Pakistan is a country with a rich history and diverse culture, and it offers a lot of opportunities for foreign investors and entrepreneurs. However, doing business in Pakistan can be challenging due to various legal and regulatory hurdles. In this comprehensive guide, we will explore the legal challenges of doing business in Pakistan and provide useful tips for foreign investors and entrepreneurs.

In 2023, navigating the legal landscape of Pakistan for businesses is akin to steering through a complex maze of evolving laws, regulatory frameworks, and socio-economic dynamics. This guide aims to provide a comprehensive overview of the primary legal challenges faced by businesses in Pakistan, drawing insights from various sectors such as data protection, intellectual property, cloud computing, and digital banking.

1. Data Protection and Privacy

With the draft bill for data protection still in development, Pakistan is on the cusp of establishing a formal data privacy regime. This transition period offers a unique opportunity for businesses to engage in consultations and help shape the law. However, challenges lie in the lack of public awareness about data rights and the intricacies of compliance with future regulations. Businesses must prepare to adapt to these upcoming changes, ensuring they meet international data protection standards.

2. Intellectual Property Rights (IPR)

The enforcement of IPR in Pakistan faces significant hurdles, including inadequate legal frameworks, limited public awareness, and insufficient penalties for infringements. The lack of specialized IP tribunals and comprehensive legislation covering all aspects of IP further complicates the matter. Businesses need to be vigilant in protecting their IP and advocating for stronger legal protections and enforcement mechanisms.

3. Cloud Computing in the Banking Sector

The “Framework on Outsourcing to Cloud Service Providers” by the State Bank of Pakistan (SBP) presents a new set of challenges and responsibilities for banks. Adapting organizational structures, ensuring effective oversight, and maintaining robust internal controls are essential for complying with this framework. This extends to understanding and managing risks associated with cloud service providers, both domestically and offshore.

4. Digital Banking and E-commerce

The digital banking regime in Pakistan, though progressively evolving, poses challenges in terms of obtaining licenses and meeting regulatory requirements. For e-commerce, the absence of sector-specific legislation means navigating existing commercial laws, with a focus on consumer protection and cyber security.

5. Challenges in Implementing IP Laws

The implementation of IP laws is hindered by a lack of public awareness, insufficient legal frameworks, and operational inefficiencies. Addressing these challenges is crucial for protecting creators’ rights and fostering an environment of innovation and creativity.

Solutions and Strategies

  • Engage in Policy Making: Actively participate in consultations and discussions regarding new laws and regulations.
  • Educational Initiatives: Implement comprehensive programs to educate the workforce and the public about IP rights, data protection, and digital banking practices.
  • Legal Compliance: Stay updated with evolving laws and regulations, especially in data protection, IP rights, and cloud computing.
  • Infrastructure Development: Develop robust internal controls, cybersecurity measures, and IP protection strategies.
  • Advocacy for Stronger Laws: Advocate for the establishment of specialized tribunals and stricter penalties for IP infringements.

Doing business in Pakistan in 2023 requires a multifaceted approach that encompasses legal compliance, active engagement in policy discussions, and continuous education about the evolving legal landscape. By addressing these challenges proactively, businesses can navigate the complexities of the Pakistani legal environment more effectively, paving the way for sustainable growth and innovation in this dynamic market.

Legal Framework for Doing Business in Pakistan

The legal framework for doing business in Pakistan is governed by several laws and regulations, including the Companies Act, the Partnership Act, the Securities and Exchange Commission of Pakistan Act, and the Income Tax Ordinance. These laws are designed to provide a fair and transparent business environment for investors and entrepreneurs.

One of the main challenges of doing business in Pakistan is navigating the complex legal and regulatory environment. Foreign investors and entrepreneurs must comply with various laws and regulations, including company registration, taxation, employment laws, and intellectual property rights.

Company Registration The first step in doing business in Pakistan is to register your company with the Securities and Exchange Commission of Pakistan. You will need to provide details about your business, including its name, registered office address, share capital, and directors. Once your company is registered, you can start doing business in Pakistan.

Taxation Pakistan has a complex tax system, which includes income tax, sales tax, and customs duties. Foreign investors and entrepreneurs must comply with these tax regulations and file their tax returns on time. It is recommended to seek the advice of a tax consultant to ensure compliance with tax laws.

Employment Laws

Pakistan has strict employment laws governing matters such as minimum wage, working hours, and employee benefits. Foreign investors and entrepreneurs must comply with these laws when hiring employees in Pakistan. It is important to seek legal advice to ensure compliance with employment laws.

