Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

[Riaz Haq]

Pakistan's computer services exports soared 26% in March, 2020 over the same month last year. This growth occurred in spite of the coronavirus lockdown that began on March 23, 2020. The nation's total services exports fell 17% in the same month.

Pakistan ICT Exports. Source: PBS

The ICT services exports bucked the overall down trend in Pakistan's exports. The country exported computer service worth $102.26 million in March, 2020, up 25.77% from $81.31 million in March, 2019.  Overall telecommunications, computer and information services increased 19.44% to $134.95 million in March 2020, up from $112.99 million in March 2019.  Prior to the current coronavirus lockdown, PBS reported that Pakistan's technology exports increased 26.24% in the first 8 months  (July-February) of the current financial year.

Double Digit CAGR in Pakistan IT-ITeS Exports in 2010-2018

The data released by the PBS showed that Pakistan earned a total amount of $887.47 million during the first eight months (July-February) of the fiscal year 2020, up from $702.99 million during the corresponding period of the fiscal year 2018-19. Computer services exports grew 31.57% to $677.23 million from July 2019 to February 2020 as compared to $514.74 million.

 It is generally believed that Pakistan's PBS and central bank underestimate the country's technology exports. Some have argued that the actual IT exports were closer to $5 billion in fiscal 2018. Some of the differences can be attributed to the fact that the State Bank IT exports data does not include various non-IT sectors such as financial services, automobiles, and health care.

Pakistan has a thriving  community of freelancers. Its digital gig economy growth is the fastest in Asia and fourth fastest in the world, according to digital payments platform Payoneer.

Gig Economy Growth in Q2/2019. Source: Payoneer

United States leads gig economy growth of 78% followed by the United Kingdom 59%, Brazil 48%, Pakistan 47% and Ukraine 36%. Asia growth was led by Pakistan followed by Philippines (35%) , India  (29%) and Bangladesh (27%).

The rapid gig economy expansion of 47% in Pakistan  was fueled by several factors including the country's very young population 70% of which is under 30 years of age coupled with improvements in science and technical education and expansion of high-speed broadband access.  Pakistani freelancers under the age of 35 generated 77% of the revenue in second quarter of 2019.

Growth in Freelance Work. Source: Payoneer

Mohsin Muzaffar, head of business development at Payoneer in Pakistan, has said as follows: "Government investment in enhancing digital skills has helped create a skilled freelancer workforce while blanket 4G coverage across Pakistan has given freelancers unprecedented access to

international jobs".

Global Freelance Revenue By Age. Source: Payoneer.

In Q2/2019, Asia cemented its status as a freelancer hub.  Pakistan, Bangladesh and India, Philippines made it to the  top 10 list, collectively recording 238% increase from Q2/2018.

Online Labor Index. Source: Oxford Internet Institute

As of 2017, Pakistan freelancers ranked fourth in the world and accounted for 8.5% of the global online workforce, according to Online Labor Index compiled by Oxford Internet Institute. India led with 24% share followed by Bangladesh 16%, US 12%, Pakistan 8.5% and Philippines 6.5%.

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[Riaz Haq]

11MFY20: #Pakistan's deficit in #services #trade narrows 41.6 % to $2.7 billion. Pak services sector has emerged as the main driver of economic growth with its share in the #GDP increasing from 56% in 2005-06 to 61.4% in 2019-20.- Profit by Pakistan Today https://profit.pakistantoday.com.pk/2020/07/06/11mfy20-pakistans-de...

Owing to the coronavirus-led lockdown, Pakistan’s services’ exports declined by 16.72pc YoY to $389.99 million in May 2020, as against $468.27 in May last year.

According to data released by the Pakistan Bureau of Statistics (PBS), the country’s services’ exports have taken a significant hit following the imposition of countrywide lockdown in March to contain the pandemic.

