FBR or provincial revenue departments would net Rs250 billion tax per month. This would add Rs3,000 billion in national kitty, just enough to bring fiscal deficit to manageable level.