Intellectual Property Rights

Intellectual property rights are protected by law in Pakistan, including patents, trademarks, and copyrights. Foreign investors and entrepreneurs must be aware of these laws and take steps to protect their intellectual property rights.

In conclusion, doing business in Pakistan can be challenging due to the complex legal and regulatory environment. Foreign investors and entrepreneurs must be aware of the legal challenges and take steps to ensure compliance with the relevant laws and regulations. Seeking legal advice is highly recommended to navigate the legal challenges of doing business in Pakistan. Our Law firm, Josh and Mak International, assists its foreign clients who are foreign investors and entrepreneurs, with meticulous planning and legal guidance, in order to help them succeed in doing business in Pakistan.

The Client Information Articles below seeks to discuss the challenges facing businesses hoping to do business in Pakistan 

The legal and enforcement framework for data privacy in Pakistan presents several challenges for doing business, particularly in the absence of specific data protection legislation. However, the Pakistan Personal Data Protection Bill, 2021 /2023 (draft bill), once enacted, will establish a more comprehensive legal framework. Below is an analysis of the current state of data privacy laws and their impact on businesses in Pakistan:

Lack of Specific Data Protection Law:

Until the enactment of the draft bill, Pakistan does not have specific legislation governing data privacy. This presents a challenge for businesses, especially those operating internationally, as they may need to adhere to international data protection standards in the absence of local laws.

Draft Pakistan Personal Data Protection Bill, 2021/2023:

The draft bill, once passed, will create obligations for data controllers and processors and establish rights for data subjects.

The proposed law includes provisions for the protection of ‘sensitive personal data’ and ‘critical personal data’, with specific conditions for processing such data.

The enactment of this bill will significantly impact how businesses handle personal data, requiring them to update their data processing and protection measures.

Sector-Specific Regulations:

In the absence of a general data protection law, various sector-specific regulations apply, such as in banking, telecommunications, and healthcare.

These regulations impose requirements for maintaining the confidentiality and security of consumer data, which businesses in these sectors must comply with.

National Commission for Personal Data Protection:

The draft bill proposes the establishment of the National Commission for Personal Data Protection, which will have broad powers to enforce data protection laws, including adjudicating complaints and setting data protection standards.

This body will play a crucial role in shaping Pakistan’s data privacy landscape and in ensuring compliance.

Industry Standards and Best Practices:

The Commission will prescribe standards for data protection. These standards are expected to reflect industry best practices.

Businesses will need to align their data protection practices with these standards once they are established.

Scope of Application:

The draft bill’s scope encompasses all entities that act as data controllers or data processors, regardless of their legal form.

This broad application means that a wide range of businesses will need to comply with the new law.


The draft bill provides for certain exemptions, such as for personal, family, or household data processing.

Specific provisions of the bill do not apply to certain types of data processing, such as for crime prevention, health data, statistical or research purposes, court orders, regulatory functions, and journalistic, literary, or artistic purposes.

In conclusion, while Pakistan currently lacks specific data privacy legislation, the proposed Pakistan Personal Data Protection Bill, 2021/2023 once enacted, will establish a comprehensive legal framework. This development will require businesses to adopt robust data protection and privacy measures, aligning with international standards and adapting to local regulatory requirements.

Extra-Territorial Application of the Data Privacy Regime

The draft (2023) bill’s application to entities incorporated outside Pakistan but operating within its territory, whether digitally or non-digitally, underscores the global reach of data privacy laws. This means businesses outside Pakistan engaging in any form of activity within the country must comply with its data privacy regulations, adding a layer of legal complexity for multinational corporations. This approach mirrors the EU’s General Data Protection Regulation (GDPR), indicating a global trend towards expansive data privacy laws.

Definitions in the Data Privacy Context

The definitions provided in the draft bill are comprehensive and align well with international standards, which is beneficial for ensuring consistency in interpretation and enforcement:

Data Processing: This broad definition encapsulates all possible operations on personal data, highlighting the extensive scope of regulatory oversight.

Data Processor & Data Controller: The distinction between these roles is clear, with responsibilities delineated for each entity involved in data handling.

Data Subject: Focusing on natural persons, this definition ensures individual rights are central to data privacy.

Personal Data: The inclusive definition captures a wide range of information, increasing the ambit of protection.

