Pakistan’s IT export crossed $1 billion mark for the first time in history
Pakistan’s IT export has achieved a new milestone by crossing the mark of $1 billion for the first time ever in the history of Pakistan.
According to the data published by State Bank of Pakistan, exports of IT and IT-related services have reached to $1.067 billion in the financial year 2017-18, which was recorded $939 million in the financial year 2016-17. This shows a double-digit growth of 13%.
Overall Export rises to $3 billion
This is the second consecutive time that the IT industry has reached a record. The country also achieved the highest value of IT payment in the previous financial year 2016-17. Moreover, the IT exports are considered three times more than the data updated by the Central bank which means the overall number reached $3 billion in the current year 2017-18. The difference is due to the fact that the export revenue is highlighted in various other sectors such as financial, automobile, and health sectors.
Furthermore, as we all know Pakistan has a huge number of freelancers and the payment comes under overseas remittances, which again causes a misreporting of export numbers. Besides, there are certain local companies functioning through other countries but their products and services are delivered through Pakistan.
Factors behind the high Export rate
Export of IT and IT-enabled services increased mainly due to the increasing demand for Pakistan’s products and services in the exporting countries, which have gradually improved in recent months. Moreover, the business of large companies has improved because many foreign customers visit Pakistan because of the better security image, said Barkan Saeed Chairman Pakistan Association of Software Houses (P@SHA).
Pakistan’s exports of IT and IT-enabled services have the main market in the US (by 60 percent), followed by European countries with a 38 percent share, and then, Middle East countries.
Government’s Incentives to IT sector
The government realizes that IT plays an important role in providing a favorable environment for the growth of the IT industry through infrastructure and HR development. The government has the vision to increase the export of this sector to $5 billion per year until 2020, which is likely to be achievable as respective authorities have taken some IT sector friendly steps:
The government has approved the following incentives for the IT sector, aimed at increasing its exports
- Zero income tax on IT exports until June 2025.
- 5% cash remuneration on IT exports, comparable with rewards for other sectors such as textiles, leather and sports.
- 5% turnover tax from ITeS within the federal territories.
- Setting up special economic zones (SEZs) for the technical sector defined by the BOI and MoitT.
- Access to commercial bank financing at preferential rates.
Moreover, a number of IT parks are being developed in the country along with the ongoing expansion of broadband services in different cities to make the ecosystem attractive and lucrative for IT companies, entrepreneurs, and start-ups.
The expansion of broadband services across the country has helped to increase IT exports in the space of freelancers, as many freelancers from Pakistan can now provide services to the international client which will ultimately boost the IT and export sector of Pakistan.