God-sent opportunity

Published November 22, 2022
The writer is a former commerce secretary and a member of the PTI advisory committee.
The writer is a former commerce secretary and a member of the PTI advisory committee.

THE government pines for dollars and thinks of exports all the time. And yet, we have only taken our exports from $24.6 billion to $34.5bn in the last 10 years, while Bangladesh has taken them from $24.5bn to $52bn and India from $448.4bn to $660.5bn.

Since my days as commerce secretary, and even before that, we have been harping on the diversification of our export commodities, but yarn and textiles comprised 60 per cent of our exports 10 years back and is around the same now.

Now an unintended opportunity has presented itself — but we are as usual doing what we do best, ie shooting ourselves in the foot.

Our population explosion (the highest growth rate in the region matching Afghanistan’s) has resulted in a youth bulge, where 65pc of our population is below 30 years of age. This young population has been exposed to the miracle of mass communication in the form of mobile phones, leading them to Facebook, YouTube and TikTok.

Our freelance workers are national assets.

Even though mostly uneducated, our intelligent and talented youth, driven by the compulsion to fight hunger, and having been exposed to the world through the internet, is exploring new avenues for themselves.

So we saw on YouTube a farmer from Pun­jab giving cooking lessons in rural cuisine, or someone performing stand-up comedy in the local dialect or sharing his singing skills. When, to their amazement, they started to receive hundreds of thousands of hits, they found money pouring into their impoverished accounts through YouTube, etc.

Driven by the success of some, other relatively more educated people were encouraged to explore more venues. Internet connectivity resulted in the mushrooming of internet cafes — initially used for viewing porn, but then going on to become forums for the exploration of simple areas of money-making like logo design, data entry, back office support, etc.

Motivated by success stories doing the rounds in small towns and urban slums, and with access to internet/websites, the opportunities of the world have been thrown at the feet of our poor youth sitting in shacks in their village or small town.

The result has been that from registered exports of $200 million 10 years back, we are up to recorded exports of $1.2bn ($2bn-3bn, according to other sources) by freelance workers. A former finance minister recently said that besides official exports, $3bn in IT export earnings are lying abroad.

In addition to organised software companies, there are reportedly 700,000 to 1m freelance workers who are working from home. This is an unintended, unplanned bonanza, that enables the weak to survive. This is job creation and a potential source of dollars without any government effort.

Rather than facilitate this nascent software /IT industry, the government has decided to throw a spanner in the works. In 2020, a tax exemption was announced for five years but the promise was broken and tax was imposed by the current government. Tax, though nominal (0.25pc), leads to harassment by the tax authorities and distracts these small, mostly struggling start-ups.

One company owner told me that they get a pay order made as soon as they have some cash in their accounts for fear of the tax department unilaterally recovering it from their accounts.

A company had to have its Microsoft lice­n­­ce renewed and only $1,500 was involved. But it took the owner 15 days of producing numerous documents before a simple TT could be sent.

Most reasonably sized software companies like to keep their dollars abroad because once they bring them in, 65pc of it has to be converted to Pakistani rupees, depriving them of the advantage of a sinking rupee. Also, when they need to send dollars out for marketing, etc., they have to answer many questions from banks, leading to distraction and delays

Those who imp­l­e­­­ment the rules can­not resist the temptation of unleashing their full powers on timid, law-abiding citizens while looking the other way in the case of powerful organised groups, often with a mafia-like approach, such as our traders and certain groups of professionals.

Meanwhile, our young and smart people, both the talented and educated ones who have set up big and successful IT companies providing services for clients abroad, and the semi-literate but computer-savvy ones who form the bulk of our freelance workers, are great national assets. While sitting in their homes in villages or urban slums, with the help of not-so efficient internet connections, they are earning much-needed dollars and creating employment — but the government is doing nothing for them.

The least that it can do is to have the tax department leave them alone for 10 years and to build inexpensive workspaces with high-speed internet so that more can join this work movement of the future.

With minimum handholding, this sector has the potential to bring in $10bn of much-needed foreign exchange in a couple of years and create millions of jobs.

The writer is a former commerce secretary and a member of the PTI advisory committee.

Published in Dawn, November 22nd, 2022

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