While a singular focus on promoting the gig economy instead of taking concrete steps to boost investment itself deserves some critique, let’s leave that debate for another time. For now, let’s turn our focus to what could be a proxy for the tech sector’s growth: computers.
As a developing nation, Pakistan is an importer of data processing machines. So we can look at whether there has been a major increase in their demand, especially post–Covid-19, which has been hailed as a game-changer for the digital economy.
Using International Trade Centre’s trade map for product-level figures, we studied the underlying trends for HS code 847130, defined as data-processing machines, automatic, portable, weighing less than 10kg, consisting of at least a central processing unit, a keyboard and a display (excluding peripheral units).
Under this category, Pakistan spent $181.6 million on 1.52m units in 2019-20 at an average price of $119.36.
While the number of imported units jumped by 462,601 over 2018-19, there was a marked decline in both the total bill and the average price, which fell from $226m and $213, respectively. In percentage terms, this reflects plunges of 19.6 per cent and 43.96pc, respectively.
That suggests a move towards cheaper and lower quality machines, which could possibly be a cause of concern. Even in the units imported, the increase doesn’t really appear to have been triggered by Covid-19 as Pakistan was buying in higher quantities before March 2020.
Even though the market people have mentioned a jump in demand for laptops post–Covid-19 — with online classes and work-from-home being the two most cited reasons — it doesn’t seem to have impacted the overall imports. The country bought 106,658 units in April-June 2020, the second lowest quarterly figure since the beginning of 2018.
In comparison, imports in the preceding two quarters were 132,194 and 155,915 units.
What seems more likely is that instead of the country’s total appetite for computers increasing, there has been a move towards older ones. That could explain the downward trajectory of the average price of a data-processing machine, which stood at $131 in June 2020 as opposed to $211 in January of 2018.
Computer vendors also paint a similar picture: that there has been a shift towards older generation machines. “The demand for up to third-generation laptops has more or less doubled, likely because of online classes. On the other hand, that for newer models has slowed down as the price has significantly gone up,” says Asif Badar, who deals in mostly used computers and laptops.
“A few second-generation Dell models I owned were selling for around Rs16,000 in January. By September, they were being quoted at roughly Rs26,000. The price increase for newer laptops has been as much as Rs20,000-25,000,” he says.
It’s a somewhat similar story for personal computers as well, with Mr Badar saying that the price of a used third-generation i5 with 4GB RAM and 250GB hard drive has jumped to around Rs14,000, from about Rs9,000 previously.
Another vendor dealing in new machines says the rates for latest models have gone up by as much as Rs25,000 while one seller based out of Karachi’s Technocity Mall tells Dawn that the prices of second-generation laptops have risen by roughly Rs5,000-6,000 and those of third-generation laptops by Rs6,000-7,000.
To further confirm this thesis, we also looked at the laptop price data from Pakistanistores.com, an e-commerce comparison website. Based on that, there definitely is an upward movement. For instance, Dell Latitude E6430 i5-3320, a particularly common office series machine, which was selling within the range of Rs23,000-27,000 depending on the seller, is now available at Rs35,000 or above. For context, it was released in the second half of 2012.
Like with pretty much every other product, the steep rupee depreciation over the past two years has been a key factor in pushing up the prices. As the dollar became more expensive, the rates for computers and laptops moved accordingly, which pushed people towards earlier generation models. That in turn raised demand and, resultantly, prices of older machines, a trend only worsened by Covid-19.
Unfortunately, instead of moving ahead with times and adopting newer technologies, we are yet again going in the wrong direction. It’s a lot like what happened in the auto sector where obsolete models came to rule the market, though it was the local assemblers’ oligopoly there. But with virtually no local production of laptops and computers, it’s unimaginable to think the situation will change anytime soon.
The government can maybe approach this issue the same way it dealt with the issue of mobile phones: incentivise and encourage foreign, especially Chinese, players to set up their shop and start manufacturing in the country. For us to move higher in the tech’s value chain and produce, say, experts on new software, it’d be a good idea for people to have access to at least somewhat recent machines.
Published in Dawn, The Business and Finance Weekly, February 8th, 2021
