Pakistan’s Information Technology industry has the biggest trade surplus in the country.
Faiz Ul Haq, a renowned economist, revealed that information technology is the only industry in Pakistan having a trade surplus of 77 percent – and, it holds the key to more than halving Pakistan’s current account deficit (CAD) from FY23’s projected $10 – 12 billion to $5 billion by FY26.
However, he added, the government withdrew the already announced tax holiday for the IT industry till 2025 and replaced it with a tax credit scheme; which effectively caused a lost opportunity in IT exports of up to $500 million in FY22 alone as per the estimates of the ministry of information technology & telecommunications (MoITT).
It is pertinent to note that IT exports posted an export growth of a whopping 47 percent in FY21 & 24 percent in FY22 – collectively registering an 87 percent growth rate in just two years from $1.4 billion in FY20 to $2.62 billion in FY22.
Faiz Ul Haq maintained that the government should extend a special export finance scheme (EFS) to IT companies; offering a discount of 600-700 basis points (bps) vis-à-vis policy rate; i.e. 8-9 percent EFS rate for IT exporters. This will enable IT companies to not only achieve the FY23 export target of $3.5 billion; but, in the long run, will enable exponential growth in IT exports for the period of FY24-FY30. This exponential growth would mean earning up to $15 billion per year in IT exports by FY30.
He highlighted that the gaming industry alone in Pakistan can earn $400 million per year; if the government decides to incentivize the IT companies & freelancers; and, liberate the earnings of the industry from the excessive regulation of SBP & FBR. They should be allowed to remit back, retain overseas or reinvest their earnings as per the complexities and expediencies of exponential business growth in their IT businesses; albeit through the use of formal banking channels.
This freeing up of their earned capital should be to the tune of at least 50 percent, he added.