Abdullah Kamran
It’s quite significant that Pakistan has achieved the second position for new non-Emirati companies joining the Dubai Chamber of Commerce in the first half of 2024, with 3,968 entities registering. This marks a 17% increase compared to the same period in 2023 and signifies the growing potential of Pakistani businesses in Dubai.
However, this trend also indicates the challenges faced by businesses in Pakistan, including enduring instability, inconsistent policymaking, and a propensity for non-productive expenditure, which have deterred potential investors and made it difficult to attract sustainable investment.
According to a recent announcement by the Dubai Chamber of Commerce, there has been a significant increase in the number of Pakistani companies registering in Dubai. The Chamber reported that 3,968 Pakistani companies registered in the first half of 2024, marking a 17% increase from the same period in 2023. Throughout 2023, a total of 8,036 new Pakistani businesses were registered with the Dubai Chamber of Commerce, representing a substantial 71.2% increase compared to the previous year.
The influx of Pakistani businesses into Dubai positions Pakistan as the second highest non-Emirati contributor of new companies to the Dubai Chamber of Commerce. This demonstrates a growing trend of business investment flowing from Pakistan to Dubai.
The appeal of Dubai as a preferred destination for Pakistan’s software companies lies in its streamlined payment processes, favorable business environment, reliable infrastructure, and strong enforcement of contracts. These factors present a stark contrast to the challenges faced by entrepreneurs in Pakistan.
Key factors that make Dubai appealing to Pakistani software companies include its high ranking in enforcing contracts and providing reliable and affordable electricity. Additionally, foreign companies feel more secure in signing contracts with entities incorporated in Dubai due to perceived ease of legal recourse in case of contract breaches. Furthermore, positive travel advisories for Dubai make it a more attractive location for business meetings, compared to Pakistan which faces security concerns and travel advisories that discourage foreign visits.
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Incorporating an office in Dubai offers strategic advantages for Pakistani software companies, providing access to reliable infrastructure, a proper legal framework, and seamless access to payment services such as Stripe and PayPal. The corporate tax rate of 9% in Dubai, coupled with simplified payment processing, further enhances the appeal of setting up offices in the emirate.
Additionally, Dubai’s more favorable tax regime and less cumbersome bureaucracy have attracted capital from around the world. The UAE’s business-friendly environment stands in contrast to Pakistan’s more restrictive financial system and extensive documentation requirements.
The disparity between these two environments has led to a significant difference in the performance of the ICT industry in Pakistan compared to its targeted growth outlined in the Pakistan Vision 2025 and the Digital Policy of Pakistan 2018. The observed exports from Pakistan’s Information and Communication Technology (ICT) industry in 2023-24 were far below the targeted $20 billion by 2025, highlighting the challenges faced by the industry within the country.
This trend raises concerns about Pakistan losing its talent, domestic and foreign revenue, and its ability to establish a strong presence in the IT sector. As traditional industries face pressure, it becomes increasingly important for Pakistan to create an enabling environment for its businesses, including those in the IT sector, to thrive domestically and compete on the global stage.
Therefore, it is critical that Pakistan meets political stability and consistency in policies. The IT sector is the most flourishing sector in Pakistan, and if this sector is not established, Pakistan can face serious challenges. Furthermore, it is the only sector that Pakistan can rely on for smooth and quick economic recovery with, producing scores of jobs.
