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Pakistan’s Silicon Valley: A Blueprint for Innovation

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Pakistan is currently at the crossroads of its history where it is facing myriad economic and social challenges. Pakistan’s economic woes in the recent period have brought it to the verge of a national crisis. But the genius lies in creating opportunities out of difficult situations. It is imperative for the leadership of the country to recognize the significance of technology in fostering economic and social development. In this regard, the success of California’s Silicon Valley serves as a compelling example. Silicon Valley has been instrumental in revolutionizing the industrial sector of the country, creating high-salary jobs for skilled workers, generating substantial revenue and influencing global trends across various sectors.

Before the onset of World War II, Frederick Emmons Terman, the Dean of the School of Engineering at Stanford from 1944 to 1958, proposed using vacant land on Stanford’s campus in Palo Alto to establish an industrial park. The US government immediately supported the idea and the first university-owned industrial park was established in the world.

Terman actively encouraged his graduate students to cultivate their own businesses and locate them within the park. Initially, two of his graduate students, William Hewlett and David Packard, founded a company that would later evolve into Hewlett-Packard (HP). Inspired by HP’s success, numerous other students of Terman and graduates from neighboring institutions like Berkeley, Davis, and San José State University (SJSU) also joined them, transforming the region into a technological hub.

Today, Silicon Valley, (named by journalist Don Hoefler in the 1970s due to the large-scale production of silicone chips and other electronic components) is home to the world’s leading technology companies such as Google, Apple, Facebook, and Intel. The Silicon Valley success story highlights the importance of investing in education, skills-based learning, fostering entrepreneurship, and governmental support for a thriving tech sector.

Pakistan demonstrates considerable technological promise, boasting 82.90 million internet users and a dynamic freelance community that ranks among the top five worldwide. Leveraging online platforms such as Fiverr and Upwork, freelancers facilitated nearly $400 million in export remittances in 2021. Moreover, the country’s e-commerce sector is poised for substantial growth, with projected revenues reaching US$2,851.6 million by 2024, highlighting digitalization prospects.

Moreover, Pakistan presents a favorable environment for the incubation of new startups, evidenced by the establishment of over 250 such ventures since the year 2015. The onset of COVID-19 pandemic accelerated this growth, with startup investments soaring from $65m in 2020 to $350m in 2021. Extended lockdowns spurred entrepreneurial opportunities, leading to the creation of valuable digital products and internet-based services such as ride-hailing and food/grocery delivery, mirroring trends observed globally.

In addition, Pakistan’s major cities boast vibrant science and technology centers with the potential to become the country’s Silicon Valley.

Lahore houses prestigious institutions like LUMS, Lahore School of Economics, and UET, along with IT businesses like NETSOL, Systems Limited, and Ovex Technologies.

Islamabad is also home to different educational institutions specializing in science and technology, the most renowned of which is the National University of Sciences and Technology (NUST). The Ghulam Ishaq Khan Institute (GIKI) located in Swabi, Khyber Pakhtunkhwa, a two-hour drive from Islamabad, also specializes in the learning of engineering, sciences, and technology.

Karachi, a financial hub, has institutions like SZABIST and NED University, in addition to successful e-commerce platforms like Daraz. pk and EatOye! (later merged with Foodpanda in 2015).

These urban centers have the essential elements required to transform into a Pakistani Silicon Valley. Moreover,the country’s burgeoning youth population, coupled with increasing internet penetration, low-cost smartphones and affordable data rates make Pakistan an ideal destination for building a Silicon Valley.

To enhance Pakistan’s prospects, it requires an upgrade to its educational system, promotion of the freelancer culture, establishment of a conducive business environment, cultivation of a culture of innovation and entrepreneurship, and the development of cutting-edge IT infrastructure.

First of all, Pakistan’s educational system needs a comprehensive overhaul, with a renewed emphasis on STEM subjects and the introduction of short courses at college and university levels to boost critical thinking and skill refinement. There’s a pressing need to raise awareness about freelancing opportunities through print, electronic and social media. The younger population should be equipped with digital skills such as cyber security, content marketing, graphic designing, and social media marketing. To achieve this, government initiatives should align with local vocational training centers as well as global institutions such as Google, Microsoft, IBM and others. In addition, the private sector should also be taken on board to set up programming boot camps to impart different digital skills among the youth.

