SBP moves to facilitate IT exporters, freelancers

KARACHI: The State Bank of Pakistan (SBP) on Monday increased the permissible retention limit of information technology (IT) exporters from 35 percent to 50 percent of their export proceeds in the exporters’ specialised foreign currency accounts (ESFCAs), a statement said.

The purpose of this move was to make it easier for IT exporters to increase their exports of IT and IT-enabled services.

“Further, the usage of the balances available in the ESFCAs has been simplified by allowing the IT exporters to make their payments from these accounts without any approval from SBP or banks,” the central bank said.

“The banks have also been advised to facilitate the issuance of debit cards, enabling the IT exporters to make online payments from the balances available in their ESFCAs,” it added.

Moreover, a new framework for freelancers has been introduced to further ease the opening of their bank accounts and allow higher retention of amounts in their FCY accounts. The freelancers will now be able to open the bank accounts both digitally and physically at their choice with minimum documentation requirements. Further, their ESFCAs will be opened concurrently with the opening of their primary PKR account. The freelancers retain 50 percent of their export proceeds or USD5,000 per month, whichever is higher in their ESFCAs, and can make all payments from these accounts without any approval from the SBP or banks.

Noman Said, a leading IT exporter, appreciated the development from the central bank saying the facilitation will encourage IT companies and freelancers to work on a lucrative and long-term projects in the foreign countries single-handedly or through partnership with foreign companies.

He urged the central bank to retain this policy for a long-term basis regardless of the transition in the government in the Centre whereas the retention rate should also be increased gradually up upon the achievement of the desired results.

He further said the continuation of the policy will tempt IT companies and freelancers to focus on foreign markets to attract handsome foreign exchange returns and enhance their contribution to the national economy.

Tufail Ahmed Khan, CEO and President Pakistan Freelancers’ Association (PAFLA), has welcomed the facilitation from the central bank for freelancers and termed it much needed for conducive working environment of a strong gig economy.

The facility will give more empowerment to freelancers who will not only open foreign current accounts but it will also motivate them to generate more business from foreign clients to bring remittances in the country.

He said the policy on foreign currency account should be continued on a long-term basis whereas commercial banks should also welcome this step and facilitate freelancers to open local and foreign exchange accounts easily.

As the freelancers focus on foreign markets, the country will not only receive foreign exchange but also additional revenues in terms of taxes, he added.

Information and communication technology (ICT) services, which have the largest share in services export, came in at $2.6 billion in FY2023, nearly unchanged from the year before, according to the SBP’s annual report on Pakistan’s economy, released on Monday.

“The plateauing of ICT exports despite the addition of new firms in the market may be attributed to a decline in imports of state-of-the-art IT equipment for the production of high-end software and exporters not bringing their remittances due to exchange rate volatility,” said the report.