Sensitive Personal Data: The specific categorization of sensitive data, including biometrics and financial information, indicates a higher level of protection for these data types.

Consent: The requirement for consent to be specific, informed, and unambiguous aligns with best practices in data protection, ensuring data subjects are genuinely aware of how their data is used.

Other Key Terms

The additional terms like “Third Party” and “Relevant Person” further clarify the roles and responsibilities within the data privacy framework. The concept of “Vital Interests” introduces a necessary balance between privacy rights and urgent needs related to life, death, or security.

Implications for Businesses

For our law firm, Josh and Mak International, advising clients on compliance with these regulations is crucial. Businesses must understand the nuances of these definitions and ensure their data handling practices align with the requirements. Especially for international clients, it’s vital to emphasize the extra-territorial aspect of the law, guiding them through compliance to avoid potential legal pitfalls.


The draft bill presents a robust framework for data privacy in Pakistan, reflecting global trends and standards. However, the extra-territorial application poses significant challenges for international businesses. Our role as legal advisors is pivotal in navigating these complexities, ensuring that our clients, both local and international, adhere to these regulations while conducting business in Pakistan.

Metaverse in Pakistan

The challenges and advancements in the realm of the metaverse and digital economy in Pakistan present a complex yet dynamic landscape. Here’s an analysis based on the information you provided:


Current Legal Framework

Absence of Specific Legislation: Pakistan currently lacks specific laws or regulations tailored to govern the metaverse. This emerging technology intersects various legal domains, necessitating a multifaceted approach to regulation.

Need for Legislative Education: Understanding the metaverse’s implications requires significant education for lawmakers and the public. Given its novelty and rapid evolution, this presents a challenge in developing informed and effective regulations.

Adaptation of Existing Laws: Current Pakistani laws would need substantial revisions to address the unique aspects of the metaverse, including issues related to virtual property, digital identity, and user interactions in these virtual spaces.

Digital Economy of Pakistan 

Key Challenges

Lack of Comprehensive Legislation: The absence of overarching laws specifically addressing the digital economy creates uncertainty and potential regulatory gaps.

Digital Pakistan Policy (2018): This policy, though not legally binding, sets out strategic goals for digitization across various sectors, aiming to foster an inclusive, innovative, and economically beneficial digital ecosystem.

Digital Banking

Regulatory Progress: The State Bank of Pakistan (SBP) is actively involved in modernizing banking services. The Licensing and Regulatory Framework for Digital Banks issued in 2022 is a significant step towards formalizing and promoting digital banking in Pakistan.

Digital Bank Licensing: The SBP’s ability to grant licenses for Digital Retail Banks (DRB) and Digital Full Banks (DFB) encourages both local and international entities to participate in Pakistan’s digital banking landscape.

E-Commerce and Cryptocurrencies

Governmental Support for E-Commerce: Recognizing its economic potential, the government is keen to develop a supportive environment for e-commerce.

Cautious Approach to Cryptocurrencies: Pakistan remains wary of cryptocurrencies, reflecting a global trend of regulatory concerns over digital currencies’ security and stability.

Legal Status of Digital Pakistan Policy

Guiding Framework: The policy serves as a strategic guide rather than a binding legal document, outlining objectives and visions for the country’s digital future.

Implications for Legal Practice

For oour law firm, understanding and navigating these emerging areas is crucial. Advising clients on potential legal implications in the metaverse, digital banking, and e-commerce requires staying abreast of evolving regulations and policy directions. Moreover, the cautious stance on cryptocurrencies necessitates a nuanced understanding of financial regulations and their possible future trajectory.

In conclusion, while Pakistan’s digital landscape is evolving, the current lack of specific laws governing areas like the metaverse and digital economy poses challenges. However, the SBP’s initiatives in digital banking and the government’s support for digital transformations indicate a progressive move towards a more structured and regulated digital environment. 

Digital Banking Regime in Pakistan

Licensing Process

Multi-Stage Process: The procedure to obtain a digital banking license in Pakistan involves several stages. This includes obtaining a No Objection Certificate (NOC), in-principle approval, demonstrating operational readiness, conducting pilot operations under a restricted license, and finally, obtaining a full license for commercial operations.

Timeframe for License Acquisition: The duration to secure a digital banking license is variable, depending largely on how swiftly an entity meets the various criteria and stages in the application process.

Experience Requirements

Extension for Traditional Banks and EMIs: The State Bank of Pakistan (SBP) reserves the right to extend the experience requirement for traditional banks and Electronic Money Institutions (EMIs) if their performance in delivering digital financial services (DFS) is deemed unsatisfactory.

