KARACHI:
The information technology (IT) sector’s export volume only increased by a pitiful 5% in November compared to the same month last year, despite being completely exempt from the time-consuming procedure of obtaining Letters of Credit (LCs) and not being dependent on imports for its raw materials (YoY). Analysts attribute this low figure to the government’s disregard for nontraditional export industries.
An official from the Ministry of Information Technology and Telecommunication, who spoke to the Express Tribune under the condition of anonymity, stated, “Globally, IT companies’ exports grow in hundreds and thousands of times, a potential that Pakistan has in abundance but cannot tap into due to inconsistent policies. In this regard, the financial ministry’s, the Federal Board of Revenue’s (FBR), and the State Bank of Pakistan’s (SBP) collaboration is essential.
The source lamented that “many in the government do not comprehend the export potential held by the IT sector,” adding that “every recommendation made to them by our ministry, however, is ignored.”
“Pakistan’s IT exports for November 2022 increased by 5% YoY to $233 million due to a 29% surge YoY in telecom services,” writes IT Analyst Nasheed Malik in a Topline Research report. Due to a 15% MoM growth in telecom services and a 3% MoM increase in computer services, exports also rose by 5% month-over-month (MoM).
“The most recent export figure is also higher than the $221 million six-month rolling average. However, exports are down 10% from their peak of $260 million in March 2022, though they did surpass the $230 million threshold established in June 2022, according to Malik.
On a larger scale, however, there has been a slowdown, with YoY growth averaging only 6% from June to November 2022, down from an average YoY increase of 17% from December to May 2022.
“The IT Ministry has set an export target of $3 billion for FY2023,” said Malik, adding that “there are doubts over whether Pakistan will be able to fulfil the stated objective with a current fiscal year monthly average rate of $217 million and a six-month rolling average of $221 million.”
IT exports increased by 3% YoY to $1.09 billion in the first five months of FY2023, thanks to a 5% YoY increase in computer services to $864 million.
The SBP’s reserves currently stand at about $6.7 billion, the lowest since January 18, 2019, according to a study by Arif Habib Limited. With the $5.9 billion in reserves held by the banks included, the nation’s total foreign reserves are $12.6 billion, or 0.99 months’ worth of import coverage.
Parvez Iftikhar, an ICT expert, stated that, “So far, no government has been able to understand that the IT sector can help the country make dollars without including any significant costs for the importation of raw materials. This merely demonstrates the lack of comprehension on the part of the government’s financial management team, which makes tax and concession decisions.
Iftikhar asserted that “our youth, however, are fully capable of doubling the country’s exports within two years if we equip them with in-demand skill sets, facilitate them with in/out dollar payments, and high-quality internet access,” adding that the answer “isn’t even out-of-the-box!”
“It is no secret that Pakistan is currently experiencing one of its worst economic crises yet, and while the tech industry has continuously outperformed, it is no longer feasible for it to continue doing so at a snail’s pace,” Si Global CEO Noman Ahmed Said told the Express Tribune.
We must come up with innovative ways to shatter the glass ceiling that is currently keeping us from progressing. Now is the time to strike while the iron is still hot, given the current financial crisis and Pakistan’s economic potential, despite the enormous losses being sustained in the other industries. Utilize the tech industry to the fullest extent possible so that we can make up for the losses we are currently suffering in other industries. By 2025, the IT ministry has set an export goal between $3 billion and $5 billion, Ahmed encouraged.
Growth has slowed down, but the trend is still upward, according to ABCore CEO Khurram Schehzad.
