SERVICES SECTOR IN

PAKISTAN
 Introduction
• Share in GDP: 53.3%
• Employed labor force: 44%
• Developed countries: 75% of GDP
• 2004-05:
– Target growth rate: 6.2% actual: 7.9%
– Major contributors: transport, wholesale and retail
trade, finance and insurance
• WTO has identified 12 areas, with 161 sub-sectors
from the perspective of international trade of
services
• Inter-Sector Linkages
 Introduction
• Boundaries between services and industry are
changing fast: half of all services in modern
industrialized economies are sold and bought
while embedded in the form of goods (designing,
marketing, consultancy)

• Contribution of services to manufacturing:

– Resource planning
– Warehousing
– Financial service and inputs
– After sales services
 Introduction
• Public service by the government are an
indicator of good governance as well as
human development. These include:
– Education
– Health
– Environment
– Transport and communication
– Law and order.
 Introduction
• Wholesale and Retail Trade
– High growth due to increase in output of manufacturing
sector and increase in exports
• Transport, Storage and Communication
– The sector is under stress and needs major investment
in physical and qualitative terms to meet expected
demand
• Information and Communication Technologies
– Explosive growth due to deregulation
– Expanding opportunities as the govt. is making
databases for ownership and land and ppty, judicial
records, agriculture etc.
 Introduction
• Finance and Insurance
– Banks, DFI’s and insurance companies account for 98%
of value added in the services sector
– The accommodative policy pursued by SBP has
encouraged competition, deepened the financial sector
and diversified the client base
• Housing and Construction
– Bank leasing has resulted in faster growth of this sector
– Persisting skill gap
 Introduction
• Public Administration and Defence
– e-Governance to increase transparency of govt.
workings
– Government postal service
• Social, Community and Personal Services
– Spend Rs. 72 billion annually on charity
– Growing no. of NGO’s
• Educational Services:
– Investment in all tiers of education is increasing
– Private sector plays an important role
– Public-private partnerships
 Introduction
• Health Services:
– Poor delivery service from the public sector
– Private sector plays a major role
– Health insurance is still in its infancy
 MTDF (2005 – 2010)
• Projections:
– Average growth rate of 6.9% over the 5 years
– Can be easily achieved if the commodity
producing sectors simultaneously perform well
and provide the associated demand
– Major focus on ICT, human resource
development and tourism
 INFORMATION
TECHONOLOGY
• National IT Policy approved in Aug 2000.
• Role of the govt. defined as an enabler for
IT based future economy.
• Salient Features
 INFORMATION
TECHONOLOGY
• Human Resource Development:
– 7 new IT universities initiated
– Virtual university
– Increase intake of IT candidates in existing universities
– International faculty hiring
– Scholarship scheme based on merit
– IT education in schools and colleges
– Professional Training Programs: govt. employees,
doctors, Java Developers, Cisco engineers
– Training higher level IT professionals
 INFORMATION
TECHONOLOGY
• Infrastructure:
– Increase fiber optic connectivity to areas such
as AJK and Baluchistan.
– Increase in bandwidth
– Reduction in bandwidth tariff
– Internet access spread to 700 localities
– IT Parks
– Extend facilities to rural areas
 INFORMATION
TECHONOLOGY
• Incentives for investment:
– 15 year income tax exemption
– 50% income tax rebate on income of IT professionals
– 0% import duty on computer parts
– Lower bandwidth rates for universities, software
exporters and ISP’s
• IT law
• IT Accreditation to ensure standard
 INFORMATION
TECHONOLOGY
• IT must be seen as an investment an not an
expense
• Delay in its adoption will be at the cost of the
development of the country
• Development Factors for Pakistan:
– Good Governance and Strategic Management
– Economic Stability
– High Agricultural Yield
– Industrial Energy
– Poverty Alleviation
– Positive Impact on International Foreign Policies
 Good Governance
• Governance: the manner in which power is
exercised by the govt. in the management of
the country’s social and economic resources
• Good Governance: exercise of power by
various levels of govt. that is effective,
honest, equitable, transparent and
accountable, leading to the ‘greatest
happiness of the greatest numbers’
 Good Governance
• Three branches of a state:
– Legislature:
• Record all the speeches and laws in the form of
texts, scripts, voice or video recording
– Judiciary:
• Electronic libraries of case laws for judges and
lawyers
• Increases the accountability of institutions and
officers towards the rule of law
– Executive:
• Database of all citizens for planning and delivery of
social services, utilities and infrastructure
 Economic Stability
• Supporting operational efficiencies:
– Doing routine tasks better, faster and cheaper
• Facilitating customer services delivery
• Risk Management:
– Providing the capability to manage, identify, assess and
control exposure to risk
• Decision Support:
– The availability of information and tools to determine
trends, make forecasts and plan strategically.
 High Agricultural Yield
• Expert Systems are computer programs that
are different from conventional computer
programs as they solve problems by
mimicking human reasoning process,
relying on logic, belief, ruls of thumb and
experience
• Agricultural Expert System
 Industrial Energy
• Install advanced energy control systems in
industries and other large customer
premises
• Energy Load Management: try to move load
from expensive to less expensive time
period
 Poverty Alleviation
• The problem can be solved by improving the total
economic and social opportunities

• In Pakistan, efforts have not been made to deliver

the benefits to the poor like health and education,
and equipping them with necessary information
and skills
• Information tech should be used to empower the
poor in this rapidly globalizing world
 International Foreign Policies
• 700 high-tech companies in Silicon Valley
headed by Indians.
• Clinton called for the start of a systematic,
committed relationship between US and
India
• Pakistan: lagging behind in marketing skills