The Pakistan Business Council has issued a statement saying that many multinational companies (MNCs) are either planning to relocate their back offices from Pakistan or have already done so, as the reported imposition of a firewall causes widespread internet disruptions across the country.

The PBC statement has come in the wake of a report by the Dubai Chamber of Commerce that 3,968 Pakistani companies registered in Dubai between January and June 2024 — making Pakistan the second-ranked country on the list. The figure was also 17 per cent higher than the 3,395 firms registered during the same period in 2023.

Last year, the Dubai Chamber of Commerce had registered 8,036 new Pakistani businesses.The surge in Dubai-based Pakistani businesses highlights a growing exodus from Pakistan which is with severe unemployment and sluggish economic growth. As hundreds of thousands of skilled and unskilled workers have already left Pakistan, millions more are reportedly seeking opportunities abroad. This migration reflects a deepening lack of confidence in the government’s economic policies. Key factors contributing to this trust deficit include the high cost of doing business, political uncertainties, soaring electricity costs, and deteriorating law and order.

To quote the Pakistan Business Council, “While we struggle with the costs of idle capacity in power generation leading to unemployment and loss of exports and tax revenue, we now have to contend with the threat of idle capacity in the emerging software sector due to poor execution of a firewall.”

The PBC has asked the authorities concerned to go back and get the right firewall or learn to apply it without creating an unnecessary impact on employment and exports. On the other hand, the Overseas Investors Chamber of Commerce and Industry (OICCI) has warned that frequent internet disruptions in Pakistan could derail the country’s economic progress.

Pakistan’s tech industry has already expressed serious concern over the recent internet slowdown, warning that these disruptions could cost Pakistan up to $300 million. IT and IT-enabled services, besides agriculture and tourism, offer a valuable opportunity to achieve the export target over the next three years. High-speed connectivity is also vital for the domestic economy. The Pakistan Software Houses Association has said that these disruptions are not mere inconveniences but a direct, tangible and aggressive assault on the industry’s viability, inflicting devastating financial losses.

In response to complaints about internet disruptions across the country and speculation over firewall installations, State Minister for Information Technology and Telecommunication Shaza Fatima Khawaja said a few days ago that reports suggesting that the internet was being throttled by the government were “completely false.” Her statement came a day after the business community and internet service providers alleged that the government’s efforts to monitor internet traffic had resulted in a significant nationwide slowdown of services.

Speaking at a press conference in Islamabad, Khawaja said,“I want to reassure the public that the internet has neither been shut down nor slowed down by the state. Reports suggesting that the internet was being throttled are completely false. The issue was limited to a few services on certain apps not downloading, which led a large segment of the population to start using VPNs.”

She emphasised that there was “no truth to the rumor that the government is throttling the internet to suppress dissent.” Earlier this week, Khawaja acknowledged the public’s concerns and said that the internet should never be slow and that news about a firewall being installed by the government was “blown out of proportion”, adding that it was a routine exercise across the globe to enhance internet security.

In the meantime, the internet service providers have alleged that the government’s efforts to monitor internet traffic had resulted in a significant nationwide slowdown of services. A statement issued by the Wireless and Internet Service Providers Association of Pakistan (WISPAP) said the government’s decision to enhance security and surveillance has had an unintended consequence, severely crippling the country’s digital economy: “Over the past few weeks, internet speeds have plummeted by 30 to 40 per cent, creating a chaotic situation for businesses and individuals who rely heavily on fast, reliable connectivity.”

According to the association, the impact had been particularly devastating for call centres, e-commerce professionals, the online working class, and those who manage electronic-related businesses. These sectors, which form the backbone of Pakistan’s burgeoning digital economy, are now struggling to maintain operations, and the slowdown is threatening their very survival. Industry insiders say that the situation has become so serious that many businesses are considering relocating their operations to other countries where internet services are stable.

The current situation is not only tarnishing Pakistan’s reputation as a hub for digital entrepreneurship but also jeopardising its economic stability. The inability to utilise VPNs due to heightened surveillance is further aggravating the issue, especially for international businesses and freelancers who depend on secure, uninterrupted internet access for running their operations. Major online platforms such as Facebook and WhatsApp have been the hardest hit, with users reporting slowdowns and difficulties in accessing messaging and social media applications. No doubt, cyber security is important but it can be ensured without disrupting normal internet-based business operations. Surely, some people in the government have mishandled the situation. Given the seriousness of the matter, corrective measures should be taken as soon as possible.