Counting Pilot Phase for EMIs: An EMI’s pilot phase operation period can contribute towards fulfilling the one-year experience requirement necessary for its transformation into a digital bank.

Criteria for Individuals: Individuals with at least three years of experience in financial services, fintech, ICT, or related fields can apply to establish a digital bank. They must hold a minimum of 5% equity in the proposed bank, ideally alongside another entity experienced in DFS.

E-Commerce in Pakistan

The e-commerce sector is an integral part of the digital economy in Pakistan. The government’s interest in fostering this sector indicates a favorable environment for growth, albeit challenges such as regulatory clarity, digital infrastructure, and consumer trust remain.

Legal Implications and Business Challenges

For our law firm, Josh and Mak International, advising clients in these sectors requires a comprehensive understanding of the evolving regulatory landscape, especially in digital banking. The complexity of the licensing process, combined with the specific experience and equity requirements, necessitates detailed legal guidance for entities looking to venture into digital banking. Additionally, as e-commerce continues to grow, providing legal support in areas such as consumer protection, data privacy, and online transaction security will be increasingly important.

In summary, while Pakistan’s digital banking regime and e-commerce sector are developing, they present a mixture of regulatory challenges and business opportunities. Navigating these areas successfully requires staying informed about the latest regulatory developments and understanding the intricacies of the licensing processes and operational requirements.

Digital Banking in Pakistan

NOCs for Digital Banks

Entities Granted NOCs: As of 13 January 2023, the State Bank of Pakistan (SBP) issued No Objection Certificates (NOCs) to entities such as Easy Paisa DB (a joint venture between Telenor Pakistan B V & Ali Pay Holding Ltd), Hugo Bank, KT Bank, Mashreq Bank, and Ragami. These NOCs represent the SBP’s preliminary approval for these entities to proceed with the establishment of digital banks.

E-Commerce in Pakistan

Legislation and Policies

Absence of Sector-Specific Legislation: E-commerce operations in Pakistan are currently not governed by any specific sectoral legislation. Instead, they fall under the general commercial laws and regulations.

E-Commerce Policy of Pakistan (2019): This policy serves as a guiding document rather than a law. It outlines a strategic vision for fostering the growth of e-commerce across various sectors in Pakistan.

Policy Scope and Objectives

Definition of E-Commerce: The policy broadly defines e-commerce to include all forms of buying and selling of goods and services, including digital products, via electronic transactions on the internet or other online networks.

Key Areas of Focus: The e-Commerce Policy addresses multiple challenges and developmental areas, such as:

Enhancing the regulatory and facilitation environment for e-commerce.

Promoting financial inclusion and digitization through improved payment infrastructures.

Empowering small and medium-sized enterprises (SMEs) and the youth.

Strengthening consumer protection in digital transactions.

Addressing taxation issues related to e-commerce activities.

Developing ICT and telecom services to support e-commerce.

Improving logistics for e-commerce platforms.

Ensuring data protection and encouraging investment.

Focusing on global connectivity and multilateral trade negotiations.

Legal and Business Implications

For oour legal practice at Josh and Mak International, the evolving nature of digital banking and e-commerce presents both challenges and opportunities. In digital banking, guiding clients through the complex NOC and licensing process is crucial. This includes advising on compliance, operational readiness, and strategic partnerships. In e-commerce, despite the lack of specific legislation, understanding the implications of existing commercial laws and the e-Commerce Policy is vital. This involves advising clients on aspects like consumer protection, data privacy, taxation, and cross-border trade issues.

In conclusion, the landscape of digital banking and e-commerce in Pakistan is characterized by a developing regulatory framework and strategic policies aimed at fostering growth. As your trusted legal advisors, our role involves not only navigating these regulatory waters but also foreseeing potential legal challenges and opportunities for clients engaged in these sectors.

Navigating Legal Challenges in Pakistan’s Digital Economy

In an era where digital transformation is reshaping global economies, Pakistan’s digital landscape is evolving rapidly, posing unique legal challenges for businesses. This blog aims to dissect these challenges, especially in the context of digital currencies and the wider digital economy, offering insights for entrepreneurs, investors, and legal practitioners.

