KARACHI: Pakistan's information technology (IT) exports jumped 37 percent year-on-year to a record $306 million in March, driven by the relaxation in foreign currency retention limits and a stable local currency.
"This is the highest ever export number in a single month, with the previous highest being US$303 million in Dec-2023," said Topline Securities in a report. "These monthly IT exports in Mar-2024 are higher than the last 12-month average of $238 million."
The monthly IT exports, which include remittances by technology companies, were also 19 percent higher than the previous month. The nine-month IT exports (July-March) rose 17 percent year-on-year to $2.28 billion, with net IT exports (exports minus imports) increasing 16 percent to $1.99 billion during the same period.
The brokerage stated that the year-on-year jump in IT exports is due to the relaxation in the permissible retention limit by the State Bank of Pakistan (SBP), increasing it from 35 percent to 50 percent in the Exporters’ Specialized Foreign Currency Accounts, and a stable rupee, which encouraged IT companies to repatriate their foreign income and deposit it in local accounts.
"The reported IT export number indicates the amount remitted back to Pakistan by technology companies."Net IT exports (Exports-Imports) also recorded an increase of 37 percent year-on-year and of 20 percent month-on-month to $275 million in March 2024. These net IT exports numbers in March are also higher than the last 12-month average of US$208 million.
In a recent interview, the newly appointed Finance Minister, Muhammad Aurangzeb, stated that IT exports are likely to reach $3.5 billion this year.Topline Securities said that although there has been growth in gross IT exports during the first nine months of fiscal 2024, the government's target appears challenging.
"We anticipate that gross IT exports for FY24 will likely fall around $3.0 billion compared to $2.6 billion recorded last year."The Ministry of IT and Telecommunication, along with the Pakistan Software Export Board (PSEB) in close coordination with the Special Investment Facilitation Council (SIFC), has been instrumental in driving accelerated international business development and improving the ease of doing business environment.
This collaborative effort has significantly enhanced IT & ITeS exports and bolstered confidence within the IT industry, said the Ministry of Information Technology and Telecommunication. The Ministry of Information Technology and Telecommunications has identified several constraints including inconsistency in policies, taxation issues and banking hurdles which are hampering the country’s information technology sector’s export potential of around $15 billion.