Pakistan’s information technology (IT) and IT-enabled services (ITeS) sectors have recorded a notable 30% year-on-year (YoY) growth in export remittances during the first two months of the current fiscal year (July-August), reaching $584 million, up from $449 million in the same period last year.
According to official figures, IT export remittances surged by 26.8% YoY in August 2024, amounting to $298 million compared to $235 million in August 2023. On a month-on-month basis, there was a 4% increase, with remittances rising from $286 million in July 2024.
For the fiscal year 2023-24, IT export remittances achieved a record high of $3.223 billion, reflecting 24% growth compared to $2.596 billion in the previous fiscal year.
Minister of State for IT and Telecommunication, Shaza Fatima Khawaja, attributed the YoY growth to several key factors, including the expansion of IT companies’ global client base, particularly in the GCC region, the State Bank of Pakistan’s (SBP) relaxation of the permissible retention limit for exporters’ specialized foreign currency accounts from 35% to 50%, and the stability of the Pakistani Rupee (PKR), which encouraged IT exporters to repatriate a larger share of their profits to Pakistan.
In July 2024, Prime Minister Shehbaz Sharif facilitated a significant development by ensuring the SBP introduced a new category, Equity Investment Abroad (EIA), specifically for export-oriented IT companies. This allows IT exporters to acquire shareholdings in foreign entities, utilizing up to 50% of their proceeds from specialized foreign currency accounts. The move is expected to further boost IT exporters’ confidence in remitting earnings back to Pakistan.
A survey by the Pakistan Software Houses Association (P@SHA) revealed that 62% of IT companies are maintaining specialized foreign currency accounts, enhancing their ability to manage international transactions efficiently.
Net IT exports for August 2024 stood at $257 million, marking a 26% YoY increase and surpassing the 12-month average of $241 million. Experts anticipate that the sector will maintain its upward trajectory, projecting a 10-15% growth for fiscal year 2025, potentially reaching $3.5-3.7 billion.
Despite the sector’s promising performance, the Ministry of IT has identified several challenges, including inconsistent policies, taxation issues, and banking obstacles, which hinder Pakistan’s potential to achieve its estimated $15 billion IT export target.
According to the Economic Survey, the country’s IT sector currently generates annual exports of around $2.6 billion. To reach the ambitious $15 billion target within the next five years, it is crucial to add at least 200,000 skilled IT professionals to the workforce.
Pakistan’s ICT industry continues to serve some of the world’s largest corporations, underlining its potential for continued growth and contribution to the national economy.