1. Cryptocurrencies: A Regulatory Conundrum

The State Bank of Pakistan (SBP) currently prohibits banks and financial institutions from dealing in cryptocurrencies (BPRD Circular No. 3 of 2018). Despite this, the legal status of cryptocurrencies in Pakistan remains a subject of debate. Ongoing legal proceedings are challenging the SBP’s circular, seeking to establish a regulatory framework for crypto-assets and crypto mining. This uncertainty creates a challenging environment for businesses and investors interested in leveraging the potential of cryptocurrencies.

2. Crackdown on Cryptocurrency Frauds

Amidst this regulatory ambiguity, the Federal Investigation Agency (FIA) has initiated actions against digital currency frauds. This includes shutting down numerous websites involved in such activities. For businesses operating in the digital currency space, this highlights the importance of complying with existing financial regulations to avoid legal complications.

3. The Prospect of a Central Bank Digital Currency (CBDC)

In a significant development, the SBP is exploring the launch of its own digital currency. The introduction of a CBDC could revolutionize the financial landscape in Pakistan, offering a state-backed, secure digital currency option. However, this also necessitates careful consideration of regulatory frameworks and cybersecurity measures.

4. Innovations in Payment Systems

The SBP’s proposed Quick Response (QR) Code-based Person-to-Merchant (P2M) system aims to facilitate instant payments for merchants and small businesses. This initiative could enhance the efficiency of transactions and foster a more inclusive digital economy.

5. Regulations for Electronic Money Institutions (EMIs) (revised 2023)

The Regulations for EMIs by the SBP mark a significant step in promoting technological innovation in the payment sector. These regulations provide a structured approach for EMIs to operate, ensuring efficient and cost-effective payment services. However, adhering to these regulations requires EMIs to navigate complex compliance landscapes.

6. Defining Electronic Money

The SBP’s definition of electronic money as a monetary value stored electronically indicates a broader acceptance and integration of digital financial solutions. This definition lays the groundwork for a diversified financial ecosystem encompassing various forms of digital money.

7. Licensing Process for EMIs

The three-stage licensing process for EMIs, including in-principle approval, pilot operations, and a full-scale licence, underscores the SBP’s cautious yet progressive approach towards digital financial entities. For businesses seeking to enter this space, understanding and navigating this process is crucial.

8. Progress in Digital Financial Services

The issuance of full-scale licences to several EMIs indicates a growing acceptance and integration of digital financial services in Pakistan. This marks a significant step towards digitizing the economy but also highlights the need for continuous regulatory adaptation.

9. Challenges in Digital Transformation

Moving towards a digital economy in Pakistan is not without its hurdles. Educating the masses about digital technologies and ensuring access to reliable communication networks, especially in rural areas, are key challenges that need to be addressed.


Pakistan’s digital economy is at a pivotal juncture, with significant legal and regulatory challenges yet tremendous potential for growth and innovation. For businesses and legal professionals, understanding these challenges is essential to navigate this complex yet promising landscape. The ongoing developments in digital currencies, EMIs, and payment systems reflect a country in transition, moving towards a more inclusive and technologically advanced economic future.

Embracing the Future: Pakistan’s Journey Towards Cloud and Edge Computing

The digital landscape in Pakistan is rapidly evolving, with significant steps being taken towards adopting modern technologies like cloud and edge computing. This blog aims to explore the challenges and opportunities in this journey, focusing on the recently introduced “Pakistan Cloud First Policy” and its implications for businesses and the tech industry.

The Dawn of the Cloud Era in Pakistan

The “Pakistan Cloud First Policy,” implemented in February 2022 by the Ministry of Information Technology & Communication, marks a new era in Pakistan’s digital journey. This policy is designed to promote the adoption of cloud computing across various sectors, a move that could revolutionize how organizations operate and leverage technology.

Impact of the Cloud Policy

Market Transformation: The Cloud Policy is expected to catalyze cloud adoption across diverse industries, potentially transforming the market dynamics. It’s not just about moving data and services to the cloud; it’s about enabling new business models and operational efficiencies.

Boost to Local ICT Industry: By fostering cloud technology, the policy aims to stimulate the growth of the local Information and Communication Technology (ICT) industry, bringing it at par with global standards.

Complementing Emerging Technologies: The integration of cloud computing with advanced technologies like Artificial Intelligence (AI), Machine Learning, and the Internet of Things (IoT) could unlock new possibilities in innovation and efficiency.

Addressing Security and Privacy

A key aspect of the Cloud Policy is its focus on information security and data privacy. By establishing guidelines and measures for data protection in cloud environments, the policy aims to build trust and reliability in cloud services, which is crucial for widespread adoption.

