Increase in retention limit for forex accounts, stable rupee support export growth
Pakistan’s information technology (IT) exports continued their upward trend, reaching $292 million in September 2024, a 42% increase compared to the same month last year and above the 12-month average of $280 million.
This marks the 12th consecutive month of year-on-year (YoY) growth in IT exports, which began in October 2023.
According to the State Bank of Pakistan (SBP), IT exports for the first quarter of the current fiscal year (July-September) grew by 34%, totaling $877 million, compared to the same period last year.
This growth was driven by an expanding global client base, particularly in the Gulf Cooperation Council (GCC) region, as well as relaxed policies such as increasing the permissible retention limit in Exporters’ Specialised Foreign Currency Accounts from 35% to 50%. Additionally, the stability of the Pakistani rupee encouraged IT exporters to repatriate a higher share of their profits.
A survey conducted by the Pakistan Software Houses Association (P@SHA) revealed that 62% of IT companies maintain specialised foreign currency accounts. Local firms have been actively engaging global clients, with prominent companies attending major events like London Tech Week 2024, Collision Canada 2024, and Black Hat USA.
A notable policy change for fiscal year 2024-25 was the introduction of a new category by the SBP called Equity Investment Abroad, allowing export-oriented IT companies to acquire overseas shareholding using up to 50% of their foreign currency proceeds. This initiative is expected to further enhance confidence among IT exporters and encourage higher remittances back to Pakistan.
IT exporter Dr. Noman Ahmad Said praised the significant growth in IT exports despite challenges such as slow internet speeds, which have affected the productivity of IT companies. He suggested that monthly IT exports should rise to $300-350 million in the coming months, thanks to the efforts of both the government and IT companies.
Said also expressed optimism about the future, noting that IT companies are eager to expand in both traditional and non-traditional markets through partnerships with foreign and local firms.
In September 2024, net IT exports (exports minus imports) surged by 56% YoY to $255 million, exceeding the 12-month average of $245 million.
Another IT exporter, Saad Shah, emphasized the importance of exploring markets in the GCC and the Association of Southeast Asian Nations (ASEAN) to diversify export regions beyond North America. He suggested that IT companies should deepen their market penetration and offer a wide range of services, such as financial services, enterprise solutions, and automation, through joint ventures. This would help IT companies grow and gradually increase their export earnings.
The IT sector is expected to maintain its growth trajectory, with a projected 10-15% increase in exports for the fiscal year 2024-25, reaching a total of $3.5-3.7 billion.
Minister of State for Information Technology and Telecommunication Shaza Fatima Khawaja, in a statement on Monday, attributed the rise in IT exports to business-friendly initiatives and ongoing efforts to further boost the sector.