Govt should develop special technology zones

Innovation economy should be built through clusters of tech-driven talent pools

ISLAMABAD: What’s common between Raghib Hussain, Rehan Jalil and Khalid Raza?

A quick Google search shows they are all successful Silicon Valley founders with huge achievements. Rehan Jalil sold Elastica to Blue Coat for $280 million, Khalid Raza sold Viptela to Cisco for $610 million and Raghib Hussain sold Cavium to Marvell for a whopping $6 billion.

What you might miss is that all the three went to the same university in Karachi - NED University of Engineering and Technology. While NED’s contribution is undeniable, what would have happened had they stayed back in Pakistan? What happens to the Raghibs and Rehans of NED who fail to move to California?

Their story should not make us proud. It should make us worry about the talent we are wasting. Famous urban scholar, Professor Richard Florida, during a video lecture in Pakistan, a couple of years ago, remarked about this phenomenon, saying: “Every single day, entrepreneurs come to America from Pakistan, building great technology companies, service companies, call centres, etc. I think the talent base is there and we need to focus much on the entrepreneurship spirit.”

Unless we focus our effort and energy on unlocking the creative potential of engineers and entrepreneurs, Pakistan cannot compete with the world or create enough wealth to lift up the bottom 100 million from their current state. The recently announced open visa policy is a great step in the right direction. We need to engage the world. The second most important thing is to build a globally-oriented entrepreneurship culture.

Economic policy and development dialogue in Pakistan is now focused on developing new Special Economic Zones (SEZs). SEZs are being considered a recipe for dealing with all economic and trade weaknesses in Pakistan. There is little dialogue on how most of the existing industrial estates and zones in Pakistan and SEZs around the world have faced failures.

Moreover, most of the discussion is still revolving around the manufacturing potential. Instead, this article shares ideas about developing the Special Technology Zones (STZs) in the country with a well-thought-out design.

There is a need to build an innovation economy by creating clusters of tech-driven, globally employable talent pools. By implementing this vision, a total of one million digital export jobs can be created by 10 STZs in the next five years.

Average export per job is $20,000 per year, creating total direct export value of $20 billion and kick-starting the innovation economy.

History and economics literature have suggested that innovation requires agglomeration and collaboration. Physical proximity is a key ingredient of successful innovation economies. Economics often refers to it as the “thick market” of entrepreneurs, service providers and customers.

This should not be a surprise that employment in finance, business and related technical/administrative services as a percentage of total employment in a city is at the highest level in San Francisco that hosts the Silicon Valley.

STZs in urban hubs

The plan should be to develop 10 STZs. Each STZ should be allocated 100 acres of public land in each of the top 10 urban hubs (Karachi, Lahore, Islamabad, Faisalabad, Multan, Peshawar, Quetta, Gwadar, Gujranwala and Hyderabad).

Knowledge workers and the creative class prefers spaces that are closer to home (commute under 20 minutes) and are also integrated with a vibrant urban culture. Setting up STZs in the middle of the city with easy access is critical to their success. Larger cities like Karachi and Lahore may require two or three STZs that cater to different regions in the city.

Many existing industrial estates and zones in Pakistan have failed due to weak governance including bureaucratic mismanagement and property speculation. A unique governance structure, thus, will be essential for the success of STZs.

Each STZ should be an independent non-profit entity with the mandate to build 10 million square feet space and create 100,000+ export jobs in creative, technology and knowledge industries in its 100-acre jurisdiction. The physical proximity of 100,000 minds, the agglomeration of insights and the celebration of globally employable talent will lead to a culture of learning, excellence and innovation.

These STZs may accelerate the knowledge economy and make Pakistan globally competitive by producing its own versions of Alibaba, Baidu, WhatsApp, Salesforce and Google.

STZs should create a master plan, architectural layouts and design standards for the 100-acre campus. They should partner with global tech leaders, local software companies, co-working spaces, start-up incubators and universities to build or rent 10 million square feet of space.

STZs should charge a fee of 20 cents per square foot for grey structures and 10 cents per square foot for self-constructed buildings. Grey structures should be provided for companies with less than 50 employees and co-working spaces will be offered at $30 per seat including electricity to cater to independent knowledge professionals and start-ups.

One person requires 100 square feet of space (work and open space). The cost at the rate of $30 per square feet is $3,000 per person. This money is to be spent in Pakistani rupees whereas export revenue per person per year is $20,000, which is in foreign currency.

By focusing on training globally employable talent, agglomerating them in a large innovation cluster and connecting them with the world technology market, we can not only address the balance of payments challenges, but will also position Pakistan for the next decade of growth and progress.

Recently, President Dr Arif Alvi contributed a piece in this paper titled “Pakistan’s place in AI and computing” through which he emphasised the need for embracing the 4th Industrial Revolution. We think establishment of the proposed STZs can help achieve the goals laid out by the president of Pakistan.

Naveed Iftikhar is a public policy adviser and research fellow having interest in public-sector governance, entrepreneurship and cities and Shahjahan Chaudhary is the director of National Incubation Centre Karachi

Published in The Express Tribune, February 4^th, 2019.

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