Recognizing Diverse Cloud Service Models

The policy’s recognition of various cloud service models, including SaaS, PaaS, and IaaS, indicates a comprehensive approach. This diversity allows organizations to choose the most suitable model based on their specific needs, leading to more customized and efficient cloud solutions.

Cloud Deployment Methods

With the inclusion of different deployment methods like public, private, government, and hybrid clouds, the policy caters to a broad range of requirements. This flexibility is essential in a country like Pakistan, where different sectors may have varied needs and constraints regarding cloud computing.

The Role of the Cloud Office

The establishment of a cloud office by the Ministry of Information and Technology is a strategic move. This office is expected to provide a structured governance framework for cloud adoption, ensuring that the transition to cloud-based solutions is smooth, efficient, and aligned with national objectives.

Challenges Ahead

Despite these positive strides, Pakistan faces challenges in fully realizing the potential of cloud and edge computing. Issues such as digital literacy, infrastructure readiness, and regulatory compliance need to be addressed. Moreover, ensuring widespread access to these technologies, especially in remote and underprivileged areas, remains a significant hurdle.


The “Pakistan Cloud First Policy” represents a significant step towards modernizing Pakistan’s digital infrastructure. It lays the groundwork for a more connected, efficient, and innovative future. However, the journey is just beginning, and it requires concerted efforts from the government, industry players, and the broader community to overcome the challenges and harness the full potential of cloud and edge computing. For businesses, this is a time of opportunity – a chance to be at the forefront of a digital revolution that could redefine the economic and technological landscape of Pakistan.

Legal Challenges in Outsourcing to Cloud Service Providers in Pakistan’s Banking Sector

The adoption of cloud computing in the banking sector in Pakistan presents a host of legal and operational challenges. The “Framework on Outsourcing to Cloud Service Providers,” issued by the State Bank of Pakistan (SBP), aims to navigate these challenges. This blog explores the implications of this framework for banks and financial institutions in Pakistan.

The New Regulatory Landscape

The SBP’s Framework replaces the previous “Enterprise Technology Governance and Risk Management Framework,” signifying a shift towards more specific guidelines for cloud services. This transition reflects the increasing reliance on cloud computing in the banking sector and the need for updated regulatory measures to ensure secure and compliant operations.

Defining ‘Material Workloads’

A critical aspect of the Framework is the definition of ‘material workloads,’ which encompasses systems, applications, and services essential to a bank’s operations. The disruption of these workloads could significantly impact a bank’s business, reputation, or profitability. Understanding what constitutes a material workload is crucial for banks to comply with the Framework’s requirements.

Outsourcing Responsibilities

One of the key challenges for Regulated Entities (REs) is maintaining responsibility for their operations, even after outsourcing to cloud providers. This means that banks and financial institutions must ensure their cloud service providers adhere to legal, regulatory, and data protection standards, a task that requires diligent oversight and effective risk management.

Preference for Domestic Cloud Providers

The Framework encourages REs to prefer domestic cloud service providers for outsourcing. This presents a challenge for banks that rely on global cloud service providers for advanced technology and expertise. Balancing the preference for domestic providers with the need for high-quality cloud services is a delicate task for REs.

Offshore Outsourcing

While electronic money institutions and similar entities are allowed to outsource to offshore cloud service providers, banks and microfinance institutions face stricter regulations. Outsourcing material workloads to offshore providers requires explicit approval from the SBP, adding another layer of complexity to the decision-making process for these institutions.

Compliance and Monitoring Requirements

The Framework imposes several other obligations, including monitoring cloud workload capacity, training staff, reporting security incidents, and providing detailed information about material workloads before outsourcing. These requirements necessitate a robust internal control environment and continuous oversight of cloud operations.


The SBP’s Framework for outsourcing to cloud service providers represents a significant step in regulating cloud computing in Pakistan’s banking sector. While it brings much-needed clarity and standards, it also presents a range of legal challenges for banks and financial institutions. Navigating these challenges requires a careful balance between leveraging the benefits of cloud computing and adhering to regulatory requirements. For legal professionals and industry experts, staying abreast of these developments and understanding their implications is key to guiding REs through this evolving landscape.

