IT exports surge 38pc to $1.1bln in July-January

KARACHI: Pakistan’s IT exports surged 38 percent to $1.1 billion in the first seven months of the current fiscal year of 2020/21, commerce adviser said on Thursday, as stay-at-home orders amid the pandemic accelerated transition to digital economy.

“These exports now constitute a third of our total export of services, and therefore are of strategic importance to us,” Adviser to Prime Minister for Commerce and Investment Razak Dawood wrote on Twitter. “We will cross the $2 billion this year.” In January, IT exports grew 26 percent year-on-year to $161 million.

The country exported $2.8 billion of services during the first half, according to the Pakistan Bureau of Statistics that is yet to publish seven-month data. The exports remained flat over the same period a year earlier.

Last year was a disaster for several businesses and economies around the world. However, the lockdown associated with coronavirus outbreak pushed people toward cyberspace to meet their social and economic needs. Therefore, demand for IT services significantly increased.

The renewed interest in IT services reflected in the unprecedented investment in tech startups in Pakistan during the last year, according to UAE-based research firm Magnitt.

“Pakistan’s startup ecosystem saw $77 million invested in startups, which was double the amount compared to 2019 (97 percent increase). The number of deals was also up 45 percent - reversing the general trend in MENA countries, where deals were down,” Magnitt said in a report.

Ecommerce, fintech, healthcare and education startups collectively accounted for 61 percent of all deals in 2020, it said.

However, concerted efforts are required to tackle the various supply- and demand-side constraints to the high digital divide in the country, according the State Bank of Pakistan (SBP).

“This would be crucial to ensure inclusive economic growth in the country,” the SBP said in a latest report.

The SBP said the assigned level of internet bandwidth in the country is lower than regional economies. The dispersion of internet services is heavily skewed towards urban areas, leaving tier-2 cities, remote regions, and rural areas digitally excluded. Low spectrum allocation and high license fees place the country at a disadvantageous position for digital transformation as compared to the peer economies.

The SBP said the COVID-19 pandemic has significantly accelerated the pace of digital transformation across the world.

“The COVID-19 crisis has reinforced the need to upscale and improve accessibility of digital connectivity and infrastructure in Pakistan, strengthen the outreach efforts to enhance digital literacy and promote digital skills, increase interoperability between branchless and conventional banks, and embrace technology in the provision of financial and government services,” it added.