On a cumulative basis, services’ exports during the first 11 months (July-May) of FY20 fell by 8.52pc to $5.05 billion, as against $5.520 billion in the corresponding period last year.

On the other hand, services’ imports also fell to $7.750 billion in July-May FY20, as compared to $10.146 billion in the period of last year, reflecting a decline of 23.61pc.

In May 2020, import of services fell by 59.79pc YoY to $468.03 million.

As a result, the trade deficit in services narrowed by 41.63pc to $2.7 billion in 11MFY20 as against $4.625 billion over the same period last year.

It is pertinent to mention the services sector has emerged as the main driver of economic growth with its share in the GDP increasing from 56pc in 2005-06 to 61.4pc in 2019-20.

Its major sub-sectors include finance and insurance, transport and storage, wholesale and retail trade, public administration and defence.

[Riaz Haq]

#Pakistan’s forex reserves rise 65% to $12 billion in FY 2019-20, up from $7.3 billion in prior year, mainly due to inflows of $6 billion #IMF bailout, $725 million from #WorldBank, $500 million from #ADB, $500 million from #AIIB & $1 billion from #China. https://www.samaa.tv/money/2020/07/pakistans-dollar-reserves-up-by-65/

Pakistan borrowed $1 billion as GOP loan disbursement from China and returned $231 million or 23% of that amount to repay foreign debt in the week ending July 3. After adjusting that amount, the country’s net dollar reserves increased by $811 million last week.

The increase in dollar reserves in fiscal year 2019-20 can be attributed to dollar inflows caused by the signing of a $6 billion bailout with the International Monetary Fund. This includes $725 million from the World Bank, $500 million from the Asian Development Bank, $500 million from Asian Infrastructure Investment Bank and $1 billion from Chinese banks.

The IMF programme opened more doors for Pakistan as the World Bank, ADB and AIIB also pledged support. According to the IMF, the programme was supposed to unlock funding of $38 billion from multilateral donors.

Pakistan’s depleting dollar reserves were one of the main challenges for the Pakistan Tehreek-e-Insaf, when it came into power in August 2018. Within its first six months, the PTI government saw the dollar reserves falling to $6 billion, barely enough to pay for two months of imports. To tackle this challenge, PM Khan’s government signed the $6 billion bailout with the IMF.

The dollar reserves doubled from its lowest point in 2018 to 12 billion this year. The dollar account turned to a surplus in October 2019. However, going to the IMF comes at a cost and steps were taken to choke the economic growth, such as reduction in imports, rupee depreciation and increase in interest rates that made the borrowing expensive.

In the first nine months of the last fiscal year, the loss in our dollar account was reduced by 73% and we were again in surplus in May.

[Riaz Haq]

#CoronaVirus Protection Gear Sales Reversing #Pakistan #Exports Fall. Exports of #PPE, #masks and other protective gear -- a new market -- have increased, says Abdul Razak Dawood. New export orders for #garments coming in. #COVID19
https://www.bloombergquint.com/global-economics/virus-protection-ge... via @BloombergQuint

Pakistan has “really moved fast into that area,” Dawood said, referring to PPE. The current year should be a better one than last, he said. South Asia’s second-largest economy, whose exports dropped 7% in the year ended June, isn’t alone in stepping up production of PPEs. Neighbor India has become the world’s second-biggest maker of PPE kits after a shortage at the beginning of the outbreak pushed it to boost local manufacturing. Supply chain disruptions caused by the pandemic has meant Pakistan secured its first sportswear order from Hugo Boss AG, according to Ijaz Akhtar Khokhar, chief coordinator at Pakistan Readymade Garment Manufacturers and Exporters Association.