Mastering Internal Controls in Cloud Outsourcing for Pakistan’s Banking Sector

In an era where cloud computing is becoming increasingly integral to banking operations, understanding and implementing effective internal controls for cloud outsourcing arrangements is crucial. The State Bank of Pakistan’s Framework for outsourcing to cloud service providers in the banking sector has set clear guidelines in this regard. This blog aims to dissect the challenges and strategies for banks in managing these arrangements effectively.

The Critical Role of Internal Controls

Internal controls serve as the backbone of managing cloud outsourcing in the banking sector. These controls are not just about compliance; they’re about maximizing the benefits of cloud services while mitigating associated risks. Adapting organizational structures to oversee cloud service providers and developing comprehensive internal policies are key steps in this direction.

Due Diligence: The First Step

Before entering any cloud outsourcing arrangement, the Framework mandates that Regulated Entities (REs) conduct thorough due diligence on potential cloud service providers. This involves assessing their cybersecurity practices, subcontracting arrangements, and compliance with legal standards. Such due diligence ensures that REs partner with providers that align with the regulatory expectations and safeguard their operations.

Organizational Adaptation for Cloud Oversight

Adapting the organizational structure is vital for effective cloud management. This includes establishing specific governance responsibilities, setting up oversight mechanisms, and framing internal policies tailored to cloud service management. These adaptations ensure that the REs have the right expertise and processes to manage these critical relationships.

Effective Oversight Mechanism

Oversight mechanisms are at the heart of managing cloud outsourcing. This includes evaluating service levels, monitoring cybersecurity practices, and staying informed about changes in service locations, ownership, or subcontracting by cloud service providers. An effective oversight mechanism ensures that cloud services remain secure, efficient, and compliant with the regulatory framework.

Security Event Monitoring

Security event monitoring is crucial in cloud outsourcing. REs must establish robust mechanisms to continuously monitor the security and integrity of cloud-based operations. This proactive approach to security ensures that any potential threats are identified and addressed promptly, maintaining the integrity and reliability of cloud services.

Handling Changes in Service or Ownership

REs must stay vigilant about any changes in the cloud service provider’s operations, including changes in service locations, ownership, or subcontracting. These changes could pose new risks or compliance issues, necessitating a continuous assessment and adaptation strategy.

Continuous Review of Compliance

Regularly reviewing the compliance of cloud service providers with legal and contractual obligations is non-negotiable. This continuous review process helps REs ensure that their cloud services align with legal requirements and maintain the expected service standards.

For Pakistan’s banking sector, effectively managing cloud outsourcing arrangements through robust internal controls is critical in this digital age. The Framework sets a clear path, but navigating it requires a strategic approach, combining due diligence, organizational adaptation, effective oversight, and continuous compliance monitoring. As the sector increasingly leans towards cloud-based solutions, mastering these controls will be key to leveraging the full potential of cloud computing while ensuring security and compliance.

Navigating Data Protection in Pakistan: Tips and Traps

As Pakistan moves towards enacting its data protection legislation, businesses and legal practitioners must understand the evolving landscape of data privacy and protection. This blog aims to provide top tips for effective data protection in Pakistan and highlight potential challenges that stakeholders may encounter.

Tip 1: Engage in Meaningful Consultation

Active Participation: As the draft bill progresses through legislative stages, it is crucial for businesses, legal professionals, and other stakeholders to engage actively in the consultation process. This involvement ensures that diverse perspectives are considered, leading to more comprehensive and effective legislation.

Potential Trap: Lack of engagement could result in a law that does not adequately address the specific needs and concerns of different sectors.

Tip 2: Learn from Global Best Practices

Adopting International Standards: Pakistan can benefit greatly by learning from jurisdictions with established data protection laws. Adopting international best practices, especially regarding security standards, codes of conduct, and grievance settlement mechanisms, can significantly enhance the effectiveness of Pakistan’s data protection regime.

Potential Trap: Failure to incorporate these best practices may lead to a data protection framework that is out of sync with global norms, potentially hindering international business relationships and compliance.

Tip 3: Raise Awareness Among Data Subjects

Educational Campaigns: There is a pressing need to educate the public about their rights under the proposed data protection law. Initiatives led by the Ministry of Information Technology and Telecommunication can play a pivotal role in this regard.

Potential Trap: Without proper awareness, data subjects in Pakistan may not be able to exercise their rights effectively, rendering the protections of the new law nominal rather than practical.

Tip 4: Prepare for Implementation Challenges

Readiness for Compliance: Businesses should start preparing for compliance with the upcoming law by reviewing their data handling practices, privacy policies, and security measures.

