Pakistan Institute of Development Economics


Building industry-academia linkages: a latent solution (PIDE In Press)

Publication Year : 2020
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Pakistan has avenues with enormous potential for development. IT sector is one of the promising sectors where special economic zones (SEZ) have yet to emerge. Under the CPEC-priority SEZs, one SEZ is proposed to be set up in Islamabad. Due to various issues-finances and non-availability of fifty acres of land in the mainland Islamabad-we could not see any tangible progress on the federal SEZ. In the policy circles proposals still exist that the federal SEZ should be an IT based one. It is high time that viable alternatives were found to save infrastructural and land investments, which might further delay the project given the financial crunch currently being experienced by the federal government.Provided that the government brings necessary amendments to the SEZ act, introduction of flexibility for IT-based SEZs can bring positive business activities to the economy,including job creation, enhanced productivity and forex earnings. IT SEZs has the potential to serve as a catalyst for software development and IT solutions for domestic use and exportable surplus, especially if it could find inroads into Chinese markets.Once the government relaxes the area requirement of fifty acres of land, the next step could be to look for a well-connected, existing building/facility to be allowed to operate as an IT SEZ. Such an initiative would save the government finances and would also bypass hassles such as getting utilities’ connections, their uninterrupted provision, one-window operation and other basic facilities that would be required for any business facility as envisioned in the SEZ act. While targeting to overcome the stated problems, software parks as well as universities appear as the best candidates to host a federal ITSEZ.>IT SEZs, while looking for opportunities, are expected to engage with local and international industry to market their productsThe Higher Education Commission has set up incubation centres at various universities – NUCES-FAST, COMSATS, NUST, BAHRIA – providing new graduates with a dedicated space to work and get training straight after graduation. The same facility can be extended to IT graduates and professionals to establish new businesses as allowed in an SEZ location. Stationing professionals at such facilities would provide the much-needed connectivity, as universities are well-connected premises. Such a setting would not only ensure instant provision and backup of utilities and infrastructure facilities but would also have a regular stream of new talent in the form of fresh graduates. It would be a win-win situation for both start-ups and fresh graduates. A start-up would get an inexpensive, energetic workforce, while the youth with fresh ideas would get instant placements to refine their skills.As far as the one-window facilitation is concerned, the office of research, innovation and commercialisation (ORIC) at selected universities can do the job by providing the necessary connectivity to all concerned. The incubators, currently based at management sciences faculties, would bring new opportunities for management graduates as well.Government can involve and benefit from the experience of the Pakistan Software Export Board (PSEB) while establishing any such facility and can engage the said organisation in promotion and export of the end products. PSEB can also act as the facilitation centre for international clients and investors.Such a setting would also act as a bridge for the academia and the industry. IT SEZs, while looking for opportunities, are expected to engage with local and international industry to market their products and learn about the needs of industry, which ultimately would get communicated to academia, through ORIC, for getting in line with industries’ needs.Although there are ample incentives for the existing IT sector -100 percent equity ownership, 100 percent repatriation of capital and dividends, and income tax exemption for IT exports till June 2025-IT SEZs at universities would bring additional benefits and would help in streamlining the activities with national goals. Initially, the said idea could be tested at the federal universities; being the federal capital Islamabad has the presence of vibrant IT universities and supply of IT professionals from the rest of the country. Once successful, the same idea could be adopted in the rest of the country.