Pakistan Tech Exports Continue to Soar: Up 40% in last 6 Months Amid COVID19 Pandemic

[Riaz Haq]

Pakistan's technology exports are continuing to soar amid the Covid19 pandemic. Tech exports jumped 43% in December, 2020 and 40% in July-December 2020 period over the same period in 2019. This is a rapid acceleration from 21% increase in all of Fiscal Year 2020 (July-June 2020) over FY 2019. Tech exports (up 40%) far outpaced overall exports (up 5.1%) in this period. 

The modest 5.1% increase in Pakistan's overall exports is still commendable in the midst of the global economic devastation caused by COVID19 pandemic. What is even more commendable is the 19% jump in exports in December 2020 over the same month in 2019, indicating a strong upward trend. 

Pakistan Tech Exports Soared in First Half of FY 2020-21. Source: C...

Total monthly ICT exports hit a record $194 million in December 2020, up 43% from $135 million in December 2019. For the entire 6 month period from July-December 2020, the ICT exports reached $958 million, up 40% from the same period a year earlier. Tech services exports now account for a third of all service exports of the country. 

Pakistan Tech Services Export Share of Service Exports. Source: Com...

Pakistani diaspora sent home $14.2 billion in remittances in July-December 2020, up 25% from the same period in 2019. Pakistanis settled in the United Kingdom and the United States increased their remittances by 52% and 47% respectively in this period, helping Pakistan achieve a record $1.8 billion current account surplus in the first 6 months of the ongoing fiscal year 2020-21. 

Remittances From Pakistani Diaspora. Source: Arif Habib

While Pakistan's exports increased a modest 5.1%, the remittances from overseas Pakistanis jumped a hefty 25% in response to an appeal by Prime Minister Imran Khan who remains very popular among them. He drew nearly 30,000 Pakistani-Americans to a rally during his Washington D.C. visit in 2019. 

Pakistan Trade 1H of FY 2020-21. Source: Arif Habib

Pakistan's imports increased 5.5%, more than the 5.1% increase in exports, during the first half of the current fiscal year 2020-21. This resulted in $12.4 billion trade deficit, a 5.9% increase. Without the 25% jump in remittances, Pakistan would most likely have a current account deficit rather than a surplus in this period. 

The modest 5.1% increase in Pakistan's exports is still commendable in the midst of the global economic devastation caused by COVID19 pandemic. What is even more commendable is the 19% jump in exports in December 2020 over the same month in 2019, indicating a strong upward trend. 

Emigrants From Pakistan 1990-2019. Source: Pakistan Bureau of Emigr...

Pakistani diaspora is the world's 5th largest with more than half a million Pakistanis migrating every year to work overseas. Over 11 million Pakistanis have left home for employment in Europe, America, Middle East and elsewhere since 1971, according to Pakistan Bureau of Emigration. The pace has particularly picked up over the last 10 years.  This phenomenon has helped reduce unemployment in a country where about 2 million young people are entering the job market each year.  It has also helped remittances soar nearly 28X since the year 2000.

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Tech Exports Soaring

Pakistan is the 7th Largest Source of Migrants in OECD Nations

Pakistanis Mini-Invasion of China

Inspirational Story of Karachi Rickshaw Driver's Daughters

Pakistan Remittance Soar 21X

Pakistan's Growing Human Capital

Two Million Pakistanis Entering Job Market Every Year

Pakistan Most Urbanized in South Asia

Hindu Population Growth Rate in Pakistan

Do South Asian Slums Offer Hope?

How "Illiterate" Are Pakistan's "Illiterate" Cell Phone Users?

Riaz Haq's Youtube Channel

PakAlumni Social Network

[Riaz Haq]

#Pakistan's #Exports jump 8% to $2.14 billion in January 2021. Exports for Jul-Jan FY21 rose 5.5% to $14.24 billion as compared to $13.50 billion in the same period of FY20, despite difficulties created by #COVID19 #pandemic- Profit by Pakistan Today https://profit.pakistantoday.com.pk/2021/02/01/exports-jump-8pc-to-...

It is pertinent to mention that the country’s exports had witnessed a steep decline of 19pc in August 2020 before rebounding in September, October, and November.

According to an FBR report, the spread of Covid-19 had impacted the flows of containers from the country to the lowest level of around 12,000 in April 2020. Since then, a gradual improvement was seen in container shipment from the country.

