Pakistan Business Council warns of multinational firms exiting country due to Internet disruptions

People work at their stations at an incubation centre in Lahore, Pakistan, on May 24, 2019. (AFP/File)

• Nearly 4,000 Pakistani companies registered at Dubai Chamber of Commerce between January and June this year
• IT industry stakeholders say that poor Internet connectivity in Pakistan can negatively impact IT export revenue in 2024

ISLAMABAD: The Pakistan Business Council (PBC) has warned that frequent Internet disruptions and low speed of Internet, caused by poor implementation of a firewall, have led many multinational companies to consider relocating their offices out of Pakistan, with some having “already done so.”
The PBC, established in 2005 by 14 leading corporations, multinationals and business groups, has went on to become a 96-member-strong body over the years and serves as an advocacy forum for improving the South Asian country’s business environment.
The PBC statement comes amid a 30-40 percent dop in Internet speed in Pakistan over the past few weeks, the Wireless and Internet Service Providers Association of Pakistan (WISPAP) said this week, amid the government’s move to install a nationwide firewall to block malicious content, protect government networks from cyberattacks, and allow it to identify IP addresses associated with what it calls “anti-state propaganda.”
A firewall is a network security mechanism that monitors and filters incoming and outgoing network traffic, based on predetermined security parameters. It acts as a barrier whose main purpose is to allow non-threatening traffic in and to keep dangerous and undesirable traffic out. Pakistan’s Internet regulatory body, the Pakistan Telecommunication Authority (PTA), has the ability to block unwanted content and prevent the access of local users to specific websites, but the installation of the firewall is expected to enhance its capability to filter and monitor content on a wider scale.
“There are many MNCs (multinational corporations) planning to relocate their offices and some have already done so,” the PBC said in a statement on Friday. “It is not too late as we should go back and get the right firewall or learn to apply it without creating unnecessary impact on employment and exports.”
The statement coincided with a report from the Dubai Chamber of Commerce, which said that 3,968 Pakistani companies registered in Dubai between January and June 2024, placing Pakistan second on the list. This represents a 17 percent increase, compared to the 3,395 firms registered during the same period in 2023. In total, the Dubai chamber registered 8,036 new Pakistani businesses last year.
The business council said that information technology (IT) and IT-enabled services, along with agriculture and tourism, offered valuable opportunities to achieve the prime minister’s export target over the next three years.
“High-speed connectivity is also vital for the domestic economy,” the council said, adding that while everyone struggled with the costs of idle capacity in power generation leading to unemployment and loss of exports and tax revenue, they now had to contend with the “threat” of idle capacity in the emerging software sector due to poor execution of a firewall.
“Even if a firewall is necessary for security, trials could have saved the livelihoods of thousands of freelance software developers and avoided damage to Pakistan’s credibility as a reliable supplier of IT/IT-enabled services.”
Pakistan’s State Minister for IT Shaza Fatima Khawaja has said that her ministry has been addressing complaints of “slow” Internet speed in the country.
“There have been complaints of slow Internet and I have asked the PTA to provide data of the last two weeks to look at the data traffic to know the speed issue,” Khawaja told reporters after attending a meeting of the Senate Standing Committee on Information Technology and Telecommunications on Thursday. “Internet should never be slow as the digital economy and digital governance depend on good Internet speed.”
Asked about the installation of a firewall, the minister said it was a cybersecurity matter and that countries around the world used the technology.
Pakistan’s Overseas Investors Chambers of Commerce and Industry (OICCI) on Thursday said “such disruptions could derail Pakistan’s economic progress, stifle innovation, and severely impact the prospects for much-needed foreign direct investment — a vital component for the nation’s economic revival.”
The OICCI said recurring Internet curbs exacerbate the challenges faced by the services sector and erode investor confidence.
“With Pakistan already struggling to attract FDI [foreign direct investment], these actions risk further isolating the country from the global digital economy,” it said in a statement.
This week, the Pakistan Software Houses Association (P@SHA) said the recent Internet disruptions were not mere inconveniences but a “direct, tangible, and aggressive assault” on the industry’s viability, inflicting devastating financial losses of up to $300 million that could further increase exponentially.
Nadeem Nasir, communications manager at the Ignite fund that supports startups in Pakistan, said Internet issues in Pakistan were indeed a significant challenge for startups, particularly those in the IT sector.
“When connectivity is unstable, it disrupts business continuity, leads to missed opportunities and increases operational costs,” he told Arab News.
Pakistani IT-related startups collectively generated an estimated annual revenue of around $500 million last year, according to Nasir.
“This figure reflects the growing potential of the tech ecosystem, but the current firewall and Internet speed issues are likely to negatively impact this year’s performance,” he said.
Nasir said startups relied heavily on cloud services, real-time communication tools and global market access – all of which were hindered by poor Internet connectivity in the country at present.
“If these challenges persist, we might see a decline in overall revenue and even a possible exodus of more companies seeking better infrastructure elsewhere,” he warned.