In a groundbreaking move, the State Bank of Pakistan (SBP) has introduced policy measures aimed at invigorating the Information Technology (IT) and IT-enabled services (ITeS) sector, which have earned accolades from industry experts. These measures are poised to drive the nation’s IT exports to new heights, with an ambitious target of $5 billion annually.
Leading voices in Pakistan’s IT industry, including Muhammad Zohaib Khan, Chairman of the Pakistan Software Houses Association (P@SHA), have hailed this momentous initiative. They have also called for the expeditious implementation of these measures. Khan, in particular, lauded the collaborative efforts of the Special Investment Facilitation Council (SIFC) and the Ministry of Information Technology & Telecommunication (MoITT) in addressing long standing demands of the IT industry.
Khan emphasized the need for SBP to ensure that commercial banks promptly comply with the new measures. He underscored the readiness of the IT sector to surge from last year’s $2.62 billion in exports to a formidable $5 billion annually within the next 12-18 months. Khan highlighted that until commercial banks provide essential facilitations, such as allowing IT companies to retain 50% of their earnings in Exporters Specialised Foreign Currency Accounts (ESFCAs), issuing corporate debit cards with international features, and permitting outward repatriation of foreign exchange through digital or online banking channels, challenges regarding foreign exchange retention and utilization will continue to persist.
The SBP’s recent policy measures have significantly increased the permissible retention limit for IT exporters, elevating it from 35% to 50%. This adjustment allows IT businesses to retain a larger portion of their foreign earnings in their accounts. Additionally, the SBP has advised commercial banks to facilitate the issuance of debit cards for IT exporters, enabling them to conduct online transactions using their ESFCAs balance.
Experts stress the importance of swiftly implementing these new measures and establishing them as a consistently applied policy to build trust and confidence with IT companies. They believe the SBP, as the regulator of commercial banking, holds the authority and tools necessary to ensure the rapid enforcement of these policy decisions.
However, there are concerns regarding the delayed issuance of corporate trade cards. Khurram Shehzad, an IT and Technology professional, voiced these concerns, stating, “The SBP has not yet issued the corporate trade cards, which must be given.” He went on to explain that while the halting of commercial payments on personal and individual trade cards is warranted, the SBP should provide alternatives, including the issuance of these cards and permission for 100% repatriation, to level the playing field for all exporters.
Shehzad further emphasized the urgency of implementing the new policy without further delay, given the substantial delays already faced by the sector. The impact of these groundbreaking policy measures is expected to gradually boost exports once fully executed.
