ISLAMABAD: Despite the steady rise of Pakistan’s IT exports, a significant portion of earnings remains unremitted, with many IT companies unable or unwilling to repatriate their full foreign income. This critical challenge was the focal point of the Prime Minister’s Committee on IT Export Remittances, which convened on Friday under the chairmanship of Finance Minister Senator Muhammad Aurangzeb.
The meeting underscored the untapped potential of Pakistan’s IT sector, positioning it as a key driver for foreign exchange and economic growth. However, bureaucratic hurdles, inconsistent policies, and limited incentives are stifling its full contribution to the national economy.
Transforming IT into a Foreign Exchange Powerhouse
The Finance Minister highlighted that Pakistan’s IT sector has the capacity to become a cornerstone of foreign exchange generation. “With the right reforms and policies, we can unlock this industry’s true potential and significantly increase the repatriation of foreign earnings,” he said.
To address this, the committee proposed a multifaceted approach:
- Streamlined Banking Processes: Simplifying account opening procedures and addressing banking challenges faced by freelancers and small IT firms.
- Tax Exemptions for Freelancers: Offering consistent policies to encourage more formal participation from freelancers.
- Classification of Remote Workers: Resolving ambiguities to better integrate remote workers into the national economy.
Freelancers: The Undervalued Contributors
Pakistan’s burgeoning freelance economy, comprising 2.32 million professionals, contributes approximately 15% to IT exports. However, only 38,000 freelancers currently maintain local bank accounts, limiting their economic footprint. Encouragingly, the State Bank of Pakistan (SBP) reported that 500 new accounts are being opened weekly, indicating progress in formalizing this critical segment.
Governor SBP presented initiatives to enhance the IT industry’s contribution, including awareness campaigns, improved complaint resolution mechanisms, and prioritization of the IT sector within banking frameworks. Leveraging Roshan Digital Accounts was also discussed as a potential tool to facilitate international remittances for freelancers and IT companies.
Driving Data-Driven Reforms
To ensure effective policy implementation, the committee announced the creation of a working group comprising representatives from the Federal Board of Revenue (FBR), SBP, IT Ministry, and industry stakeholders like P@SHA and the Freelancers Association. This group aims to harmonize data, streamline processes, and build a transparent ecosystem that ensures continuity of reforms.
Industry Defends Itself
Addressing criticisms of non-repatriation, P@SHA Chairman Sajjad Syed explained that the difficulty of making payments abroad often compels IT companies to park funds overseas. “The industry has international vendors, and making payments from Pakistan is a cumbersome process,” he said, urging policymakers to address these procedural challenges.
A Digital Economy on the Horizon
The meeting, attended by key stakeholders, signaled a strong commitment to transforming Pakistan’s IT industry into a global player. By simplifying processes and fostering a supportive ecosystem, the government hopes to harness the IT sector’s vast potential to drive economic growth and enhance foreign exchange reserves.
