Islamabad, Dec 5: Restrictions on Virtual Private Networks (VPN) have the potential to have a substantial short- and medium-term economic impact. The estimated cost of unclear internet policy is $420 million, and the reported decline of 30% in order bookings could result in long-term damages exceeding $1 billion.
While briefing the Senate Committee on Information Technology and Telecommunication here on Thursday, Sajjad Mustafa Syed, Chairman of the Pakistan Software Houses Association (P@SHA), which accounts for more than 90% of Pakistan’s IT exports, disclosed this information.
“We believe that the current approach of only limiting the IP whitelisted registered IPs and lacking a clear long-term policy on VPN and internet use is counterproductive, even though we respect and support national security objectives,” he continued.
According to data from the State Bank of Pakistan, IT and ITeS exports total $3.2 billion and are expanding at a Compound Annual Growth Rate (CAGR) of 22.6%, making them one of the economy’s fastest-growing export sectors.
The PAFLA and ADB report states that IT and ITeS are the largest employers of young people, employing over 600,000 skilled workers, and employing 2.37 million freelancers. Today, around 3.0 million families rely on IT and exports associated with IT. By 2030, this amount might rise to $15 billion with secure infrastructure and consistent policy.
The industry’s core foundation is at risk due to unstable internet connectivity and ambiguity around VPN use. In addition to being a convenience, dependable internet is essential to IT and ITeS enterprises and the sole way for us to export our services. Previous upheavals have damaged consumer and investor trust, leading to financial losses and a decline in Pakistan’s international reputation.
Pakistan’s Internet Freedom score of 27 out of 100 is far lower than that of all of our international competitors, including Bangladesh, the Philippines, and India, which score 50. According to FIDE studies, internet outages cost Pakistan a significant amount of money every day roughly Rs. 1.3 billion. An additional 2023 estimate projects a loss of $1 million per hour due to Internet outages.
Restrictions on VPNs have the potential to have a substantial short- and medium-term economic impact, with an estimated $420 million in losses due to unclear internet regulation. This cautious estimate includes $126 million from a 30% drop in freelancer productivity, $20 million in compliance costs for businesses looking for alternatives, and $320 million in direct revenue loss from decreased IT export efficiency.
Internet disruptions cost Pakistan a substantial sum of money each day, approximately Rs. 1.3 billion, according to FIDE study. According to a different prediction from 2023, Internet interruptions will cost $1 million every hour.
Restrictions on VPNs have the potential to have a substantial short- and medium-term economic impact, with an estimated $420 million in losses due to unclear internet regulation. This cautious estimate includes $126 million from a 30% drop in freelancer productivity, $20 million in compliance costs for businesses looking for alternatives, and $320 million in direct revenue loss from decreased IT export efficiency.
According to him, the industry depends on reliable internet infrastructure, which includes free VPN access. Infrastructure that is stable and secure is not a luxury; it is a necessity for data protection, secure communication, and compliance with international regulations such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR).
Every nation in the world has systems in place to contain digital terrorism, and national security is a worldwide concern. We only follow the whitelisting route used by economies that do not supply software and services to the Middle East, North America, the EU, and the UK.
China, Russia, North Korea, Iran, and Turkmenistan all use the whitelisting-only VPN technique. Compared to nations with comparable economies, China and Russia are not major exporters of IT, and unlike Pakistan, they have a robust hardware sector to support their software expansion.
Our current IT exports are significantly higher than those of any other nation. For our sector to benefit from the same infrastructure as our international competitors, we must adopt the digital counterterrorism strategy of our major rival nations, such as Vietnam, the Philippines, Ireland, India, etc., he continued.
The following hazards are associated with the present whitelisting-only strategy.
First, lowering competitiveness and digitally isolating Pakistan’s IT sector
The second is the direct loss of FORTUNE 1000 clients’ business.
Third, limiting access to only whitelisted companies and making it difficult, if not impossible, to adopt the new standards in the short to medium term should adjustments be necessary.
Four, a long-term policy that is transparent and unambiguous about internet regulation and the use of digital tools and technology so that investors and our industry may make long-term commitments and investments.
5. The IT sector, the primary internet stakeholder, must be involved in any changes to vital infrastructure.
He added that protecting Pakistan’s digital future is more important than merely enforcing internet restrictions. It concerns the future of the millions of young people presently enrolled in computer science programs across our nation as well as the means of subsistence for millions of households. He went on to say that it is about our wonderful country’s economic independence and future economic progress.
