Pakistan Struggles with Domestic AI Capabilities Despite New Policy

In July 2025, Pakistan’s government approved its National Artificial Intelligence (AI) Policy, which outlines ambitious goals to enhance AI integration and governance across multiple sectors within the country. This policy is intended to pave the way for innovation, drive economic growth, and develop a skilled workforce. However, a recent report critically highlights that the backbone needed to effectively execute these goals is severely lacking in Pakistan. The country is currently grappling with insufficient domestic expertise, inadequate funding, and the absence of essential institutional frameworks such as an operational AI Council meant to oversee the policy's implementation.

The implications of this shortfall are profound for Pakistan’s technology landscape. As the report indicates, without an AI Council tasked with governance and strategic direction, the government's ambitions remain largely unfulfilled. Furthermore, the report suggests that the reliance on foreign specialists and technologies—particularly from China—is set to increase. This reliance could adversely affect the development of Pakistan’s IT and software sectors, which are fundamental for generating employment and fostering innovation domestically. Instead of cultivating local talent and expertise, the country faces the risk of undermining its potential technological autonomy, as foreign solutions could dominate the market.

In comparison to its South Asian peers, such as India, Sri Lanka, and Bangladesh, Pakistan has fallen behind in implementing AI systems that contribute to effective governance. For instance, India has successfully integrated AI within its governance structures, facilitating more streamlined operations and decision-making processes, while Bangladesh has demonstrated better prospects by subjecting its AI policy drafts to transparent consultations and assessments. Such differences highlight the urgency Pakistan faces to not only establish its AI governance structures but also cultivate an environment conducive to innovation.

The ongoing reliance on foreign solutions signifies significant procurement opportunities for international firms looking to provide AI technologies and services in Pakistan. As the domestic market remains underdeveloped, the need for partnerships and collaboration will emerge as essential. Local contractors, especially those involved in AI and software development, should evaluate strategic alliances that not only align with the government’s evolving AI framework but also focus on capacity building within the country.

Moreover, the report indicates a troubling trend where public sector systems in Pakistan operate largely on paper with fragmented data formats. This lack of clean, interoperable data renders AI implementations ineffective, further complicating the landscape for potential developers. To truly modernize, Pakistan must invest in improving its data infrastructure and enhancing the skills of its workforce to prepare for the AI revolution.

A significant concern raised in the report is the potential for increased state surveillance facilitated by imported Chinese technologies, which not only modernizes urban management but also strengthens state control. This paints a concerning picture for the IT export sector as constraints imposed by foreign partners could stifle local growth and creativity. The report warns that Pakistan’s nascent IT sector, previously an area of growth, may become collateral damage in the race for AI integration, potentially sacrificing local industry for foreign power dynamics.

As the challenges mount, procurement professionals and agencies must pay close attention to the emerging demands and opportunities within the local market. There is a pressing need for capacity-building initiatives, training programs, and solutions that foster domestic expertise. Preparing for future government initiatives aimed at establishing or reinforcing AI governance bodies could represent a pivotal opportunity for contractors and stakeholders in this evolving domain.