Transformation of services sector required thru new policies speakers

Press Coverage

Transformation of services sector required thru new policies: speakers

ISLAMABAD: Rapid transformation of services sector is required through new policies to move away from vested interests, and rethinking of regulations and new institutions in two key areas, i.e., trade competition and skills.

This was the crux of the session, “Services-led Growth and the Rise of Digital Platforms: A South Asia Perspective”, organised by the Sustainable Development Policy Institute (SDPI) in collaboration with the World Bank South Asia Chief Economist Office.

The speakers recommended that new institutional capacity must be developed to regulate the digital economy.

The speakers including Gonzalo Varela, senior economist, The World Bank; Shamim Rajani, COO, Genetech Solutions; Dr Muhammad Sohail Rajput, federal secretary Information Technology and Telecommunication, and others were of the view that digital platforms can improve the performance by increasing access to market as they add buyers and sellers, convenient transactions, facilitate and enable buyers and sellers. This leads to increased market access for firms, which leads to increased economies and productivity.

They called for rapid transformation of the services sector through adopting new policies to move away from vested interests and rethinking of regulations and setting up new institutions in two key areas, i.e., trade competition and skills. There is a need to increase institutional capacity and introduction of regulatory frameworks, on job reskilling and shared service centres.

Business services contribute the most to manufacturing and the links are stronger in wealthier countries as compared to the ones with a bad economy.

Economies except for Pakistan have seen an upgrade in skills, for instance India and Bangladesh.

To eradicate barrier of entries new institutional capacity should be introduced. Introduction to regulatory sandboxes, on job reskilling, shared service centres were also recommended.

Valerie Mercer-Blackman of the World Bank said that services are increasingly the dominant share of GDP globally regardless of the level of development. Services-led development requires tradability, productivity, and skills requirement. With digitisation, services will only be able to lead to development if they expand jobs and income. The rapid transformation of services sectors requires new policies to move away from vested interest, rethinking of regulations. She further said that the digital technologies are changing the tradability of goods and services; services-led growth may be the only option for South Asia.

Digital platforms are game changers in market economies. Adoption of e-commerce was proposed and encouraged as it is associated with a sustained increase in business profits and sustainability.

Services will be able to lead development, if they get amalgamated with information technology. More learning and development should be encouraged as it expands jobs and income. Introduction to adoption of new instructional capacity was introduced.

Shazia Naz presented a brief literature review and then focused on services exports and FDI. She then discussed the methodology, some comparative analysis, their results and conclusion. Regressions, estimations and their mutual linkage were also discussed. The FDI and its linkage with respect to trade in Pakistan, and how it can bring about changes in host countries were emphasised.

She further said that Pakistan needs to upgrade the prospects for entry of international players. The liberalisation policy of the FDI and trade should be undertaken by the government of Pakistan. Accelerated advancement in communication and information in Pakistan have a wide scope for exports-oriented services. Pakistan should exploit the complementary linkages between services exports and the FDI to boost the global competitiveness, she added.

Siddhartha Sharma discussed how selling online is affecting informal firms in South Asia. He made comparisons between Daraz and Chaldal. He emphasised on how engagement with e-commerce is helpful; its rapidly increasing impacts such as reduced transaction cost, more accessibility, easy access to grassroots level, scale reduction for large scale, quick acquiration in product market, etc.

Sharma said that informality, despite decades of growth remains stubbornly high in South Asia. Informal firms tend to have limited access to credit. Selling in e-commerce platforms impacts small firms in developing countries. Joining the online selling platforms such as Chaldal and Daraz gives any incentive to the informal firms to increase their customers and sales.

A literature review with a divide was presented, discussing informal firms, quantitative case studies, their small, limited selling in local market, limited geographic reach, limited credit, less labour, outdated technology and simple management functions. The focus was to reduce the gap between formal and informal firms. Immediate increased need of e-commerce in South Asia was discussed.

Badar Khushnood said that e-commerce in Pakistan is rapidly increasing. We need to retain some of the employees to upgrade their knowledge. There is a need to upgrade.

Badar and Gonzalo emphasized on life cycle of services and impact on economy. Analogies were drawn between earning in rupees and comparisons were drawn with dollars. Issues like lack of employability, less job retention, no skill and curriculum upgrade, lack of faculty knowledge and capacity building were emphasized. Need of new upgrades through camps, ongoing governmental projects, domestic exports and management were discussed.

Evolution of e-commerce and retail, last four quarters of cash on delivery and domestic getaways were briefed. Different statistics of post-Covid era, e-earnings via Facebook, YouTube, and Instagram was bought in consideration. Ongoing research and think tanks working on B2b wholesale to retail were briefed.

Dr Ganzalo primarily focused on intensive service not businesses and three matrixes to know about transformation were elaborated. He said that the number of exporters has increased in Pakistan who are exporting IT services. There is a huge potential in Pakistan to expand further its business capacity.

He appreciated increased exports and Pakistan getting international exposure and attention. He also mentioned and appreciated in and out payment flow, ways to bring money in, foreign exchange, its entry and exit, and how new policies can be game changers.

“The government of Pakistan aims to increase growth of e-commerce enterprise by encouraging other merchants, enterprises to adapt to digital models,” said Dr Sohail Rajput.

The federal secretary said that knowledge-intensive services have grown a lot but there is a huge potential that is untapped in Pakistan. The government needs to focus on short-term interventions and medium- to long-term intervention to increase employability. The government needs to incentivize the goods side of exports. Dr Sohail concluded the event and discussed knowledge-intensive services, increased exports and potential intact.