Boosting IT Cooperation through China-Pakistan Digital Corridor

The undeniable proximity between China and Pakistan has led to their increasing cooperation in new sectors. The all-weather allies recently agreed to launch three new corridors, including China-Pakistan Digital Corridor. The Prime Minister of Pakistan, Shahbaz Sharif, was among the few leaders to be invited by China after the historic 20th National Congress of the Communist Party to address the “revitalisation” of CPEC. The two states are interdependent and share a mutually beneficial relationship. The bilateral digital corridor aims to help China in software development, boost the IT industry of Pakistan, and train and utilise its workforce. Although Pakistan’s Information Technology (IT) industry hit its highest point recently, the digital corridor will supplement creating a world-class technology ecosystem.

Earlier, the IT sector in Pakistan faced numerous challenges, including untapped talent and skilled workforce, low-quality internet services, lack of training centres, and negligence regarding start-up culture. However, in the middle of 2021, Pakistan’s tech sector peaked. Despite encountering various hurdles in the past few years, unprecedented growth has been witnessed in the IT services of Pakistan. The Economic Survey of Pakistan 2020-21 revealed that the compound annual growth rate for IT and IT-enabled services reached 18.85 per cent, making it the highest growth rate for any industry in the state. Additionally,  Pakistan earned 199 million USD via IT export to foreign countries during the first month of the fiscal year 2022-23, which showed a 1.58 per cent increase compared to FY 2021-22, reports the Pakistan Bureau of Statistics.

Pakistan’s present IT landscape stands on solid foundations, and a new digital corridor will act as a catalyst for further progress in the IT sector.

When it comes to Pakistan’s bilateral cooperation in the technology sector, China remains on top. The Cross Border Optical Fibre Cable project of CPEC promises to improve the Information and Communications Technology (ICT) and telecom industry of Pakistan. It will also accelerate mutual IT exchange. It further aims to cater to the rapidly growing internet traffic needs of the two countries. Nevertheless, the two states have decided to reinforce their position with respect to the digital domain. Thus, the China-Pakistan Digital Corridor brings along new opportunities. Under this initiative, China will set up training centres in Pakistan to utilise the rich repertoire of human resources and talent in the field of IT. This will be an additional impetus to the growth of the IT industry and the overall economy of Pakistan. Moreover, to magnify the cooperation in the technology sector, the Chinese organisation Shenyang Economic and Technological Development Area (SEDA) and Pakistan’s Special Technology Zones Authority (STZA) have signed a letter of intent. Hence, the digital sector acts as a new avenue for potential cooperation in digitalisation and emerging technologies.

There is a lot to learn from the Chinese economic miracle and booming IT industry. Sixty-four per cent population of Pakistan is below the age of 30. The majority of the state’s population is not only digitally adept but also possesses the technical skills required to develop and globalise the technology sector. Cooperation with China will bring forth an unrecognised skilled workforce and provide training opportunities to those having potential in the IT domain. Moreover, as China and Pakistan enjoy a symbiotic relationship, the former’s interests are equally served. STZA’s Chairman, Amer Hashmi, while speaking on a special occasion, stated that globally competitive opportunities are being offered by Pakistan’s technology for Chinese investors and partners. This is evident from their extensive cooperation in human capital development, innovation and the digital economy. Demographic advantage plays a huge role in Pakistan’s leveraged position. Other benefits arising from its location include being a significant regional hub for Chinese enterprises to carry out relations with the Middle East, Central Asia and Africa.

The success of the bilateral project will be a game-changer for Pakistan. It will reinforce the view that Pakistan’s IT sector will continue to become more integrated and competitive with the world market. China is investing in Pakistan to develop and utilise the latter’s talent pool which can lead to the production of cutting-edge technologies and will also aid in software development. Pakistan’s present IT landscape stands on solid foundations, and a new digital corridor will act as a catalyst for further progress in the IT sector.

However, there are a few concerns that Pakistan needs to address as it embarks upon this journey along with China. Firstly, the state should consider hurdles originating from domestic political instability and other IT-related concerns, i.e., internet speed, tax and barriers to e-commerce, that can obstruct the flow of products and foreign investments. Secondly, only product-focused ventures with global relevance should be prioritised. Lastly, Pakistan should fully recognise and engage with the talent pool committed to investing its energies and time in the IT field. Pakistan lags in four out of six talent competitiveness indicators: enable, attract, grow and retain. It needs to realise that training and retaining talent are vital to securing the long-term growth of the IT industry. Therefore, by keeping the aforementioned concerns in view and robust restructuring concerning the digital realm, there are sufficient chances for Pakistan to unlock the exponential growth of its IT industry and exports. The digital corridor, as a result of this, will also pave the way for Pakistan to become a financially strong country.

Zainab Yasin

Zainab Yasin is a graduate of National Defence University, Islamabad. She serves as a research intern at CSCR, and is passionate about analyzing diplomatic relations, world politics and cyberspace.

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