THE past governments had been promoting conventional exports, like textiles, commodities and other goods, neglecting the services sector, in general, and the information technology and IT-enabled services, in particular.
The prime minister’s vision of Digital Pakistan, however, has brought the IT sector into limelight as its exports surged to a record $2.123 billion during the last fiscal despite the impact of Covid. IT exports’ share in overall exports related to the services sector is about 36 per cent.
There has been exponential growth of the IT industry as reflected in its exports during the last five years. Pakistan’s earnings by providing different IT services to various countries amounted to $655 million in 2016-17, $834 million in 2017-18, $995 million in 2018-19 and $1,230 million in 2019-20.
Major IT exports are of software consultancy services and computer software, while the share of call centres, hardware consultancy, maintenance and repair of computers, and other computer services is minimal in the overall IT exports.
There is a vast potential for increasing IT exports in the coming years, which needs to be harnessed optimally. The Pakistan Software Export Board targets IT exports to the level of $5 billion by 2025 and $10 billion by 2030, whereas the Board of Investment projects $20 billion worth of exports by 2025. The realistic targets could be achieved if the start-ups and exporters are facilitated and incentivised by the government, with a focus on high-tech services.
It is heartening that the government would establish a Rs10 billion fund for providing cash rewards to IT companies against their exports. The government will also allow rebate at 5pc on all exports related to IT.
However, the government has withdrawn, effective the beginning of the current fiscal year, the tax exemption that was available to the IT industry and was valid till 2025.
This is a great setback to the exports of this important sector, and, therefore, the decision deserves to be reconsidered.
Published in Dawn, September 15th, 2021