Government’s role and future
Many start ups in Pakistan have been emerging in the changing business environment of Pakistan. Pakistan has been seeing the rise of start ups for past few years and this has changed the local dynamics of work; the number of people out of work is more than the number of jobs available. But what is the government’s attitude towards these evolving workforces? Is the government facilitating them at all?
Looking at governments of different countries one can see that governments have provided some kind of help to start ups whether it is loans, grants or some kind of acceleration. India has recently granted about 100 billion rupees to start ups and in addition to that tax breaks have also been included in the initiative.
The Federal Government of Pakistan has imposed eight percent on start ups revenue last year. This has impacted the start ups negatively and as Khurram Zafar, Executive Director of LUMS Centre of Entrepreneurship, said: “These taxes have been imposed on revenue now the revenues are whether a loss or profit, the company or the start up has to give the eight percent minimum tax.” This could be a concern towards the newly initiated start ups since start ups reportedly do not make profits right away and moreover discourages start ups to come into being.
In recent years, Punjab Government has taken initiatives under Punjab Information Technology Board’s (PITB) Entrepreneurial Wing, headed by Nabeel Qadeer, such as Plan 9, Plan X and Tech Hub Connect. All of these incubators and accelerators are located at Arfa Software Technology Park, Ferozepur Road in Lahore. When asked about what happens in these incubators and accelerators Mughees elaborated that “Plan 9 and Plan X offers free co-working space, laptops to members of start ups incubated. The only difference is Plan X doesn’t offer monthly stipend whereas Plan 9 do because Plan X start ups are more mature and advanced.”
Imran Ali Rajput, Founder of Java Home Tuition Service, had a slightly same point of view as according to him “Technology start ups scale up quickly and generate more revenues in less time than non-tech start ups. Moreover, to run technology start up one do not need a big team” Whereas Mohammad Murtaza, Co-Founder of Turr Lahore, had different kind of view from all three of them as he says “Government thinks that start ups in Pakistan cannot challenge the global perspective but could think through global perspective.”
Mr Mughees further explains about Plan X and Plan 9 that, “Both help start ups generate revenues which are in different forms such as increasing customer base, linking to investors and providing mentorship” Hence, PITB under Punjab Government is doing an enormous amount of work to support the start up. But it can be observed that all of these incubate certain kind of start ups. Mr. Mughees confirms by saying, “Both Plan 9 and Plan X take on start ups which are technology related.” Which raises the question on why the government is focused on just “tech” start ups?
According to Arslan Khalid, Content, and Research Manager at Social Innovation Lab at LUMS, “The reason for government focusing on start ups related to tech is that they are tangible.” He adds on “Which means one could access anything using a smart phone and it’s easy to do. Moreover, the reason could be accountability”. However, Mr. Khurram denied that government is just focusing on tech start ups. According to him “They are investing in different start ups too but tech start ups come out in the open more because of advancement of technology such as Facebook, Twitter etc.” Imran Ali Rajput, Founder of Java Home Tuition Service, had a slightly same point of view as according to him “Technology start ups scale up quickly and generate more revenues in less time than non-tech start ups. Moreover, to run technology start up one do not need a big team” Whereas Mohammad Murtaza, Co-Founder of Turr Lahore, had different kind of view from all three of them as he says “Government thinks that start ups in Pakistan cannot challenge the global perspective but could think through global perspective.”
Through Government’s point of view, Mr. Mughees said “When Plan 9 was initiated, Pakistan lacked when it came to technology. Comparing us to other regions back then, we used to be way behind many countries.” He further added “Initiating these projects we are not lagging behind anymore. In addition, two things started to happen. First, people realized that being an entrepreneur is not as difficult as it seemed to be. Secondly, entrepreneurship now exists as a possibility in addition to the local jobs.” He concludes by saying “One of the reasons both of these projects are in existence were to raises awareness regarding entrepreneurship, develop an ecosystem in Pakistan for entrepreneurship and then sustain that ecosystem.”
The projects under PITB, Plan 9 etc, have limited number of start ups that they can incubate in the cycle of 6 months. Each start up has around 4 to 5 members, so in reality, you are not catering 10 start ups or 15 start ups but 45-60 individuals in the office space. This is where the problem lies; limitations should increase and office space shouldn’t let projects, such as Plan X, limit the number of start ups that they incubate. An example of having very less office space but a high number of start ups is Social Innovation Lab (SIL) at LUMS. As Mr. Arslan describes, “In Social Innovation Lab we have at least 50 to 60 start ups working under it. They are people from LUMS and outside of LUMS.” If Social Innovation Lab could cater such huge amount of start ups in such little space, so could Plan X and Plan 9.
The idea of boot camps and an entrepreneurial zone is quite attractive and will indeed help start ups to grow. But whatever right now is happening is only happening at Punjab level.
Another recommendation for increasing office space is having an Entrepreneurial Estate. As Moavviz Siddiq Nizami, Co-Founder of Five Point Nine Systems Engineering, describes, “Entrepreneurial Estate just like Industrial Estate, should be established in which low cost on resources should be provided” He further elaborates, “There is non-stop supply of electricity, and any kind of resources that are required by an entrepreneur. An entrepreneurial estate shouldn’t be on huge acre of lands but a simple building, just like Arfa Karim Tower, which is dedicated only to entrepreneurs for. Different activities can be held which are at the moment being held by foreign companies and Non-Government Organizations.” When this idea was pitched into Mr. Mughees he did appreciate the suggestion but said it’s too early for something like this. According to him, small steps should be taken rather than big ones to achieve something.
The future of start ups in Pakistan is bright. As Imran Ali Rajput puts in his recommendation,” Start up ecosystem in Pakistan is flourishing, and in the coming days there will be more opportunities for entrepreneurs. But there is still a need of conducting Boot camps.” The idea of boot camps and an entrepreneurial zone is quite attractive and will indeed help start ups to grow. But whatever right now is happening is only happening at Punjab level. At the national level, rather than encouraging start ups by giving them tax breaks and subsidies, the federal government is doing quite the opposite.
Around the world there are different schools of thoughts that are involved in debate over whether the government should be involved in start ups or not such as government should stay away from start ups and if they are involved should act as an accelerator. Mr. Khurram says, “Government should not be involved in start ups.” Furthermore, another entrepreneur and business expert shared the view that whatever Pakistan government gets involved in it destroys it. He further comments, “If the government gets involved then dirty politics will be involved as well” Even Mr. Moavviz agrees to say,” Government’s financial might will always be greater than start up owner’s financial might” Hence, the government would actually decelerate the start up trend rather than accelerate it.
Start ups are now a growing trend of which most fresh graduates have started to think of. But will the future of start ups in Pakistan be competitive in the global atmosphere? Well, only time could tell that. One could only hope for the best and encourage people to get their ideas out in the open. Moreover, the start ups that are already established should focus on differentiating their brand since the market could start saturating in the near future.