Pakistan plans to give tax incentives to any global brand that opens an office in the country, said trade adviser Dawood. The South Asian nation is looking to spur growth in the economy after its first contraction in 68 years in the year ended June. While exports dropped in seven out of the past 12 months, the rupee’s depreciation -- by more than 50% since late 2017 -- has made the nation’s shipments competitive globally, said Dawood. Dawlance, a local home appliances maker, exported microwaves to Bangladesh for the first time, while D.G. Khan Cement Ltd. has sent clinker to new markets such as China and Philippines. The cement maker has another order from the Philippines for supply of 20,000 tons as well as making more shipments to China, according to CFO Inayatullah Niazi.

[Riaz Haq]

Fibre optic cables from #China border at Khunjerab to #Pakistan's capital Islamabad made operational. High bandwidth #Internet #Fiber will be laid from Islamabad to #Karachi and #Gwadar in the next phase. #digitalhighwayplan #CPEC #5G #digitalpakistan https://tribune.com.pk/story/2254533/fibre-optic-cables-from-khunje...

The Pak-China fibre optic cable is to be laid along three main routes of the China-Pakistan Economic Corridor (CPEC), including railway tracks.

The two countries have already activated first phase of the fibre optic cable, which is an 820km-long cable project from Rawalpindi to Khunjerab. In this regard, a Chinese company has already conducted successful tests and can generate a lot of revenue for the government.

On July 10, the CPEC Authority was thanked for facilitating the realisation of the Kohala and Azad Pattan power projects, by Prime Minister Azad Jammu and Kashmir (AJK) Raja Farooq Haider, and the chief executive officers (CEOs) of China Three Gorges and China Gezhouba.

This CPEC chairman (Gen Asim Bajwa) had announced in a tweet that the meetings were held separately and discussed the process of the two projects' execution.

He had stated that a total of 1800MW of hydel power will be produced under the projects, whereas 8,000 jobs will also be created.

[Riaz Haq]

VM Interactive, a #UK-based #digital #technology company, invests $250,000 in seed funding in #Pakistan’s #HealthTech #startup emeds.pk. #Covid_19 brings attention to #health sector | The Express Tribune /story/2254458/angel-investors-eye-pakistans-health-start-up


The pandemic has brought healthcare sector to the fore in countries across the world and Pakistan’s health sector is no different. The coronavirus has exposed strengths and weaknesses in the system, which has caught the attention of angel investors.

Since the lockdown was imposed, online businesses enhanced their mark and the country’s health system witnessed a similar trend as well where a few large scale pharmacies initiated home delivery services and doctors set up e-clinics.

The trend of digitisation caught attention of VM Interactive, a UK-based digital technology company, which recently invested $250,000 in seed funding in Pakistan’s health-tech ecosystem through a locally indigenous start-up, emeds.pk.

VM interactive Chief Operating Officer Alex Kalavrezos said that having seen Pakistan’s tech industry grow by leaps and bounds, with the government focused on taking it to another level, the chance to invest in it during this time is an opportunity, which should not be missed.

“The recent pandemic has exposed vulnerabilities of healthcare systems around the globe, however, Pakistan is among the few countries that have performed relatively better,” Kalavrezos told The Express Tribune.

This shows that the country has the potential to rival some of the most developed health care systems around the world provided that a robust system is created for healthcare workers to flourish.

According to him, this was one reason why countless doctors and healthcare workers of Pakistani origin excel in western countries where healthcare systems are more developed.

“Having worked closely with the tech fraternity of Pakistan, I am familiar with the wealth of talent available here, so having first-hand knowledge and experience played a major role in convincing our investors,” Alex said.

The UK-based tech company is providing its support in terms of investments and training to the local start-up, which intends to revolutionise the concept of health-tech in Pakistan and counter the menace of fake medicines available widely in the market.

The management of the company plans to work with manufacturers to secure medicines and store them in its own warehouses rather than relying on third party suppliers.

“Medicines are temperature oriented and if a minimum temperature is not maintained, they expire,” said emeds.pk Chief Executive Officer Umaad Sheikh. “Small scale pharmacies do not consider this fact while operating business nor do they empower pharmacists to do so.

The start-up, which began operations in March 2020, received the seed investment last week.

