The Information and Technology (IT) sector of Pakistan has been expanding. It has been increasing its contribution to local markets and through exports of services and products to different countries, resulting in an overall turnover of $3.3 billion at present.
According to the Economic Survey of Pakistan for financial year 2016-17, Pakistan’s IT exports are estimated to have crossed $2.8 billion annually at present as per the estimates available from Pakistan Software Export Board (PSEB). The IT sector’s annual domestic revenue is hovering around $500 million.
Cumulatively, total revenue of Pakistan’s IT industry is estimated to be around $3.3 billion a year at present.
An impressive growth rate of approximately 97 percent in IT remittances has been reported over the last four years, the survey report noted.
Dynamically evolving Information and Communication Technologies (ICTs) hold critical importance globally since they are seen as one of the key sectors in terms of powering economies, acting as a catalyst of change and enablement across all other sectors.
The survey commented that IT and Telecom sectors are expanding and generating new jobs as businesses utilize modern ICT technologies such as e-commerce, e-banking, e-health, e-education, and IT applications.
Broadband Penetration Supports Economic Growth
The growth in revenues of the IT sector is attributed to the penetration of broadband internet in various businesses at different levels.
According to the survey, broadband penetration has jumped from 3.7 million to 40.7 million over the period of few years mainly on the arrival of 3G/4G technology.
If the government realizes how economic growth is related to the penetration of broadband internet services, it should move towards reduction or removal of taxes to provide maximum benefit to the masses and the economy.
Currently, there are taxes on internet services (such as advance tax of 14 percent) in many provinces. GST also continues to be imposed on 3G/4G by Government of Punjab.
The growth of IT sector has been immense, and largely supported by the private sector despite uncertain policies on part of the government.
Government’s Incentives for IT Sector
The Government realizes that it has an important role in providing a conducive environment for the growth of the IT industry through infrastructure and HR development.
The government has laid down its vision for the IT sector and proposed the following steps to aid in its growth:
- Zero income tax on IT exports till June 2019
- 100 percent equity ownership allowed to foreign investors
- 100 percent repatriation of capital and dividends allowed
- 7 year tax holiday for venture capital funds.
National Incubation Centers (NICs) are also being established in order to provide opportunities to young entrepreneurs and talented youth of Pakistan, and to equip the local Pakistani IT industry with infrastructure, mentorship and all other facilities.