Pakistan

2 Pakistan

2.1 A profile of Economic Development
With a population of 135 million, Pakistan is the country with the most rapid growth in population in the world. It is a developing country, with arable land area accounting for 27% of the total and with agriculture dominating in the economy, well renowned as "Fruit Basket" of the East. The number of laborers engaged in agriculture accounts for 51% of the total nationwide. Pakistan is relatively good at product marketing Pakistan has been confronted with the difficulty in sustained development, and all its electric power, highways, communication system, housing and traffic are in sustained development, and all its electric power, highways, communication system, housing and traffic are in a state of insufficiency.
Several successive terms of the Pakistan government have implemented, system reform policies over the past six years so that the economic liberalization has become a more distinctively market oriented economy. The role of the government in economy continues to weaken. In 1996, public enterprises contributed 30% to the added value in the manufacturing sector. After selling 80% of the industrial enterprises, the government is still continuing to decrease its ownership on enterprises. Although cotton-based-textile production dominates the whole manufacturing industry, agricultural production level still continues to step down. Pakistan is in urgent need for generation plants and for improving infrastructures. If Pakistan can keep political stability, it will maintain a satisfactory growth rate, develop a lot of new type privatized industries and increase their opening in foreign trade.
The industrial output value accounts for about 25% of the GDP. The textile and other light industries play a leading role in industry, with cotton textile industry being the largest industrial sector. The government encourages the development of export industries and puts and development of import substitute industries on top priority. The energy industry is the bottleneck of the national economy of Pakistan, with per capita energy of only 0.19 ton petroleum equivalent, a extremely low value even in developing countries. The power generation capacity can not satisfy the need of economic development.
Foreign trade is growing and adverse balance of foreign trade is enlarging. In the current year, the export of Pakistan exhibits a tendency of growth and foreign exchange earnings have notably increased. However, as a result of the soaring price of petroleum globally and the unexpected import of sugar, foreign exchange used for import has significantly increased and easily balanced out the growth rate of export, thus enlarged adverse balance of foreign trade.
The export target of Pakistan for the whole year is US$ 10 billion, and the import target is US$ 11 billion. But according to the current progress, adverse balance of foreign trade has exceeded the US$ 1 billion target for the whole year. It is estimated that adverse balance for the whole year might reach US$ 2 billion.
As for industrial production, the first half of the current fiscal year witnessed an output growth of 7.69%, but 13 categories of large-scale industries presented a downslide. The worst case is the sugar refinery industry with a decrease of 30.58%. Other 25 kinds of industrial products have recorded an increase in production. According to statistical data by Pakistan, the industry of Pakistan has registered an overall growth of 6.2% for the first seven months, mainly contributable to the growth in textile and auto industries.
Foreign investment decreased. Foreign investment utilization in Pakistan for the first half of the current fiscal year decreased by a large margin by a total of 73% over the same period of the preceding year. According to the most updated data available, foreign direct investment for the first half-year was US$ 142.1 million, down 53% from the same period of the preceding year (US$ 306 million). Indirect investment decreased by US$ 67.4 million. It is thus clear that although the Pakistan governments is trying all out to attract foreign investment, the result is not remarkable.

2.2 Development Status and Trend of the Communication Industry
Item 1996 1997 1998 1999 2000
PC possession per thousand personsMain toll lines possession per thousand personsAverage charge rate for local calls (US$ per 3 minutes)Proportion of high-tech product export in industrial finished product export 3.5718.4----0.03 3.6819.70.030.09 4.2821.10.030.12 4.3022.10.030.32 ----

2.2.1 Construction and evaluation of communication infrastructure system in Pakistan
The public Pakistan Telecommunication Corporation Ltd. (PTCL) plans to increase the number of Internet connected cities from more than 400 currently to 800 within the current fiscal year. It is reported that the company will lay high-capacity optic fiber cable to extend the Internet coverage, and install 450,000 telephone sets for accessing the Internet. In addition, the company plans to improve various supporting telecommunication facilities to promote the services quality for users. The Pakistani telecommunication network has developed to certain extent.
2.2.2 Development status and trend of the communication industry
There exists serious monopoly in the development of communication in Pakistan. The basic telephone business has been monopolized by the PTCL before 2002.
2.2.3 Pattern and development trend of telecommunication operation market
1. Competition pattern in national telecommunication operation market
●Postal/Telecommunication services separation and split of regulatory functions
Major carrier: Pakistan Telecommunication Corporation Ltd. (PTCL) is a public carrier and 11.85 of its stock shares was sold through listing in 1996. Another 3.1% was sold in 1997. The Pakistan government is implementing the plan of further privatizing PTCL by selling stock shares to its strategic partners.
SCO is responsible for the telecommunication operation and services in the northern areas as well as Azad Jamu and Kashmir regions. Three joint venture companies provide mobile cellular communication services. Pakcom (owned by the Millicom of Luxemburg with 59.3% shares and local Arfeen International) provides analog mobile services. Paktel (with Dadong holding 80% shares and local private limited Hasan Ass holding 20%) also provides analog mobile services. Pakistan Mobile Communication (with 66% shares held by Motorola of the USA and local Saifullah-Khan) provides GSM services.
●Allowable foreign ownership: 100%
● Extent of market liberalization:
Local services NLD ILD Data Telex Leased line
Monop. Monop. Monop. Compet. Monop. Monop.

