Fledgling Palestinian high tech shows promise

29 Jan, 2004

Palestine Online's nerve centre is a carpeted, computerised, sixth floor office overlooking the outlying villages of Ramallah, the city where Palestinian leader Yasser Arafat has his, now wrecked, headquarters.
Ramallah is also the hub of a fledgling Palestinian high-tech industry that boasts an annual turnover of $325 million, based primarily on software.
The industry, founded in part by Palestinian expatriates who returned to their homeland after the 1993 Oslo Peace Accords, faced a brain drain after the outbreak of violence with Israel in September 2000.
Yet it has been the only Palestinian economic sector to stay afloat amid the bloodshed and tough Israeli travel restrictions that have devastated the more traditional industries.
"Software can be e-mailed and downloaded and we can do virtual technical support so we don't have the barriers other industries face in export," said Ahmed Abumarzouq, vice chairman of the Palestinian Information Technology Association (PITA).
Locally, Internet service providers (ISP) are continuing to grow. Palestine Online, which recent data casts as the largest Palestinian ISP, counts 3,000 private subscribers and 200 frame relay business clients.
When Israel's military measures, tightened after suicide bombings in its cities, prevented customers from paying their subscriptions at local offices, Palestine Online changed their billing process.
It offered Internet cards at local groceries to replace monthly subscriptions in a society where credit cards are rare.
Palestinians are one of the most Internet savvy societies in the Arab world. About eight percent have Internet access, far above the 1.6 percent of the world's 270 million Arabs noted in a recent United Nations report.
Samer Sabri, Palestine Online's deputy general manager, says that despite the hardships Israel imposes, Palestinians nonetheless benefit from their proximity to the Jewish state.
Palestine Online connects to the Internet through an Israeli company.
"There is a lot of contact between Palestinian and Israeli companies in high tech as Internet companies," said Sabri. "We have the background and we want to show the world that Palestinian people can do a lot in technology."
The Palestinian technology market remains primarily local, but the focus is increasingly outward. Palestinian companies recently developed software applications for Gulf states and won Website development projects in Egypt and Saudi Arabia.
The Palestinian Authority hopes the sector will be pivotal in the rebuilding of its economy, which, according to the CIA's World Factbook, saw its gross domestic product fall by an estimated 22 percent in 2002.
"We believe that we have to support the high tech sector as a necessary infrastructure both on the macro and micro level," said Saeb Bamya, head of the Ministry of Economy and Trade, noting he is seeking to target donor money for the industry.
The World Bank said in September that the Palestinian Authority needs at least $1 billion a year from donors just to keep its economy going.
USAID (the US Agency for International Development) has taken up the technology challenge, helping to establish in March 2003 the Palestine Information and Communications Technology Incubator (PICTI), the first of its kind in Palestinian areas.
David Bailey, the incubator's American general manager, set up similar projects in Moscow and Kiev. He said the Palestinian initiative has unique traits, similar to those that gave Israel's high tech a push, to ensure its success.
Eighty percent of the Palestinian high tech sector is based in Ramallah, creating a close-knit community that enables firms to build on each other's strengths and tap into funding from wealthy expatriate Palestinian businessmen.
Bailey said an excellent local university system and work ethic could contribute to the industry's success.
"They have an excellent opportunity going forward to really concentrate on specific niche areas within the IT community and to do it extremely well," he said in a recent interview.

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