Investment in science and technology: The new national Imperative

Despite its immense potential, science and technology (s&t) sector of Pakistan has continued to suffer from the inadvertence of policymakers. We can no longer afford to treat the sector as a stepchild in the country’s strategic planning exercises. There is a lot that needs to be done to attract foreign and private sector investment into the sector, but there is no reason why the government shouldn’t take the lead and prioritize s&t over other industrial sectors.

Anyone with an informed global view understands that s&t is the future and it’s eating the world. According to the most recent PwC Global Top 100 rankings, all of the top five and seven of the top 10 largest companies of the world are technology companies. The largest sector by market capitalization is the technology sector with 15 companies valued at $4.8 trillion in the top 100. The top 10 companies that grew the most over the past 10 years contain nine s&t companies with the leader, Netflix, growing by over 4000 percent. There were only eight industrial companies in the top 100.

Despite that, we only keep incentivizing traditional, old economy, industrial businesses at the complete expense of new age industries such as biotechnology, information technology, robotics, and biomedical engineering.

Here are a couple more data points to consider. Pakistan’s total external debt amounts to approximately $95bn and the combined total value of companies of Pakistan that listed on the Pakistan Stock Exchange is less than $50bn. Compare that to the value of a single technology company called Netflix that has a market capitalization of over $150bn. Let that sink in. A single technology company has more value than the entire external debt of Pakistan plus the value of all publicly listed companies of Pakistan. S&t-based companies grow to become unicorns (> $1bn value) faster than any other industrial sector globally.

Many argue that such companies thrive only in places like Silicon Valley. That’s not true at all. Just last year, eight companies in India grew to become unicorns. If we look hard enough, we will see the potential right here in Pakistan. Careem was founded by a Pakistani, all its software was developed in Karachi by Venture Dive, Pakistan is one of its largest markets and it was recently sold to Uber for $3.1bn. Most technology for the $3bn+ US listed company FireEye, founded by a Pakistani, was developed in Lahore by eBryx. The foremost neuro-degenerative diseases researcher of the world, Dr Khalid Iqbal, is a passionate Pakistani who is on the verge of discovering cure for Alzheimer’s and Autism but has to work out of New York, because Pakistan doesn’t offer the kind of funding and resources he requires. I can go on and on.

Do we have enough of such amazing human resource though? The answer is again simple. Yes, we have enough. S&t-based companies enjoy very high leverage on good HR. We don’t need millions of trained resources. We need a few thousand. They need to be scouted, brought together, groomed, supplemented by world-class experts sourced globally and provided an environment conducive to innovation, invention and creativity. Creation of an elite s&t research, development and commercialization company is one concrete step that can help this cause. The company, nationally funded, can develop cutting-edge, commercially relevant products that can be brought to market through collaboration with the private sector. At the moment, we can’t afford to turn millions into scientists and engineers, but we can identify the best, leverage them, generate wealth for the nation and get to the task of developing the masses later.

Many policymakers think that s&t companies may be great wealth creators but do not create as many jobs as textile mills and sugar refineries. That couldn’t be farther from the truth. Technology companies are great enablers and catalyze mass livelihoods at scale. Companies like Careem, Uber, AirBnB, Fiverr and Freelancer are great examples. They have indirectly created more livelihoods than entire industrial sectors. As technology companies grow, they employ more people also. Google has close to 100K direct employees.

Investment in s&t sector can also help save our traditional industries. These businesses need to innovate and embrace new technology otherwise they will be gradually priced out of the global market. The seths think that robots are not necessary because they would rather employ people and be a source of livelihoods for their workers. Instead of embracing automation and saving some jobs, they will end up destroying all the jobs as they become non-competitive gradually. So what’s better? Import these robots, automation systems, workflow management software from outside or buy from Pakistani companies. We already sell stock exchange software to the world. We build 3D printers. We develop artificial stents and dialysis machines. With a little bit of support for high tech manufacturing by the government, we can build anything locally!

Let me conclude by making a couple of concrete recommendations. More need to be solicited through technical experts from across the country. First, there is a need for selective focus on identifying and grooming promising talent from across the country at all levels from primary schools to research institutions. Subsidising the training of staff at private organisations is another great way of developing HR capacity in high priority s&t sectors. There is also a need to develop, and let competent private sector, commercial-minded management run an organisation like a national research, development and commercialization company as alluded to earlier. And finally, a large fund of at least PKR 10-15 billion needs to be set up in collaboration with globally renowned venture capital giants to invest in Pakistan-based s&t startups. The various task forces set up by the government need to be leveraged better to advise policymaking and prioritise government spending.

By investing in s&t sector and bringing it to the fore of policymaking discourse, we can cultivate a high growth industry in Pakistan that can turn us into a developed nation in no time while creating the fiscal space needed by the government to developing further this 200 million people nation. The time to act is now!

(The writer is a member of PM Task Force on Technology Driven Knowledge Economy and Country Director of 47 Ventures, an international venture capital fund exclusively investing in Pakistan. He tweets at @kayzafar)

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PwC Global Top 100

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Rank   Company              Country            Industry   Market Cap($ bn)

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1      Apple                    USA          Technology                851

2      Alphabet                 USA          Technology                719

3      Microsoft                USA          Technology                703

4      Amazon.com               USA   Consumer Services                701

5      Tencent                China          Technology                496

6      Berkshire Hathaway       USA          Financials                492

7      Alibaba                China   Consumer Services                470

8      Facebook                 USA          Technology                464

9      JPMorgan Chase           USA          Financials                375

10     Johnson & Johnson        USA         Health Care                344

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