Measures announced under the export facilitation measures led to an increase in the number of exports Goods Declarations (GDs) from 71,190 in July 2020 to 79,756 in December 2020, posting an increase of 11pc.

Also, under the ‘Make in Pakistan’ initiative, duty drawback rates for at least eight sectors were revised upwards by FBR. During the whole exercise, more than 434,000 claims were disposed of with approximately 7,800 exporters benefitting from this initiative.

VISIT TO UZBEKISTAN

Meanwhile, in a separate statement issued on Monday, the Ministry of Commerce informed that Razak Dawood was leading a delegation to the Republic of Uzbekistan. The visit was a follow-up to the visit of Uzbek Deputy Prime Minister Dr Sardor Umurzakov to Pakistan on 10th September 2020.

“The first meeting of Joint Working Group on Trade and Economic Affairs and the meeting of Tripartite Working Group on the Implementation of the Trans-Afghan Railway Project would be held between Pakistan and Uzbekistan from 1st till 4th February, 2021,” the statement read.

On Monday, the Advisor called on Uzbekistan President Shavkat Mirziyoyev and discussed with him matters related to economic cooperation between the two countries. He also met Uzbekistan Chamber of Commerce and Industry President Adkham Ikramov to deliberate upon cooperation in textile, leather and engineering sector.

During the 1st meeting of the Joint Working Group on Monday, both sides expressed desire to enhance bilateral trade relations. In this regard, they discussed streamlining bilateral phytosanitary standards, enhancing banking cooperation, working on rail & road connectivity and establishment of off-dock terminal.

The two sides also expressed resolve to enter into Preferential Trade Agreement (PTA).

The Uzbek side invited the Pakistani business delegation to organize a joint exhibition in Tashkent in June this year.

[Riaz Haq]

#Pakistan #exports add up to $14.24 billion in 7 months (July 20-January 21), up 5.5% over same period in prior year. On track to exceed $24 billion in current fiscal year in spite of #covid19 #pandemic.

https://twitter.com/haqsmusings/status/1359263728806424576?s=20

--------------------

Exports increase 5.53pc in seven months
The exports of the country during July-January (2020-21) were recorded at $14.242 billion.

https://www.brecorder.com/news/40061421

The exports from the country increased by 5.53 percent during the first seven months of the current fiscal year (2020-21) as compared to the corresponding period of last year, Pakistan Bureau of Statistics (PBS) reported Monday.

The exports of the country during July-January (2020-21) were recorded at $14.242 billion against the exports of $13.496 billion during July-January (2019-20), according to the latest PBS data.

The imports during the period under review also increased by 6.92 percent by growing from $27.316 billion last year to $29.205 billion during the first seven months of current fiscal year.

Based on the figures, the country’s trade deficit increased by 8.27 percent during the first seven months as compared to the corresponding period of last year. The trade deficit during the first seven months of the current fiscal year was recorded at $14.963 billion against the deficit of $13.820 billion last year.

Meanwhile, on year-on-year basis, the exports from the country increased by 8.11 percent during the month of January 2021 as compared to the exports of January 2020. The exports during January 2021 were recorded at $2.132 billion against the exports of $1.972 billion in January 2020, the data revealed.

The imports into the country also increased from $4.121 billion in January 2020 to $4.733 billion in January 2021, showing growth of 14.85 percent.

On month-on-month basis, the exports from the country decreased by 9.89 percent during January 2021 when compared to the exports of $2.366 billion in December 2020.

Likewise the imports into the country also decreased by 5.43 percent in January 2021 when compared to the imports of $5.005 billion in December 2020, the data revealed.

Meanwhile, the country’s services exports during the first half of the current fiscal year increased by 0.31 percent from $2.835 billion last year to $2.844 billion. Likewise, the services imports also declined by 15.68 percent from $4.532 billion during first six months of last fiscal year to $3.821 billion during the corresponding period of current fiscal year..

Based on the figures, the services trade deficit witnessed sharp decline of 42.41 percent by falling from $1.696 billion last year to $0.977 billion during the current year.

[Riaz Haq]

Pakistan’s trade deal with #China makes it an ideal re-exporting hub. #US companies can build #manufacturing facilities in #Pakistan and add value to #American goods there, enabling those goods to access the Chinese market as Pakistani #exports. #economy https://www.atlanticcouncil.org/blogs/new-atlanticist/biden-needs-a...

