Muhammad Zohaib Khan, Chairman of Pakistan Software Houses Association (P@SHA), has apprised that there are some indications that the government is contemplating an incentives package for the IT & ITeS industry to boost IT exports in FY24 to $4.5 billion from FY23’s expected $2.5 – 3.0 billion; when the final numbers come in.
Mr. Khan, nonetheless, strongly demanded that the IT industry wants legally-covered consistency in fiscal, financial, taxation, exports, HR, and infrastructure policies for a period of 10 – 15 years; as only then we can bring FDI in the country coupled with long-term private-sector investments in the IT industry; enhance exports rapidly & sustainably; expand the pool of skilled IT professionals and establish joint ventures with the international players.
Zohaib Khan emphasized that, most importantly, the IT industry wants nothing less than the state of Pakistan to provide a guarantee of the consistency, continuity, implementation, and reliability of IT industry policies as he recalled, there have been multiple IT policies & incentives packages for the IT industry over the last decade; however, with the change of the government, policies & packages become redundant – this phenomenon, in fact, causes more harm than good.
Zohaib Khan added that, for example, there was an IT Policy & Incentives Package was announced in March 2022 with much fanfare and received applause from IT companies as well; but, the very next month, i.e. April 2022, saw the change in the federal government and the entire package became obsolete.
As the foremost demand of the IT industry, P@SHA Chairman has stressed that the government should announce tax holiday for the IT and ITeS industry in income tax, tax on dividends, capital gains, and profits for 10 years like many other countries in the world; calculating the very real potential to achieve an enormous growth rate of 30 percent in IT exports every year consecutively.
Zohaib Khan explained that substantial funds should be allocated for the IT industry in the federal budget 2023 – 24; and, those funds should primarily go towards human resources & skills development; infrastructure development; promoting soft-image of & building Brand Pakistan and capacity enhancement of the tech ecosystem in the country.
Muhammad Zohaib Khan, who also sits on PM’s Advisory Council on Digital Economy, noted that another area of concern for the IT industry is foreign exchange retention; for which P@SHA proposes allowing 100 percent forex exchange retention in foreign currency accounts and 100 percent repatriation as IT industry is totally dependent and operates on USD.
Chairman P@SHA added that the IT industry appreciates the idea of special technology zones (STZs); however, special technology zones authority (STZA) has not been able to deliver on its promises, despite being established for many years now and given funds in billions of rupees so far. Therefore, P@SHA advocates that, in the upcoming budget FY24, benefits meant for STZs should directly go to IT & ITeS companies to effectively & efficiently help the exporters directly.
Elaborating on the financing needs of the IT industry, Zohaib Khan said that – like many other countries – the government of Pakistan needs to introduce cash rebate schemes for the IT industry; preferably, a 5 percent on export income and prioritizing export refinancing scheme for the industry through discounted interest rate by at least 10 percent as compared to the prevailing key policy rate of 21 percent of the State Bank. This will make access to finance possible for the IT exporters; rationalize the cost of doing business with reference to international competitors and enhance the country’s ease of doing business score.
Mr. Ali Ihsan, Senior Vice Chairman of P@SHA, maintained that it is crucial for the government to address these IT industry’s demands promptly. By doing so, we can unleash the full potential of IT exports; leading to sustainable economic growth, and job creation and positioning Pakistan as a formidable player in the global digital landscape.