KARACHI: The Information technology (IT) exports surged to a record high of $303 million in December, up 17 percent month-on-month and 23 percent year-on-year, industry data showed on Wednesday.
The IT exports in December were also higher than the last 12-month average of $222 million, reflecting the strong performance of the sector, brokerage Topline Securties said in a report.
The jump in IT exports was attributed to two main factors: the relaxation of the permissible retention limit by the State Bank of Pakistan (SBP) for IT exporters, and the stable exchange rate of the rupee against the U.S. dollar, the brokerage said.
In November, the SBP increased the retention limit for IT exporters from 35 percent to 50 percent in the Exporters’ Specialized Foreign Currency Accounts, allowing them to keep more of their foreign earnings in foreign currency and use them for their business needs.
A relatively stable rupee against the dollar since encouraged IT companies to repatriate their foreign income and deposit it in local accounts, boosting the reported IT export figures.
The reported IT export number previously indicates the amount remitted back to Pakistan by IT companies, not the actual value of their services rendered abroad. According to the government, IT companies have parked an estimated $1-2 billion outside of Pakistan, which could be brought back if the government provides more incentives and facilities for the sector.
The IT exports rose 9 percent to $1.5 billion in the first half of the fiscal year 2023-24, compared with $1.3 billion in the same period a year earlier, the brokerage said.
Net IT exports, which are calculated by subtracting IT imports from IT exports, also increased by 16 percent month-on-month and 13 percent year-on-year to $263 million in December. “These net IT exports numbers in December were also higher than the last 12-month average of $197 million. In 1HFY24, net IT exports recorded a growth of 7 percent year-on-year to $1.3 billion,” it added.
The government has recently launched the Pakistan Startup Fund, under which it will invest Rs2 billion every year into startups as equity free capital. The fund aims to support the growth of the local IT industry and create more jobs and opportunities for the youth.
“These efforts by the government will bring a positive momentum to the industry; however, it will take time for a significant transformation to occur,” the brokerage said. “Although there has been a growth in gross IT exports during 1HFY24, the government’s ambitious target of reaching US$5 billion seems challenging.”
The brokerage anticipates that gross IT exports for FY24 will likely fall within the range of $3-4 billion, compared to $2.6 billion recorded last year.