Sheikh projected to receive next round of investment at the end of the year which would be utilised for expansion of company operations in Punjab and the rest of Pakistan.

Nevertheless, there are a handful of difficulties being faced and the company has sought help from the government in this regard.

“The government is working towards improving ease of doing business in Pakistan but to do that, a special zone for online investors should be materialised to cater to the needs of start-ups,” Sheikh said.

He stressed that tech-start-ups were the future and if government made efforts to uplift the ecosystem of this sector, all other sectors will improve alongside.

Currently, tech start-ups face issues in online payment facilities, banking sector paperwork and timely issuance of visas to foreign investors.

“The reason why most tech investors prefer India over Pakistan is the fact that our neighbouring country has a proper ecosystem in place and it facilitates them in all possible manners,” he said. “A little attention by the government in this regard will bring higher amount of tech investors to Pakistan.”

[Riaz Haq]

World Bank stresses greater export participation by Pakistani firms to boost recovery

https://tribune.com.pk/story/2256815/withering-economic-growth



Although short-term analysis of maritime traffic does not look promising, suggesting that the contraction in global trade is likely to linger, a recently published blog by the World Bank recommending actions to speed up export recovery emphasises greater export participation by Pakistani firms to boost recovery efforts.

The blog recommended the steps necessary to increase exports. These steps include smart promotion of exports, improving compliance and regulatory environment and easing import restrictions to boost productive capabilities. However, it is important to mention that shift towards an export-oriented approach will be unlikely if inward-looking policies are a preferred choice for policymakers during the Covid-19 era.

The trade deficit of Pakistan was more than 150% of total exports from the country in 2018. Exports were valued at 40% of imports. In 2015, the trade deficit was less than the total amount of exports. It is particularly disconcerting that imports of productive investments such as machinery and equipment for export-oriented industries were neglected.

Capital goods

According to the ITC’s Trademap.org, imports of textile machinery peaked in 2005 at $737 million and dropped to $155 million in 2009. They gradually recovered to $498 million in 2017.

In relative terms, imports of textile machinery accounted for 3% of total imports into Pakistan in 2005 but they comprised only 0.9% in 2017.

In comparison, Vietnam imported $280 million worth of textile machinery in 2005 but surpassed the $1-billion mark in 2018. Its textile exports increased from $5.3 billion to $36.7 billion during this period. Imports of textile machinery into Bangladesh also increased from $380 million in 2005 to $888 million in 2015. It too registered a significant growth in textile exports over the past 15 years.

On the other hand, Pakistan’s textile exports have increased from $10.3 billion to $13.7 billion between 2005 and 2019. The slow pace of export growth in the most dominant industry in Pakistan, the textile industry, points to the anti-export bias that has severely discouraged exports from export-oriented sectors of the economy.

Value addition

The value added manufacturing per capita is a useful indicator to determine the level of industrial development across countries. Unido uses the value added manufacturing per capita as a main indicator to assess the level of industrialisation.

Borrowing data on the value added manufacturing and population from the World Bank’s World Development Indicators shows Pakistan has had a rather flat trajectory for value added manufacturing per capita relative to Bangladesh, India and Vietnam in recent years.

Pakistan reported a maximum of $181 and a minimum of $161 per capita between 2011 and 2018. On the other hand, Bangladesh skyrocketed from $138 in 2011 to $361 in 2019. Vietnam too more than doubled its value from $204 in 2011 to $448 in 2019.

It is important to note that it is only until recently that India, Bangladesh and Vietnam have caught up with Pakistan in terms of urbanisation, that is, the percentage of population residing in urban areas. Labour-intensive manufacturing sectors are typically an important source of employment for migrants from rural to urban areas.

In essence, investments to improve productivity and industrialisation levels in Pakistan were limited relative to its counterparts at a time when the latter were investing to boost industrialisation.

