Interim IT Minister Umar Saif, in a recent announcement on Wednesday, outlined the government’s comprehensive strategy to significantly augment IT exports by a substantial $5 billion. This ambitious plan encompasses several key initiatives aimed at fostering the growth of Pakistan’s information technology sector.
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Pakistan’s IT Exports Strategy
Firstly, the government intends to achieve this goal by providing extensive training opportunities to over 200,000 IT exports professionals.
This investment in skill development aims to enhance the country’s human capital in the IT field, making it more competitive on the global stage.
Another vital aspect of this strategy involves the institutionalization of dollar retention accounts.
This step seeks to streamline the process of retaining foreign currency earnings within Pakistan, making it easier for IT companies to manage their international transactions and investments effectively.
PayPal, Stripe, and Export Success
Furthermore, the government has set its sights on bringing globally recognized online payment platforms, namely PayPal and Stripe, to Pakistan.
The introduction of these platforms would be a significant milestone, as it would simplify online transactions and facilitate international trade for businesses and freelancers in Pakistan.
Minister Umar Saif’s announcement highlights a multi-pronged approach to bolster Pakistan’s IT exports significantly.
This includes workforce development through training, improved financial infrastructure through dollar retention accounts, and the potential arrival of global online payment giants, all aimed at fostering growth and competitiveness in the country’s IT exports.
Pakistan’s IT Export Success and Challenges with PayPal and Stripe
Approximately 650,000 Pakistanis have been actively engaged in exporting their IT services worldwide, either as freelancers or through various IT exports. Their efforts have resulted in a substantial monthly income of approximately $200-250 million in export remittances for the country. In the year 2022, Pakistan’s overall IT export remittances amounted to a total of $2.6 billion.
Despite Pakistan being home to thousands of freelancers, global online payment platform Paypal had refused to extend its services to Pakistan in 2019. Paypal refused to operate in Pakistan, saying that it was not included in the company’s three-year roadmap due to a lack of business opportunities, regulatory and compliance issues, as well as concerns around fraud and money laundering in the country.
Similarly, Stripe, an Irish-American online payment processor and payment gateway that lets customers securely pay online for products and services, is not available for users in Pakistan.
“The Prime Minister has approved and appreciated our plan for the Ministry of IT and Telecom,” IT minister wrote on the social media platform X. “[Which includes bringing] PayPal and Stripe to Pakistan and establishing co-working spaces for 500,000 freelancers to increase their potential to an additional $3 billion per year.”
Pakistan’s IT and Telecom Revolution
Minister Saif’s IT plan involves institutionalizing dollar retention accounts, simplifying tax procedures, and training 200,000 IT professionals to boost IT exports by $5 billion.
The government is also bringing Starlink satellite Internet service to Pakistan and establishing the Pakistan Venture Capital Fund to attract international investors, aiming for a substantial $1 billion investment in local startups.
He quoted that the premier had also approved his plan to provide “incentives for local manufacturing and export of smartphones in Pakistan, as well as smartphone financing platform (so that people can easily get phones on monthly installments) to enhance local demand.”
The IT minister recently unveiled a comprehensive strategy aimed at preparing the telecommunications industry for an upcoming 5G spectrum auction.
This ambitious plan involves a timeline of just 10 months and includes several crucial initiatives. One of the key components is the implementation of active spectrum sharing, a forward-looking approach that optimizes the efficient use of available radio frequencies.
Additionally, the strategy encompasses the introduction of progressive taxation policies designed to support the industry’s growth and competitiveness.
Favorable regulations will also be put in place to create an environment conducive to the successful deployment of 5G technology.
Challenges Affect Pakistan’s IT Exports Despite Promising Plans
Despite these forward-looking plans, Pakistan encountered a significant challenge with its IT and IT-enabled Services (ITES) export remittances, falling approximately 14 percent short of the targeted figures for the fiscal year 2022-23.
Several factors contributed to this shortfall. Firstly, the failure to implement previously agreed-upon incentives hindered the sector’s growth.
Secondly, a lack of consistency in policies and regulations created uncertainty within the industry, making it difficult for businesses to plan and invest confidently.
Lastly, unresolved issues related to taxation and banking practices further compounded the problem, creating obstacles for IT and ITES businesses seeking to operate and expand their operations effectively.
In short, while the government’s plans to prepare for 5G technology are promising, Pakistan’s IT and ITES sector faced challenges in meeting its export remittance targets for the fiscal year 2022-23.
Addressing issues related to incentives, policy consistency, and financial practices will be crucial in ensuring the sector’s sustained growth and competitiveness in the global market.