The United States cannot match China’s economic investment in Pakistan or in the region for that matter, but it can influence the direction Pakistan takes. That possibility is greater now than at any time in recent memory as there are significant changes to fundamentals that have long defined Pakistan’s strategic calculus.

First, the United States is no longer fixated on terrorism, which means it is no longer paying attention to Pakistan in the ways it did after the 9/11 attacks. Pakistan is keen to find new ways to engage the United States. These sentiments, exhibited at the highest levels of military and civilian leadership in Pakistan, are motivated by the pragmatic realization that the country can no longer take US interest for granted as the United States shrinks its presence in Afghanistan.

Pakistan has offered a new approach based on economic security that seeks collaboration with the United States on climate change, technology, and a host of other non-security issues. Translating this new approach into a reality is going to take a lot of work, as Pakistan falls short in keeping its own economic house in order.

This is related to the second fundamental change: the economy. Dwindling foreign aid, dips in labor remittances owing to the collapse of Gulf Cooperation Council economies, and decreases in Pakistan’s textile and manufacturing exports have put the country in dire straits. Pakistan has long borrowed to finance existing debt. That is no longer possible, and payments on its short- to medium-term debts are converging. Pakistan needs international assistance, preferably via loans and economic aid, and it must grow its exports to boost its economy. The United States should take note that under these circumstances Pakistan will be more open to policy compromises that could provide relief on these fronts.

Third, Saudi Arabia no longer serves as Pakistan’s strategic depth. After nearly five decades of close ties, Saudi Arabia is decisively distancing itself from Pakistan. Last year it canceled a three-billion-dollar loan after Islamabad complained about lack of Saudi support for Pakistan over Indian suppression in Kashmir.

---
Fifth, the paradigm for India-Pakistan relations is changing. With Saudi Arabia, China, and the United States de-linking conflict between India and Pakistan from their respective relationships with those countries, Pakistan is being forced to reevaluate how it engages its traditional partners on the defining feature of its foreign relations with many countries: competition with India.

The cumulative effect of these five developments has been to unmoor Pakistan’s strategic calculus, leaving the country somewhat adrift and unsure of its standing and future direction. The changes introduce serious questions for policymakers. For example, what will the end of an Islamic foreign-policy paradigm mean for Pakistan-based militancy, which has long enjoyed the patronage of financiers based in Persian Gulf states? What will the distancing of China and Saudi Arabia from India-Pakistan tensions mean when the two neighbors come to the brink of nuclear war?

[Riaz Haq]

China has given immediate duty-free access for 3,707 (45%) tariff lines. A further 30% of tariff lines will have duty-free access by 2030. Tariffs on 412 tariff lines will be reduced by 20% in five years while tariffs will remain at base year (2013) levels for 1,867 (20%) tariff lines.

https://tribune.com.pk/story/2266948/china-pak-ties-fta-ii-a-signif...

CPFTA-II will significantly improve Pakistani exporters’ access to the $2 trillion Chinese import market and thus help address the country’s trade deficit.

The tariff structure applicable to Pakistan under CPFTA-II shows a marked improvement over CPFTA-I. On over 80% of CPFTA-II product lines that China imports, Pakistan is now offered tariffs that are lower than or equivalent to those applied to China’s main trade partners.

Tariffs on nearly 40% of CPFTA-II products that China imports have been reduced compared to CPFTA-I and 45% of the tariff lines are now being offered duty-free access to China. Potential items that Pakistan could export to China include seafood, garments, synthetic blankets and knitwear shirts.

“Focus on these items in exports to China can provide Pakistan with easy gains in the short to medium term,” said Khalil. In the long term, “Pakistan needs to export those items which China imports but Pakistan does not export at present,” he said.

As a starting point, Pakistan can gain market access for export of machinery, mechanical appliances, electrical equipment and parts, mineral fuels, optical, photographic and surgical equipment, plastics, vehicles and essentials.

Industrialisation in the country and production of these goods must be the top priority of the government in a bid to ease the burden of imports and gain access to the Chinese and other global markets.

Market demand

With this opportunity, a question arises whether Pakistan can produce goods according to demand in the Chinese market?

“In order to evaluate Pakistan’s ability to produce good-quality goods as per Chinese market demand, it is important to see it in the context of Pakistan’s trade performance in general,” suggested Khalil.

Pakistan’s global export performance has declined over the past two decades – reasons for this include low competitiveness and exports of low value-added and non-unique products.

Apart from the textile sector, Pakistan has largely lost the world market over the past five years. Low value-added products are the main hindrance in the way of meeting Chinese market demand.