Potential Trap: Companies that delay this preparatory work might find themselves scrambling to comply at the last minute, potentially facing legal challenges or fines for non-compliance.As Pakistan stands on the cusp of enacting its data protection law, it is an opportune time for businesses and legal professionals to take proactive steps. Engaging in the legislative process, learning from international best practices, raising public awareness, and preparing for implementation are key to navigating the data protection landscape effectively. By anticipating and addressing these potential challenges, stakeholders can ensure they are well-positioned to comply with the new law and protect the privacy rights of individuals in Pakistan’s digital economy.

The Implementation of Intellectual Property Laws in Pakistan: Impediments and Solutions

In Pakistan, the implementation of intellectual property (IP) laws faces significant challenges, impacting the country’s innovation, research and development, and overall economic growth. This blog, inspired by the insights of Ghulam Murtiza and Justice ® Prof. Dr. Ghous Muhammad, aims to explore these challenges and propose solutions to strengthen the IP regime in Pakistan.

Understanding the Impediments

  1. Lack of Awareness: A major impediment is the widespread lack of understanding about intellectual property among the Pakistani populace. Many people are unaware of the concept and significance of IP, leading to unintentional infringements and a lack of protective measures for their creations.

  2. Ineffective Legal Framework: The outlines of the IPO Pakistan Act are not fully implemented. Intellectual property tribunals, crucial for handling IP disputes, are absent in key cities like Peshawar and Quetta, creating a geographic barrier to effective legal recourse.

  3. Insufficient Penalties: The penalties for IP infringements in Pakistan are often seen as lenient, failing to deter piracy and counterfeiting. This soft approach undermines the seriousness of IP crimes and their impact on creators and businesses.

  4. Incomplete Legislation: Not all areas of IP are covered by current Pakistani legislation. Key areas like Geographical Indications and Genetic Resources remain unprotected, leaving significant gaps in the IP protection framework.

  5. Operational Inefficiencies: There are inconsistencies in enforcement coordination at the operational level, leading to confusion among the general public about where to report IP crimes.

Proposing Solutions

  1. Nationwide Awareness Campaigns: Launching comprehensive programs to educate the public about the socio-economic benefits of IP is crucial. This should include seminars, workshops, and the use of media to spread awareness even in less developed areas.

  2. Establishment of Intellectual Property Tribunals: Intellectual property tribunals should be established in all major cities, staffed with judges and professionals knowledgeable in IP matters. This would expedite the resolution of IP disputes and enhance legal protection.

  3. Strengthening Penalties: Amending laws to impose harsher punishments for IP infringements could serve as a stronger deterrent against violations.

  4. Complete and Inclusive Legislation: Legislation should be expanded to cover all branches of IP, including areas currently unprotected.

  5. Formation of Specialized IP Enforcement Units: Creating specialized IP police or enforcement units could streamline the process of reporting and acting against IP crimes.

  6. Capacity Building: Improving the skills and knowledge of judiciary members, enforcement agencies, and legal professionals in IP matters is essential for effective law enforcement.

  7. Incorporating IP in Education: Introducing IP law as a compulsory subject in legal education and promoting IP research in universities could foster a more IP-conscious society.

  8. Alternative Dispute Resolution Mechanisms: Implementing ADR mechanisms for IP disputes could offer quicker, more efficient resolution processes, encouraging respect for IP rights.

  9. Strengthening Governance and Law & Order: Good governance and a stable law and order situation are fundamental to the effective implementation of IP laws.


For Pakistan to realize its potential in innovation and economic growth, it is essential to address the challenges in the implementation of IP laws. Through comprehensive reforms, awareness programs, and a strengthened legal framework, Pakistan can create an environment that fosters creativity and innovation while protecting the rights of creators and businesses. This will not only boost the country’s economic development but also align Pakistan’s IP regime with international standards.

By The Josh and Mak Team

Josh and Mak International is a distinguished law firm with a rich legacy that sets us apart in the legal profession. With years of experience and expertise, we have earned a reputation as a trusted and reputable name in the field. Our firm is built on the pillars of professionalism, integrity, and an unwavering commitment to providing excellent legal services. We have a profound understanding of the law and its complexities, enabling us to deliver tailored legal solutions to meet the unique needs of each client. As a virtual law firm, we offer affordable, high-quality legal advice delivered with the same dedication and work ethic as traditional firms. Choose Josh and Mak International as your legal partner and gain an unfair strategic advantage over your competitors.

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