Pakistan’s technology sector recorded exports of $303 million during December 2023, up by 23 percent year-on-year (YoY) compared to $247 million in the same period last year, monthly data on services exports by State Bank of Pakistan (SBP) showed on Wednesday.This is highest level of monthly exports attained by the sector, according to Arif Habib Limited. Official data showed that technology exports witnessed an increase of 17 percent on a month-on-month (MoM) basis.
Notably, tech exports, which include telecommunication, computer, and information services, stood at $2.597 billion in FY23 compared to $2.619 billion in FY22.
According to Topline Securities, the jump in IT exports is due to the relaxation in the permissible retention limit by the State Bank of Pakistan (SBP), increasing it from 35 percent to 50 percent in the Exporters’ Specialized Foreign Currency Accounts, and stable PKR currency which encouraged IT companies to repatriate their foreign income and deposit it in local accounts.
To highlight, the reported IT export number indicates the amount remitted back to Pakistan by technology companies. As per Caretaker IT Minister Dr Umar Saif, IT companies have parked an estimated $1-2 billion outside of Pakistan.
The government has recently launched the Pakistan Startup Fund, under which it will invest Rs. 2 billion every year into startups as equity-free capital. The Topline report noted that these efforts by the government will bring positive momentum to the industry; however, it will take time for a significant transformation to occur.
Although there has been a growth in gross IT exports during 1HFY24, the government’s ambitious target of reaching $5 billion seems challenging. The report sees gross IT exports for FY24 to likely fall within the range of $3-4 billion compared to $2.6 billion recorded last year.