Hi Everyone! I hope you are all doing well. Welcome back to another blog. In this article, we will talk on the topic in detail “Pakistan Lagging Behind Neighboring Countries in Data Center Development”. The rapid transition to a digital economy worldwide relies heavily on data centers, which are crucial facilities that house computer systems and associated components such as telecommunications and storage systems. These facilities play an essential role in ensuring the availability and reliability of various digital services like e-commerce, e-governance, and cloud computing.
However, Pakistan has failed to keep up with the fast-paced growth of data center development in the region. While countries like India, China, and Malaysia have made significant strides in this field, Pakistan lags far behind.
Data Center Development
The Digital Economy Report published by The Overseas Investors Chamber of Commerce and Industry (OICCI) reveals that Pakistan lags behind its regional peers in the data center market, despite there being a pent-up demand. Currently, Pakistan only has 11 data centers in operation, compared to Malaysia which boasts a $1 billion data center market, and Vietnam which has a market worth $454 million.
In Pakistan, companies and government departments, such as NADRA, PTCL, Jazz, Telenor, Zong, Ufone, and various universities operate data centers, mainly in Karachi, Lahore, and Islamabad.
To capitalize on the advantages associated with data centers, the government has taken steps to develop the industry. Recently, the National Information Technology Board (NITB) opened its first data center in Islamabad.
The report “Recommendations for Digital Transformation in Pakistan” suggests that Pakistan can leverage cloud and data center technology, which companies have largely adopted in an ad-hoc manner. Enterprises are the main beneficiaries of the majority of data centers in the country. In order to promote the growth of this sector, policymakers and the private sector must incentivize investments to establish hyper-scale data centers, support local cloud service providers through tax benefits, and integrate government databases.
Setting up data centers can create job opportunities for citizens, as it requires a unique logistics chain that includes internet exchanges, hosting, cloud, and fiber optic providers. Multi-tenant data centers typically take three to five years to develop, while large single-tenant hyper-scale data centers can take up to ten years. In 2021, the market valued the global data center industry at $215.8 billion, and it is expected to reach $288.3 billion by 2027.
The report highlights challenges faced by companies in investing in data centers in Pakistan. Frequent electrical shortages result in high maintenance costs. Poorly designed electrical infrastructure is a major disincentive. The problem is compounded by constantly changing censorship and political instability. Data center operators risk losing clients and revenue. Data centers are at risk of cybercrime. The 2021 hacking of the Federal Board of Revenue’s data center is evidence of this. The hack resulted in significant disruptions to the country’s shipments.
Suggestions
- Create a plan to encourage investments in hyper-scale data centers. Enhance the capacity of existing data centers through tax credits and affordable land for construction. Establish a Data Center Task Force. Engage in talks with private companies and the government.
- Consult with market players to identify their needs and preferences. Highlight the identified needs and preferences to potential implementation partners.
Companies and organizations increasingly demand the scalability, security, efficiency, and state-of-the-art technology that data centers offer. Data is recognized by governments as strategically important. It is often referred to as the new oil. Ensuring the safety and sovereignty of the country has become dependent on it.
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