Government has failed to recognise the potential of computer hardware industry of Pakistan

An interview with Ghias Khan - CEO Inbox
Q. What are the different locally assembled PCs, servers and laptops Inbox markets in Pakistan?
Right from high-end mission-critical enterprise level computing needs to home computing needs, the Inbox range of products covers a wide spectrum of customer and business needs.
With the grace of Allah we can claim that we are the largest selling brand of computers in Pakistan, Inbox is specially leading the mobile computing business with over 60% of the market share consistently for last two quarters.
Q. Do you think there is scope for locally assembled PCs in Pakistan?
The scope for locally integrated PCs in the country is tremendous to say the least. PCs are no longer considered a luxury, which was perhaps the case 4 to 5 years ago, now they are an essential part of equipment for every office and their penetration in the households is also very encouraging. I feel that awareness, the Internet and educational institutions are playing a very important role in promoting the use of PCs.
The scope is remarkable, however, without the essential government recognition and support, the future of IT hardware industry of Pakistan may not be so bright. It has been 3 years since we launched INBOX, which was perhaps the first truly home-grown computer brand company in Pakistan.
The response over the last 36 months has been very encouraging for us.
Since then, we have sold over 15,000 computers and our network has grown to 4 Inbox locations (Karachi, Lahore, Islamabad & Peshawar) additionally, now we also have authorised dealerships in over 14 cities countrywide.
Users of Inbox products can be found in over 70 cities nation-wide, so basically we are extremely motivated and are encouraged by the growth potential.
Q. As a company marketing its own brand of locally assembled PCs, what impediments should be removed to increase the sale of locally assembled PCs in Pakistan?
Yes we certainly do market only our own brand of computers. Sadly, several local computer brand companies are also working as authorised distributors/dealers for major foreign brands.
Basically where the local computers are not welcome - as is the case with government and its organisations - these companies still make the ends meet by selling the more expensive foreign brands.
In my view, the government and some of its owned corporations should be blamed for this rather sorry state of affairs and not the computer companies.
We however, never wanted to have an option of proposing machines that are not integrated at Inbox.
Unquestionably the government together with its institutions and public sector companies is the largest consumer of computers in the country.
And it is not a state secret that most of the government requirements are fulfilled by ready-to-use foreign brands.
The ideal growth in this sector will not happen unless the government enables level playing fields for the local computer companies as well.
They need to follow China, Korea and India, where not only are local brands the market leaders, but they are also given a clear preference over their foreign counterparts.
In fact the governments in these countries encourage local integration of computers by imposing import duties on boxed computing products, specially computers, thus forcing major international brands to set up local assembling units.
Each of the countries mentioned now boast one or several international brands integrating computers locally and not just pushing their finished products in these geographies, which was the case earlier on.
Q. Is the government supporting local assemblers? If not, what do you think our government should be doing to encourage local assembling of PCs.
I feel that the successive governments have totally failed to assess the potential of this sector and even now, the signs of support are far from encouraging.
Allowing duty-free import of computer components and accessories was the only worthwhile initiative.
Sadly however, the duty-free regime also applies to the import of ready-to-use (boxed) computers.
So basically, no real time advantage or incentive has been enabled for the local technology companies. If anything this dichotomy has only hurt the local companies.
Firstly, the government should shortlist and pre-qualify prominent local brands and allow them to participate in the government tenders.
The "Foreign Brands Only" system has to be abolished if we wish to see any substantial growth in this sector.
Secondly, the government should impose import duty on finished products and encourage these foreign brands to set up local assembling facilities.
This will result in transfer of technology in a real time environment and it goes without saying that it will create plentiful employment opportunities for the local computer science graduates as well.
Q. What are the selling points for promoting local brands of PCs as opposed to foreign brands?
It has been witnessed that computers have a much higher rate of user involvement with the brand than any other household appliance and/or equipment in case of an office environment.
In Pakistan, as you know better, most computer users are not as technology savvy, so basically the aspect of after sales support can be sighted as the key selling point for the local brands.
Though there aren't many good examples of dedicated after-sales support in the local market, I still feel that users are more comfortable having a local product as compared to a foreign one.
Q. During 2003, in your view how has the PC market in Pakistan performed?
Speaking for Inbox, it was the best year for our company. For the industry perhaps it was yet another healthy year.
We saw the introduction of new local brands, witnessed latest technology being introduced at par with other geographies in the world.
During this time even banks were very active on this front by bringing out consumer loans for computers and above all, healthy technology acquisitions continued in both our target segments (ie the business and the home users) throughout 2003.
The number of local brands that have been introduced in the last 18 months is perhaps a testimony of how well the local PC market has done.
Without any recognition or support from the Government I feel the computer industry is doing as well as it can under the obvious and rather dismal circumstances.
Q. Compared to foreign PC brands, how have local brands fared?
Local brands have done well and can do a lot better if the government recognises this sector as an industry. You look at any success story in the region and you will see that hardware integration came first which was closely followed by component assembly and then came the manufacturing, as in the case of Malaysia and China.
Our government has, sadly, not done much when it comes to following suit.
We are far from where we can say that IT in Pakistan is an industry that provides employment to thousands of skill-full people and enables a healthy and competitive environment.
Q. Do you see a growing demand for locally assembled PCs . if so, what would be the main reason?
General awareness about technology and cheaper and faster communication solutions made possible by the Internet have fuelled the demand for locally assembled (economical) PCs.
Whereas the demand at the corporate level was expected, the results from the home computing segment have also been very encouraging.
PC penetration in Pakistan's primary cities is far from ideal and while the Internet may have arrived in the secondary (offline) cities, they still don't have access to quality computing products.
The government itself, with aid and assistance from abroad, has embarked upon massive computerisation of the government functions.
The single most important factor, however, which will continue to drive the demand, would be IT literacy.
The more people are able to understand IT, the more able they will be to apply technology in their personal life and work facets.
Q. Compared to other countries in the Asia Pacific region, how would you rank the Pakistan PC market?
I was travelling in the region recently and my engagements took me to Singapore, Hong Kong & Taiwan. It was pleasing to be able to hear the views of the people based there about our IT industry and its potential.
Overall, the PC market has been doing exceedingly well and growing at a healthy rate of over 30% per annum for a number of years now. This is a very good sign and is being looked at very positively by others in Asia Pacific.
It would be safe to assume that Pakistan has one of the fastest growing PC market perhaps superseded only by China & India in the region.
As we all know our local economy has not been stable for many years now and it has only recently started showing some signs of improvement.
Despite the overall depressive business mood, technology is one sector that has done fairly well.