Special Technology Zones – A New Engine for Pakistan’s Economic Growth

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Special Technology Zones – A New Engine for Pakistan’s Economic Growth

A Unique Technology Zone (STZ) is a knowledge ecosystem based on the triple helix model of innovation, in which the government provides special incentives to encourage the development, promotion, and spread of cutting-edge technology.

It is a cluster in which all core and peripheral operations are driven by innovation. The businesses and individuals tasked with developing and disseminating technology are themselves part of the smart city culture.

The government encourages and supports businesses in order to help them grow, produce money, and provide opportunities for others. People and technology companies from all over the world are drawn to these ecosystems.

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The Zones gradually spread beyond their initial bounds, forming townships and eventually cities. As a result, each STZ aids the supporting government in implementing a broader reform programme and delivering socioeconomic improvement to its inhabitants.

The oldest examples of such zones date back to the 1950s when they were known as Research Parks and catalysed by universities that hosted cutting-edge technology enterprises.

In the 1970s, the Zhongguancun Science Park (Z-Park) in Beijing (China), the Shenzhen Special Economic Zone in Shenzhen (China), and Daedeok Innopolis in Daejeon (South Korea) were established to mimic the idea.

Because their indigenous university and industry were not mature enough at the time, the Asian zones were stimulated by substantial government intervention. Apple, Google, Intel, Hewlett-Packard, Cisco, Huawei, Lenovo, Baidu, Tencent, and Xiaomi are just a few of the technology titans that have arisen from such zones.

These behemoths now have revenues that rival several sovereign countries and human resource headcounts that rival many small cities. From the 2000s forward, a new trend emerged in which private companies created entire zones, such as the Samsung Digital City and the LG Science City (both in South Korea).

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For decades, Pakistan’s intelligentsia had discussed industry-academics partnership; however, none of the offered models presented a viable and workable answer for leveraging local academia and industry for the country’s greater socio-economic gain.

One of the reasons for this was that the solutions never truly allowed industry, particularly the technology industry, to play a true role in national development. The missing piece was a custom-tailored, all-encompassing incentive programme.

While the Special Economic Zones (SEZ) model offered the most advantages, they were located far from urban areas and academic institutions in Pakistan. In other words, the needs of the technology sector and the SEZ model were incompatible in terms of production components.

The Special Technology Zones Authority (STZA) Act 2021 has addressed this disparity, allowing the industry to take the lead in policy and system development through unprecedented incentives and technology-specific programming.

A true pivot has occurred, both in word and spirit, to propel the industry to the forefront of the triple helix. The Authority STZA is the architect, facilitator, and regulator of the ecosystem in support of all of this.

STZA has not only obtained major incentives (10-year corporate tax and custom duty waivers, special forex provisions, subsidised land and utilities, and much more) in the seven months since its Act and approximately 17 months since its Ordinance, but it has also created a system of rules, regulations, and other statutory provisions that will enable it to support the technology industry in a specialised manner.

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Other government agencies (OTAs) in all units of the federation, as well as national and international support institutions, have formed relationships.

The outreach to local and international technology companies has been fruitful, and numerous technological behemoths are in talks to join the STZs, which will serve as anchors for other businesses.

Zone Developer (ZD) and Zone Enterprise (ZE) licence applications have been opened, and a great number of applications have been received in a variety of technical disciplines that will bring in significant investment and contribute to the Authority’s strategic objectives.

Technological transfer, technology exports, import-substitution, employment creation, human capital development, R&D, and innovation are among the strategic goals. A future review will go through the specifics of the licences given and their consequences.

According to preliminary estimates, a typical urban 100-acre zone will attract the equivalent of USD 1 billion in investments and produce USD 1.6 billion in annual GDP activity.

According to the expected amount of investment, the government will receive $20 for every $1 invested in land, infrastructure, and connection. The overall area of all expected zones to come online in the near future is currently 1500 acres.

Using the aforementioned conservative projections, total technology investments in these zones might be around USD 15 billion, with economic activity worth USD 24 billion (> 6% of GDP) maturing over the following few years.

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Given the existing state of the country, the majority of these investments are likely to come from domestic sources rather than foreign ones — indeed, local investments in transformative fields are frequently the trigger for FDI.

The Islamabad Technopolis, a 140-acre zone in Islamabad’s Chak Shehzad neighbourhood, was the first Technology Zone to be built. Universities, R&D facilities, offices of science and technology support organisations, and housing societies will all be located in this zone.

CDA has been a big help in terms of boosting access and power. NESPAK was hired to design the master plan and supervise the EPC. Various civil engineering studies, bylaws design, and related services have been completed by other private sector firms.

The development of trunk infrastructure, as well as the land allocation procedure, is about to begin. The arrangements for ZE tenants in a central location in Islamabad have already been prepared because this process will take time before the ZDs can give space and the ZEs can begin their activities.

Pakistan’s State Life Insurance Corporation (SLIC) applied to STZA for a zone for its New State Life Tower in Blue Area. ZEs working in fields like Artificial Intelligence, Financial Technologies, Electronics Design, Venture Capital Management, and Deployment will be housed in this 300,000 sqft skyscraper.

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The facility will house an incubator as well as other ecosystem support facilities and will serve as a great example of public-private collaboration to achieve national goals.

Lahore Technopolis in Lahore, Pakistan Digital City in Haripur, and the Pak-Austria Fachhochschule Institute of Applied Sciences and Technology (PAF-IAST) in Haripur are among the STZs declared as a result of ZD applications.

PAF-IAST was also the first university to apply for a ZD licence, and many more have followed suit since then. This is a game-changing opportunity for many S&T universities to turn their research and development toward technology transfer and commercialization.

Aside from the five zones indicated above, over a dozen additional are being considered across Pakistan, and applications are still being accepted.

The commercial sector’s imagination has already been captivated, with broad interest from software companies, electronics assemblers and manufacturers, defence technology companies, biotechnology and vaccine manufacturing companies, and universities and colleges.

The ZDs have addressed a wide range of technologies, including artificial intelligence, marine science, agricultural technology, materials engineering, biotechnologies, electronics, and renewable energy, to mention a few. Hotel chains, hospitals, and restaurants have also shown an interest.

Many of STZA’s agreements and alliances will result in an infusion of foreign technology firms. A Digital Country Partnership between Mastercard and STZA has been signed for cashless zones and digital payment solutions for SMEs.

A Memorandum of Understanding (MoU) has been struck between Shorooq Partners, a MENAP-focused venture capital firm, and STZA, with ambitions to create a Pakistan-specific venture capital fund to promote Pakistani entrepreneurs.

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STZA has actively attracted firms from the United States as a result of the President’s initiative to engage the diaspora. Several agreements with Chinese organisations like the Zhongguancun Belt and Road Industrial Promotion Association (ZBRA) and Z-Park have eased the path for Chinese technology companies to come to Pakistan.

Similarly, the MoU with Skolkovo Technology Park will attract Russian technology companies. Many other organisations and IT companies have been involved in a similar way, and several ambassadors and missions have visited STZA to discuss technology cooperation.

All of the aforementioned factors give the country a once-in-a-lifetime opportunity to accelerate its scientific and technological growth. The impact of the STZA plan will become obvious as the nationwide deployment of zones continues and technology businesses begin to enter and operate from the zones.

And this impact will not be limited to a single technological vertical or a single issue; rather, it will be felt throughout the whole technology spectrum and will be synergistic by design. The Authority’s mission is to establish the groundwork for a knowledge economy and encourage innovation.

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