KARACHI: In a move to encourage exporters of software and IT&IT-enabled services to bring more dollars into the country, the State Bank of Pakistan (SBP) has allowed 35 per cent retention of their earnings outside the country. For meeting this objective, the SBP has amended the Foreign Exchange Regulations and advised the banks to mandatorily allow, till March 31, 2023, retention of 35pc of their export proceeds in special foreign currency accounts.
However, such exporters need to be registered either with Pakistan Software Export Board (PSEB) or with Pakistan Software Houses Association (P@SHA). These instructions will be reviewed in light of the incremental export performance by the IT sector and realisation of export proceeds during this period.
The exports of telecommunication, computer and information services collectively increased to $2.618 billion in FY22 from $2.108bn in FY21. However, the SBP move to restrict the outflow of dollars has started hurting the sector as the exports were almost static at $1.087bn during July-November FY23 compared to $1.051bn in the same period last year.
“Exporters would be allowed to use their retained funds for legitimate business payments or expenses abroad,” said the SBP in a circular issued on Friday.
The SBP has advised banks to provide digital channels for the opening and operation of these special foreign currency accounts. Banks can now provide facilitation of outward remittances from the retained proceeds through the issuance of corporate debit cards after conducting necessary due diligence.
“The amendments will incentivise new entrants in this field to focus on exports and enable existing exporters to boost their business that in turn will create employment opportunities and increase foreign exchange earnings of the country,” said the SBP.
The data showed that Pakistan earned $633 million by exporting different IT services during the first quarter of the current fiscal year 2022-23.
According to the Pakistan Bureau of Statistics (PBS) the export of computer services grew by 5.21pc to $516.4m during July-September FY23 from $490m in the same period last year.
Among the computer services, the exports of software consultancy services witnessed an increase of 5.73pc from $176.5m to $186.6m while the exports of hardware consultancy services also rose by 10.27pc from $0.837m to $0.923m.
The export of telecommunication services also witnessed a decrease of 18.94pc as these went down from $142.7m to $115.7m during the months under review.
Among the telecommunication services, the export of call centre services increased by 21.20pc during the period as its exports increased from $44m to $53m whereas the export of other telecommunication services decreased by 36.85pc from $89.7m to $62.3m during the period under review.
The SBP has advised banks to institute a mechanism for the facilitation and speedy resolution of customers’ complaints. The banks were further advised to provide proper training to relevant staff of all foreign exchange dealing branches to ensure facilitation to the IT-based exporters/ freelancers and establish a permanent help desk overseen by two officers not below the rank of vice-president to act as lead coordinators on behalf of the bank to resolve the matters about account opening, retention in accounts, outward remittances, etc.
Published in Dawn, January 15th, 2023