ISLAMABAD: Amid admission that a substantial portion of IT exports revenue remains un-remitted, the government envisaged increasing the sector exports to from $3.2 billion in fiscal year 2024 to $4.2 billion in fiscal year 2025.
Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb chaired a high-level meeting of the Prime Minister’s Committee on IT Export Remittances at the Finance Division on Friday to explore ways for boosting the flow of IT export remittances, which are crucial for Pakistan’s economic growth and digital economy.
The discussion stressed the urgent need for access to global payment gateways such as PayPal and creation of similar payment solutions at home to empower IT professionals and freelancers, and enhance Pakistan’s global competitiveness.
IT, ITeS export remittances hit all-time high of $3.223bn
An official statement issued by the Finance Ministry noted that the finance minister underscored the IT sector’s critical role as a rapidly growing industry contributing to Pakistan’s economic growth. “The IT sector has the potential to be a cornerstone of foreign exchange generation through exports remittances. A collaborative approach, consistent policies, and targeted reforms are essential to unleash its full potential and repatriation of foreign earnings,” he stated.
The meeting highlighted the sector’s opportunities and challenges, focusing on improving the ease of capital movement to boost IT export remittances. Participants noted that while IT exports are steadily increasing, a substantial portion of revenue remains un-remitted.
Discussions emphasised the need for simplified procedures, consistent tax exemptions for freelancers, and addressing issues related to remote workers classification and small IT firms to create a more favourable environment for IT businesses to remit their earnings back into the country.
The meeting noted that Pakistan is home to 2.32 million freelancers - contributing 15 per cent of IT exports - yet only 38,000 of them hold bank accounts. While 500 new accounts are being opened weekly, as par SBP data, retaining these account holders and encouraging others to follow the course is of crucial importance.
The SBP governor updated the committee on measures that have been taken to address these challenges, including streamlining account opening procedures, awareness campaigns, improving complaint resolution mechanisms and prioritising the IT sector in banking frameworks.
Sources said that responding to the IT sector’s demand, the SBP has raised the foreign exchange retention limit to 50 percent or USD 5,000 per month (whichever is higher), up from 35 percent. This encourages IT exporters and freelancers to bring their earnings into Pakistan. Further, banks have been directed to ease the process of opening accounts in both PKR and foreign currency for freelancers and IT companies, enhancing accessibility for this sector.
Copyright Business Recorder, 2024
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