THE rapid growth in reg> istration of new companies with the Security and Exchange Commission of Pakistan (SECP) unveils a renewed business confidence in a growing economy.

The number has surged to 44 per cent during the first half of the current fiscal year compared to a 34pc increase recorded for FY2016-17.

The diversity and range of planned investment include setting up of a good number of companies in the following fields: engineering firms 155, food and beverages 164, corporate agriculture farming 126, cable and electrical goods 58, chemicals 55, and steel and allied 38.

When these firms go into production, the domestic output of intermediate industrial goods and raw materials is expected to go up significantly.

According to the first quarterly State Bank report for FY 2018, official guidelines envisage local output of core component and materials rising to 40pc in 2020 and 75pc over time.

Steered by an escalating domes-tic demand, the wide-ranging stipulated investment, if fully realised, can put the economy on a correction course towards reducing its critical structural imbalances.

In the sixth months under review, the trading sector takes the lead with the highest number of incorporation at 783, followed by the service sector at 729. However, together they are still less than one-third of the firms registered in the rest of the segments. Spurred by CPEC, construction has clinched the third position with 625 firms, closely followed by 599 IT firms.

There has been a big jump in the number of IT companies (599) registered in half a year when compared to 733 registered during the whole of FY2016-17. Some experts suggest that unlike in industrialised states, there are bigger opportunities in developing economies to mainstream IT and ICT in business strategies.

The productive gains of IT are difficult to realise for big established organisations as it often impliesrevamping of old business models and re-engineering of the factory floor. Plants and machinery, installed with heavy investments, cannot be dismantled easily until such time as they become obsolete.

Some refurbishing can still be carried out. IT companies can more easily help other newly incorporated firms adopt digital products. They can capitalise on the technologysavvy young population.

The IT sector will receive further impetus from the decision of the National Institute of Technology Fund, taken on Jan 16, to train one million people in IT and ICT under its flagship DigiSkills programme.

In Pakistan, the number of private limited firms (82pc) and singlemember companies (16pc) together account for 98pc of the total registration of 4,954 companies in six months ending December last year.

The number of unlisted public companies is so small that they are clubbed together in the remaining two per cent along with trade organisations, non-profit associations and foreign companies.

While the total number of registered companies has shot up to 83,879 at the end of the last calendar year, the share of old listed public companies at the PSX is stagnant at around 561 companies.

However, leading business groups have been diversifying their business and investments through subsidiaries and inter-corporate equity financing. That provides them theopportunity to adopt new ideas and latest technologies as new entities are free from historical baggage.

The rapid growth of operative private limited firms and active singlemember companies is also strengthening the current trend of economic pluralism. In the emerging environment with old business models yielding place to new ones, market competition and entrepreneurialism are finding space to prosper.

Over the past few years, export of IT software services and products has also increased at a much faster pace than foreign sales of merchandise. The trend is likely to continue.

`Entrepreneurial leaders feel empowered to resolve challenges without depending on government action,` and that breeds economic and political pluralism and nurtures participatory democracy, says Kim Eric Bettcher, an economist at the Centre for Private Enterprise.

On the other hand, he observes that `destructive` entrepreneurship distracts from productivity and innovation, and survives on rent-seeking (financing one`s share of existing wealth without creating new wealth).

And rent-seeking is averse to democracy.

If sustained on the long-term basis the emerging investment trends marked by surging incorporation of new IT firms have the potential to change the country`s economic landscape. • jawaidbokhari2016@gmail.com