Pakistan lags behind Bangladesh, India and Vietnam. Investments in textile machinery were negligible as well as the increase in manufacturing output per capita.

It is essential that policymakers focus on improving industry competitiveness in order to ensure sustainable economic growth and accumulation of much-needed foreign currency reserves.

[Riaz Haq]

Pakistan produces 20,000 IT graduates, engineers annually, says minister

https://www.thenews.com.pk/print/549580-pakistan-produces-20-000-it...


LAHORE:Provincial Minister for Industries and Trade Mian Aslam Iqbal Friday said that government was moving towards right direction by adopting more business friendly policies.Addressing Lift Pakistan 2019 conference hosted by a business group here in a hotel, the minister said the government was fully committed to serve and facilitate its business community.He said Pakistan was ranked at number 4 for free lance development in the world and IT exports increased 70 percent during the last three years. Pakistan has more than 2,000 IT companies and call centres, and 300,000 English speaking IT professionals and 20,000 IT graduates and engineers being produced annually.At present, around 52 incubation and acceleration programmes exist in the country from each of which 7-15 startups are graduating every year. In addition to incubators and accelerators, the start-up of echo system has been strengthened by co-working spaces, business process outsourcing services, 11 fellowship programmes growing scale of angel investment and the launch of local chapter of global initiatives, he said.The minister appreciated the organisers for collaborative efforts in organising an excellent platform to bring together the creative young mind professionals, academicians, entrepreneurs and leading business personalities to explore new opportunities in the real potential of growth of our nation.The minister said the government was working aggressively towards creating a comprehensive start of ecosystem so as to channel the real potential of this growing market. He said that in the World Bank doing business report 2020, Pakistan improved by 28 points on the ease of doing business ranking from 136 to 108 out of 190 economies. He said in order to make national economy grow faster, it is utterly important to continue efforts to ensure a conducive business environment.The government has taken measures which will guarantee and ensure that the business community’s investments in Punjab are secured and their returns are assured. The Punjab government has recently launched e-pay, a mobile application for all business to government and public to government payments in order to facilitate the public and improve country’s revenue collection through easy payment solutions, he concluded.Kilns’ closure delayed: Environment Protection Secretary Salman Ijaz has said that brick-kilns will not be closed immediately in case of improving of air quality index. He stressed upon kiln owners to make their kilns environment friendly by converting the same on zigzag technology to get production throughout the year. This was stated by him while presiding over a meeting here Friday.Director General Environment Tanveer Ahmad Warraich, Director Environment Naseem-ur-Rehman, central and provincial presidents of All Pakistan Mines and Mineral Associations Mir Behroz and Khalid Pervaiz, Chairperson Hyderabad Mir Samad, other representatives, owners of kilns and coal agents were present on this occasion.

[Riaz Haq]

Pakistan earned $ 286 million by providing different information technology (IT) services in various countries during the first two months of fiscal year 2020-21. This shows growth of 35.58 per cent when compared to $210.940 million earned through provision of services during the corresponding period of last fiscal year 2019-20, Pakistan Bureau of Statistics (PBS) reported.

https://nation.com.pk/26-Oct-2020/pakistan-earns-dollar-286m-from-i...

During the period under review, the computer services grew by 37.27 per cent as it surged from $162.300 million last year to $222.790 million during July-August (2020-21). Among the computer services, the exports of software consultancy services witnessed increase of 16.10 per cent, from $62.468 million to $72.526 million while the export of hardware consultancy services however witnessed decrease of 76.01 per cent, from $0.321 million to $0.077 million.

The export of repair and maintenance services also decline by 86.27 per cent from $0.517 million to $0.071 million whereas the export and imports of computer software services witnessed increase of 13.86 per cent, from $49.854 million to $56.762 million. In addition the exports of other computer services rose by 89.98 per cent from $49.140 million to $93.354 million. Meanwhile, the export of information services during the period under review increased by 65.52 per cent by going up from $ 0.290 million to $ 0.480m.

