Comment by Riaz Haq on July 9, 2022 at 10:00pm

Pakistan’s tech exports witness sharp 27% drop in May 2022

https://www.techjuice.pk/pakistans-tech-exports-witness-sharp-27-dr...

Pakistan’s tech exports have taken a plunge for the first time since February 2021, as new data reveals that the country’s exports in the tech sector dropped by 27 percent in May 2022 as compared to April 2022.

As per State Bank of Pakistan (SBP) data, IT exports in May amounted to $183 million while in April they were considerably higher at $249 million. Exports have fallen 8 percent year-on-year.

In May 2021, Pakistan exported $198 million worth of technology-related products and services. The technology sector witnessed exports worth $2.4 billion in 11 months of this fiscal year, contributing 38 percent to overall services’ export and marking a 25 percent year-on-year increase.

While IT export performance has certainly been encouraging, and has helped improve the country’s foreign exchange earnings, the monthly drop in exports in May is still far from an ideal scenario.

The reason being touted for the drop in IT exports is the extended Eid holidays. Since the pandemic resulted in a rise in freelancing, the export performance of country’s technology products and services stayed higher.

However, despite the Prime Minister of Pakistan’s ambitious declarations to target $15 billion in IT and IT-enabled services exports, the released budget brings down the industry’s potential to meet this aim. This was noted in a recent P@SHA press release.

According to Chairman P@SHA Badar Khushnood, the current taxation regime in place is “regressive” and has already proven disastrous for the IT industry’s growth.

“This year’s targeted exports of USD 3.5 billion are also not being achieved due to the introduction of an inefficient tax regime,” he stated. “Rather than facilitating the IT industry with more and better incentives to catalyze the existing organic growth, the previously announced one and the only benefit, i.e., ‘tax exemption’ committed till 2025 has been abruptly reneged and revoked. If nothing else, this is a recipe for disaster for a nascent yet fastest growing exports-led sector!”

Comment by Riaz Haq on July 27, 2022 at 10:00am

Arif Habib Limited
@ArifHabibLtd
During Jun’22, technology exports were up 12% YoY to $ 235mn. During FY22, technology recorded exports worth $ 2.6bn (38% of the overall services’ exports) marking a 24% YoY jump.

https://twitter.com/ArifHabibLtd/status/1552323262889267203?s=20&am...

Comment by Riaz Haq on December 21, 2022 at 6:34pm

IT sector records sluggish growth at 5%
Analysts say growth hindered due to government indifference, inconsistent policies

https://tribune.com.pk/story/2392042/it-sector-records-sluggish-gro...

Despite being entirely free from the cumbersome process of acquiring Letters of Credit (LCs) and not being dependent on imports for its raw material, the export volume of the information technology (IT) sector only grew a meagre 5% in November year-on-year (YoY). Analysts are laying the blame for this low number on the government’s indifference towards unconventional export sectors.

Speaking to the Express Tribune on the condition of anonymity, an official from the Ministry of Information Technology and Telecommunication said, “Globally, IT companies’ exports grow in hundreds and thousands of times, a potential that Pakistan has in abundance but cannot tap into due to inconsistent policies. The cooperation of the finance ministry, Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) is crucial in this regard.”

“Any suggestion given to them by our ministry, however, is ignored,” said the official, lamenting that, “People in the government do not understand the export potential held by the IT sector.”

According to a Topline Research report by IT Analyst Nasheed Malik, “Pakistan’s IT exports for November 2022 increased by 5% YoY to $233 million due to a 29% jump YoY in telecom services. The exports also increased by 5% month-on-month (MoM) due to a 15% MoM increase in telecom services and 3% MoM in computer services.”

“The latest export number is also above the six-month rolling average of $221 million. Exports, however, are down by 10% from a peak of $260 million recorded in March 2022 but managed to cross the $230 million mark set in June 2022,” said Malik.

However, on a broader level, a slowdown is being witnessed with YoY growth averaging 6% in the last six months (June to November 2022), compared to the average growth of 17% YoY in December to May 2022.

“The IT Ministry has set an export target of $3 billion for FY2023,” said Malik, adding that, “With a current fiscal year monthly average rate of $217 million and a six-month rolling average of $221 million, there are concerns about whether Pakistan will be able to achieve the set target.”

In the five months of FY2023, IT exports are up by 3% YoY to $1.09 billion – the slight growth was witnessed due to a 5% YoY growth in computer services to $864 million.

According to a report conducted by Arif Habib Limited, the SBP’s reserves currently stand at around $6.7 billion, the lowest since January 18, 2019. Including the banks’ reserves of $5.9 billion, the total foreign reserves in the country stand at $12.6 billion – amounting to an import cover of less than one month – 0.99 months to be exact.

ICT Expert Parvez Iftikhar said, “So far, no government has been able to comprehend that the IT sector can help the country earn dollars without incurring any huge expenditures on raw material imports. This just indicates the lack of understanding in the government’s finance management team that decides on taxes and concessions.”

“If we equip our youth, however, with in-demand skill sets, facilitate them with in/out dollar payments, and high-quality internet connectivity, they’re quite capable of doubling the country’s exports within two years,” claimed Iftikhar, adding that the solution “isn’t even out-of-the-box!”

Si Global CEO Noman Ahmed Said told the Express Tribune that, “It is no secret that Pakistan is currently facing one of its worst economic crises yet and whilst the tech sector has consistently outperformed, it is no longer feasible for it to continue doing so at a snail’s pace.”

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“Growth has slowed, but the trend still remains positive,” said Khurram Schehzad, CEO of ABCore.

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