P@SHA terms SBP measures for exporters a move in the right direction

Chairman Pakistan Software House Association (P@SHA), Barkan Saeed has lauded recent State Bank of Pakistan (SBP) measures taken for facilitating startups, fintech, and exports in Pakistan.

“In the IT industry, whenever the exporters move into other countries to set up businesses, we require a front office because every country, in general, wants to conduct business with its local companies as it believes that sending payments will be easier. Similarly, an investor also considers it a better option to invest in their local companies,” said Saeed.

Days ago, SBP notified revisions in chapter 20 of the Foreign Exchange Manual to modernize foreign exchange regulations for facilitating startups, fintech, and exports in Pakistan.

With this revised foreign exchange policy, SBP will enable Pakistani fintech and startup companies to channelize foreign direct investment in the country by establishing a holding company abroad against remittance of up to US$10,000, and subsequent swapping of shares to mirror the shareholding of a local company in the holding company.

Barkan said that Pakistani nationals used to face several problems as they were unable to form such companies and it was difficult for them to send funds abroad.

“Many companies acquire different companies abroad in order to enhance their sales,” said Barkan. “This is an important step as we move towards enhancing the ease of doing business. We thank the State Bank, it is not the complete thing but it is a good first step,” he added.

The central bank will also facilitate exports through this revised policy by enabling export-oriented companies to establish subsidiary/branch office abroad against remittance of 10% of their average annual export earnings of the last three calendar years, or USD 100,000 (whichever is higher).

These revisions in the foreign exchange regulations will also allow exporters to explore new, non-traditional markets, and capture more export orders from international buyers, who prefer dealing with subsidiaries of foreign companies in their home country.