Armenian PM claims existence of proof that Syrian Mercenaries fight in Karabakh
Among the information services, the exports of news agency services also increased by 133 per cent, from $0.100 million to $0.233 million whereas the exports of other information services rose by 30 per cent, from $0.190 million to $ 0.247 million. The export of telecommunication services increased by 29.74 per cent as these went up from $48.350 million to $62.730 million, the data revealed.

Among the telecommunication services, the export of call centres services increased by 23.19 per cent during the period as its exports increased from $16.148 million to $19.892 million whereas the export of other telecommunication services also increased by 33.03 per cent, from $32.202 million to $42.838 million during last year, the PBS data revealed.

It is pertinent to mention here that the country’s services trade deficit contracted by 50.41 per cent during the first two months of the current financial year (2019-20) as compared to the corresponding period of last year.

Greater Game Plan: Murad exposes opposition parties’ nexus with anti-Pakistan lobby
During the period from July-August 2020-21, services exports decreased by 14.26 per cent, whereas imports reduced by 32.81 per cent, according the data released by Pakistan Bureau of Statistics. The services worth $758 million exported during the period under review as compared the exports of $884.14 million in same period of last year, whereas imports of services into the country was recorded at $1220.12 million as against the imports of $1815.91 million, the data revealed.

[Riaz Haq]

The Information Telecommunication (IT) and IT-enabled Services (ITeS) export remittances comprising computer, and call center services, surged to $379.251 million at a growth rate of 43.55 percent during the first quarter (July-Sep) of FY 2020-2021 compared to $264.187 million during the same period of 2019-2020.

https://www.brecorder.com/news/40028343

This has been revealed in the latest performance report of the Pakistan Software Export Board (PSEB), an organisation functioning under the Ministry of IT and Telecommunication.

It stated that the Ministry of IT was taking all possible steps to ensure sustainable growth of Pakistan's IT industry and to ensure close coordination with the IT industry and associated stakeholders.

The generous incentives from the government and various projects to enhance capacity and capability of the IT industry have resulted in strong industry growth rates.

On the direction of Federal Minister for IT and Telecommunication Syed Aminul Haque, the Ministry of IT and Telecom is committed to increasing the IT exports, and making special efforts in this regard.

Incentives to the industry include zero income tax on IT and ITeS exports till June 2025, tax breaks for the PSEB-registered IT start-ups for three years, up to 100 percent foreign ownership of IT and ITeS companies, up to 100 percent repatriation of profits for foreign IT and ITeS investors, tax holiday for venture capital funds till 2024, among other incentives.

Spokesperson of the ministry told Business Recorder that more than 6,000 Pakistan-based IT companies were providing IT products and services to the entities in over 100 countries.

Strong incentives are being provided to the IT industry, and there are several projects intended to facilitate and assist the IT industry in its growth trajectory, and to ensure continued upward momentum in local and export earnings.

Pakistan was ranked the 3rd most popular country for freelancing in the world, and Pakistani IT companies are providing products and services to the world's largest companies.

The IT and IT enabled Services (ITeS) export remittances comprising computer services and call center services have surged to $379.251 million at a growth rate of 43.55 percent during the first three months (July-September) of 2020-2021, in comparison to $264.187 million during the same period during 2019-2020.

The ITeS export remittances surged by 23.71 percent to $1.230 billion in the fiscal year 2019-2020 compared to $994.848 million during the same period last year (2018-2019).

The government has set a target of $5 billion for export remittances through information technology and IT-enabled services during the next three years.

Federal Minister for IT and Telecommunication Syed Aminul Haque said that the government was taking all possible steps to ensure long-term IT industry growth trajectory and to enhance IT industry exports.

He also lauded the IT sector for its contributions to Pakistan, saying that Pakistan's IT industry had reached an important milestone in its journey, and it had the potential to be the largest foreign exchange earner for Pakistan.