The economy and society are undergoing profound changes due to digitalisation. It fuels entrepreneurial innovation, regional economic growth and productivity. Moreover, it has consequences for economic growth, the labor market and political engagement. And it imposes new demands on education and training, and not only in the field of information and communication technologies.
Today, as the world gears up for 5G technology, IT think tanks in Pakistan need to seriously consider effective ways to catch up with the world and maximize the economic benefits.
Despite considerable expansions in access to ICTs before the COVID-19 crisis, the availability and use of ICTs remained far from universal. The COVID-19 crisis has accelerated the digitization of advanced economies and made it harder for nations or regions to catch up. We need to explore the current state of digitalization in Pakistan, its economic impact and how should we pave the way for future technologies.
Digitalization is considered the fourth industrial revolution. However, in the case of Pakistan, we may not be on par with the world. The biggest challenge facing the country is the general drive to fully utilize digitalization. According to the World Bank’s 5G Readiness Plan, the Government of Pakistan (aligned with the Pakistan Telecommunications Authority) should devise a strategy to incentivize multinational organizations to invest in digital transformation infrastructure. There remain multi-faceted challenges to Pakistan’s adaptation to 5G technology. Despite huge potential for growth, we see that foreign direct investment in the telecommunications sector has fallen from a staggering US$763 million in fiscal year 2019-20 to a meager US$202 during of the 2020-1 financial year. The main reason for this drastic drop in investment is the low adaptability of the technology among the population.
The economic contribution of the mobile phone industry in Pakistan could reach $24 billion by 2023, or 6.6% of the country’s gross domestic product.
5G technology offers endless economic and industrial benefits. Up to $3.5 trillion in revenue is expected to be generated by the 5G value chain by 2035, with up to 22 million jobs supported.
Global GDP growth will increase by $3 trillion cumulatively between 2020 and 2035, according to projections based on the deployment of 5G. By 2035, 5G-related services, such as mission-critical services, increased mobile broadband, and huge IoT improvements, would be worth more than $12 trillion, according to estimates. Retail, healthcare, education, transportation and entertainment are some of the areas set to benefit from 5G technology.
According to the Pakistan Telecom Authority (PTA), the country has more than 98 million 3G/4G subscribers, representing a penetration rate of 43.51%. Despite network advancements such as the addition of new 4G towers, more than 90% of mobile devices built or manufactured in the country are only compatible with 2G technology. Currently, around 53% of all SIM subscribers use 2G devices. Experts estimate that for a successful transition to 5G technology, at least 60% of the population must be connected to 4G technology.
Broadband penetration is only about 46.4% in Pakistan, which needs to be significantly expanded to ensure economic benefits. Among the many challenges hindering the adaptation of the technology in Pakistan are “lack of large contiguous blocks of affordable spectrum”, “wider access to fiber link” and “widespread availability of smartphones and other devices”. Affordable 5G”.
Pakistan’s IMT Spectrum Management Policy has been identified as the main impediment to the industry fully investing in 4G development and industry competitiveness.
The current government seems to have a good plan of action to boost 5G technology in the country, some of which include:
o Tax refund, tax rationalization and elimination of customs duties on the import of all components of high-end 4G and 5G devices;
o Imports of duty-free IMT/5G network-ready equipment to facilitate 5G readiness and mobile broadband to support wider deployment of mobile broadband and 5G networks;
o Special incentives for global telecom equipment vendors to establish assembly and production lines in Pakistan to promote local assembly of IMT/5G and IoT ecosystem devices, including chipsets, and
o The licensee shall establish at least one 5G innovation and test center/laboratory to develop the 5G ecosystem for start-ups and entrepreneurial activities at their own expense for citizens.
All of these are indeed solid items on the action list, but the 2021 Asia-Pacific Mobile Economy Report predicted that “Pakistan will bottom out in terms of smartphone users as well as 5G coverage among the selected countries in the Asia-Pacific region by 2025″. According to the GSMA’s estimate, the economic contribution of the mobile phone industry in Pakistan could reach $24 billion by 2023, or 6.6% of the country’s gross domestic product. The same report estimates that smartphones will account for more than 80% of all connections in the Asia-Pacific region by 2025, up from 68% in 2020. However, Pakistan was near the end of the list of top 12 countries, just above. Bangladesh, and neither country is expected to reach the 80% target in the near future.
5G technology will be a game changer for Pakistan. Small and medium-sized industries could greatly benefit from adopting online sales techniques, accessing global markets, and learning international best practices, supply chain, and business operation strategies. Pakistan’s education and medical industry stand to be the biggest beneficiary of 5G technology with its low latency and widespread applications, which can help overcome the low student-teacher ratio which is currently 29 to one. .
The truth is that it is not as easy as it may seem to officials, from 2017 to 2035 the world will need to invest $3.7 trillion, or 4.1% of global annual GDP per year, in infrastructure to fill existing gaps. Of this amount, 54% will be used to meet the needs of Asian countries. Therefore, Pakistani experts need to carefully consider their approach to solving 5G technology challenges and adopt a single national strategy.
The author is the General Secretary for Foreign Affairs of BRI College, China. He tweets @DrHasnain_javed.