Internet shutdown: Govt considering exempting STZs, incubation centres

ISLAMABAD: Amid fear of losing huge orders booking as well as shifting companies outside the country, the government is considering to exempt special technology zones (STZs) and incubation centres from internet shutdown in future to minimise the losses of the sector.

The Ministry of Information Technology and Telecommunication is in the process of moving a policy to the federal cabinet, proposing to exempt STZs and incubation centres from internet shutdown in coming times by providing uninterrupted data services.

The potential short- and medium-term economic impact of restrictions on virtual private network (VPN) are significant and lack of clarity on internet policy are estimated at $420 million dollars, with potential long-term damages surpassing $1 billion dollars, resulting from a reported decline of 30 percent of order booking.

Internet shutdown: IT sector suffers $1m per hour loss: P@SHA

The IT and ITeS exports stand at $3.2 billion dollars as per State Bank of Pakistan (SBP)’s data, growing at a Compound Annual Growth Rate (CAGR) of 22.6 per cent—one of the fastest-growing export sectors in economy; the largest employers of youth, empowering over 600,000 skilled labour force, and 2.37 million freelancers. Around 3.0 million households today are dependent on IT and IT-related exports. With consistent policies and stable infrastructure, this figure has the potential to reach $15 billion dollars by 2030.

Unstable internet connectivity, uncertainly about the use of VPN, jeopardise the very foundation of the industry. Reliable internet is not just a convenience; it is the lifeline of IT and ITeS businesses, and the only means available to us to export our services. Past disruptions have already eroded investor and consumer confidence, resulting in economic losses, and diminishing of Pakistan’s global standing. According to freedomhouse.org, Pakistan scores 27 out of 100 in Internet Freedom, well below all our global competitor countries like India which scores 50, Bangladesh, and Philippines (61).

As per FIDE reports, Pakistan incurs substantial economic losses due to internet disruptions, estimated at approximately Rs1.3 billion per day. Another estimate of 2023, accounts for a loss of $1 million per hour internet outage.

The potential short- and medium-term economic impact of restrictions on VPN are significant and lack of clarity on internet policy, with estimated losses of $420 million dollars. This conservative estimate includes $320 million dollars in direct revenue loss from reduced IT export efficiency, $20 million dollars in compliance costs for companies seeking alternatives, and $126 million dollars from a 30 per cent productivity decline among freelancers.

Conservatively, the short-term immediate losses to the IT sector from these announced restrictions and a lack of long term policy are estimated at $420 million dollars, with potential long-term damages surpassing $1 billion dollars, resulting from a reported decline of 30 per cent of order booking - a grim statistic.

Copyright Business Recorder, 2024