Secondly, there’s a need to facilitate the freelancing community by offering them reliable payment solutions and safeguarding them from illicit payment channels. In recent years, self-employed individuals have experienced significant losses due to excessive fees imposed by banks on each foreign remittance transaction.

As a response to this, The Ministry of Information Technology and Telecommunication (MoITT) drafted the “National Freelancing Facilitation Policy 2021” to make the country a premier marketplace for online services, promoting skills development and capacity building. However, this policy has limited outreach and there are different bureaucratic hurdles in the way of its implementation. Therefore, this policy should be made more effective for the support and sustainability of the freelance industry.

Thirdly, inviting investments for startups is crucial. Unfortunately, many of the established funding entities and individuals in Pakistan tend to favor investing in well-established businesses over startups. There is a dire need to create awareness among such institutions and individuals regarding the potential of the IT sector.  In this regard, the Ministry of Information Technology and Telecommunication can play a significant role in organizing IT-related expos domestically and internationally to attract investment for startups. Moreover, the government should facilitate the provision of business-friendly loans and formal financial services to strengthen the funding landscape for new businesses.

Fourthly, addressing the academia-industry gap and reducing brain drain are vital. Thousands of students graduate from different universities in Pakistan every year but the talent pool of the country remains narrow primarily due to these two factors. Pakistan ranked 110 out of the 140 countries on the Global Competitiveness Report published by the World Economic Forum in 2019. Therefore, it is the need of the hour to invest in the skills development of youth to drive innovation in the information technology sector. In this regard, government and academia must cooperate.

Fifthly, entrepreneurship must be encouraged at the university level as was done in the case of Silicon Valley in the US. Universities that have in-house research facilities and up-to-date curricula not only nurture the skill sets of students but also foster entrepreneurial activity in the country. In this way, they not only cultivate talent but also translate that talent into practical outcomes.

In Pakistan, private sector universities such as NUST, GIKI and LUMS have taken such initiatives by developing research parks and incubation centers to bridge the gap between entrepreneurs, innovators and investors. However, the graduates of these universities make up only a small fraction of the overall graduates who complete their degrees from government sector universities which still lag in terms of resources, research and development facilities and startup ecosystems. Therefore, public universities must be upgraded to provide research and development facilities and inculcate a spirit of entrepreneurship amongst their degree holders.

Lastly, improving IT infrastructure is essential. To make a conducive environment for digitalization, adequate investments must be made to ensure access to high-speed internet, reliable power supply and modern means of transportation. Optical fiber coverage should be installed in all the major cities as well as remote and rural areas for fast and unlimited internet access. 4G and 5G technology should also be expanded to boost digital connectivity.

The industrial and entrepreneurial sector has suffered a lot in the past due to the chronic energy crisis in Pakistan. Now is the high time that the government should invest in non-renewable sources of energy such as solar, biogas and wind power to ensure a reliable and consistent power supply. Similarly, the development of modern transportation systems such as highways, railways, and air transportation is also extremely important to facilitate the business spectrum of the country.

In the contemporary era characterized by globalization, digitalization presents itself as a critical driver of national economic and social development. Pakistan’s path towards achieving this necessitates overcoming any economic or social barriers that may currently impede the advancement of digital technologies. In the wise words of Chinese philosopher Lao Tzu, “A journey of a thousand miles begins with a single step.” The pursuit of a domestic center for technological innovation in Pakistan necessitates immediate action.

*Natasha Matloob is a research intern at The Diplomatic Insight, currently pursuing Bachelors in International Relations from NDU, Islamabad. She can be reached at natashamatloob737@gmail.com 

**The opinions in this article are the author’s own and may not represent the position of The Diplomatic Insight. The organization does not endorse or assume responsibility for the content.

Natasha Matloob
Natasha Matloob
The writer is pursuing a bachelor's degree in International Relations from National Defense University, Islamabad.

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