Cellular analog Cellular data Paging Cable TV Satellite fixed Satellite mobile
Compet. Compet. Compet. N.A. Monop. N.A.

●Leased lines and sublet
Domestic Innternational
Use of leased lines or private networksSublet to third partyConnection of leased lines or private networks to PPSTN Not definedNot allowedOnly allowed to connect at one end Not definedNot allowedOnly allowed to connect at one end
●Future regulatory plan: under the new legal framework, all telecommunication services will be subject to competition except basic services and telephone services.

2.3 Market Analysis of Electronic Information Products
2.3.1 Market scale, developmental features and growth potentials of electronic information products
While the consumption of household electrical appliances is at a rising stage in Pakistan, the sources of household electrical products on the market are mainly relying on import. The Pakistan government announced that it will no longer import complete sets of exchanges from foreign countries, and only home made exchanges can access the market in Pakistan.
Among the global software industry, Pakistan accounts for less than 3%. Famons brand PCs total only 130,000 all around Pakistan, and PCs with inferior brands total about 55,000.
2.3.2 Analysis on sales volume, structural features and development potentials of electronic information products
The computer hardware market of Pakistan has developed considerably over the recent years. Philips, Intel and Acer have founded their offices in Pakistan. Philips Pakistan Branch stated that the company is considering starting to assemble computer spare parts, especially displays, in Pakistan.
From January to June 2001, Acer reported a growth of 135% in sales volume of computers and spare parts in Pakistan. Such a growth rate indicates that there is still tremendous space for growth in the computer market.
Intel set up its branch company in Pakistan as early as 1997. The company stated that in the third quarter of 1999 the company hit historical high record of delivery in the total microprocessors, chipsets and quick blink memories.
The growth rate in software was 115 for 1996-1997, 18% for 1997-1998, and reached 45% in 2000.

2.4 Development of National IT Industry
Pakistan encourages software export while making efforts to enable software export to grow by 300% within next two years. Currently the annual software export of Pakistan is only US$ 30 million. In order to expand software export, the Pakistan government has decided to actively train highly qualified talents with advanced computer software knowledge and give software companies large fund support. In the budget for the new fiscal year, the Pakistan government has increased the budget for science and technology by a factor of 12, and decided to simplify the procedures for foreign computer companies' registration in Pakistan, exempt IT-related companies from administration tax, and determine unified and standard price nationwide. In addition, the government has also decided to establish software technology cooperation zones in big cities such as Islamabad and Karachi, to provide more convenient conditions for both national and international companies. Software piracy is serious phenomenon; the rate of piracy is estimated over 60%. Import rate for software is 35%.

2.5 Analysis on IT Application
(1) The IT industry has just gotten off the mark in Pakistan, so to speak. For most Pakistanis, computer is still a new thing. After president Musharraf took office, the development of IT industry has been linked with the future of Pakistan, while information technology has been vigorously promoted and extended all over the country. For a time, computer promotion and application was rapidly outspreading in Pakistan.
(2) Some major news media have played a leading role in the popularization of IT in Pakistan. Several newspapers and news agencies have their own websites and special news homepages, most of which are in English and in Urdu. New websites in Pakistan are mostly simple in contents comparatively. Except for some real time news, related special topics and background materials are very few, the quality and quantity of the news are limited, and those who really browse the websites are also very few. When some websites hold teach-ins, it is often the case that there are only scores of voters, many of them being overseas Pakistanis.
(3) Information schools are a mixture of the good and the poor. In numerous "information academies", the teaching facilities are very old and outmoded. In such schools, what you learn is mostly computer operation and rarely in-depth computer knowledge. The economic depression and unpopularity of computerized office in Pakistan are the major obstacles to the development of IT. In Pakistan, except some enterprises with good economic conditions, such as banks, many organs and institutions are still using typewriters, arousing a feeling that popularization of IT will still have a long ways to go.