“Industrialisation is the need of the hour for building capacity to produce sufficient goods, which can satisfy domestic and international demand,” said Khalil.

“There is also a substantial information deficit facing Pakistani businesses. Factors behind this include a lack of research on China, identifying Chinese partners and meeting regulatory requirements,” he said.

“In order to translate the improved tariff concessions into sustained exports, the government must address the issues related to capacity building amongst Pakistani businesses and issues pertaining to ease of doing business – both of which affect the ability to deliver orders of the scale required in China within the specified time,” said the former KCCI official

[Riaz Haq]

#Pakistan large-scale #manufacturing grew 11.4% in Dec 2020. #Automobiles (43.91%), #pharmaceuticals (13.82%), Textile (3.54%), food, beverages and tobacco (17.72%), coke and petroleum products (23.91%), chemicals (16.95%), fertilizers (11.98%). #economy https://profit.pakistantoday.com.pk/2021/02/12/large-scale-manufact...

Large-scale manufacturing (LSM) in Pakistan grew 11.4 per cent in December 2020 as compared to December 2019, data released by Pakistan Bureau of Statistics (PBS) on Friday showed.

LSMI Quantum Index Number (QIM) was recorded at 167.21 points in December 2020 against 150.11 points in December 2019.

As per the data, the overall LSM output increased 8.16pc during the first half (July-Dec) of the current fiscal year (FY21), compared to the corresponding period of last fiscal year. Industrial production during July-Dec FY21 was recorded at 143.30 points against 132.49 points last year.

The highest increase of 6.23pc was witnessed in the indices monitored by the Ministry of Industries, followed by 1.63pc increase in indices monitored by the Provincial Board of Statistics and 0.29pc increase in the products monitored by the Oil Companies Advisory Committee (OCAC).

Meanwhile, on a month-on-month basis, the country’s industrial output witnessed an increase of 13.51pc in December 2020 when compared with November 2020.

Major sectors that showed a positive growth during the month under review included textile (3.54pc), food, beverages and tobacco (17.72pc), coke and petroleum products (23.91pc), pharmaceuticals (13.82pc), chemicals (16.95pc), automobiles (43.91pc), non-metallic mineral products (17.52pc), fertilizers (11.98pc), paper & board (8.93pc) and rubber products (8.24pc).

On the other hand, LSM industries that witnessed a negative growth in December included electronics (35.59pc), leather products (40.55pc), engineering products (23.93pc) and wooden products (30.20pc).

[Riaz Haq]

BRR (Business Recorder Research) : With Pakistan competing with other countries in the region, where do you see Pakistan’s IT exports heading? Which areas need to be focused on to achieve the targets set by the IT ministry?

MN (Mahnoor Nadeem CEO REDTone): The MOITT is on a mission to first build an environment of innovation through knowledge parks, educational initiatives, investments in the start-up space etc.; and then incubate this country as a centre of excellence and development. This is a fantastic vision, because you are transforming the mindset of a country, to focus on core competencies and bridge gaps between talent and real-world experience.

If we can get our people to become more aligned with the innovation requirements of the world, we open ourselves up for business, which will immediately boost our IT exports, as our work will speak for itself. The key areas in development for local talent are IoT, Blockchain, Cloud/Edge Computing, Robotic Process Automation etc. We need to first get our people to understand the building blocks behind these innovations (which means giving them the right exposure/mentoring to understand how the tech was built, core languages/components behind it).

In short, the Ministry of IT is being led by brilliant people, they have the right vision and are taking necessary steps to incubate our domestic talent. The private sector needs to up their game, support the ministries initiatives and align efforts so that we are all moving in a cohesive manner.

BRR: Pivoting to retail, how is the retail ecosystem transforming, and how important is the role of digital payment system?

MN: Digital payments are essential to the growth of the retail sector, with more and more retailers augmenting their brick-and-mortar operations and making room for ecommerce initiatives, they need a robust digital payment system that can help them settle funds and receive payments efficiently.

The cash on delivery (COD) method relies on the transportation of physical cash from the buyer to the seller, one that is no longer necessary. To get rid of COD and truly embrace digital payments, we need to work on trust (both at the consumer and the retailer level - making sure that the right goods land on the right customers doorstep every time); real-time settlement to reduce the reconciliation and settlement process between buyer and seller to allow for smooth working; and incentivisation i.e., rewarding people for investing in a transparent business process - through cashbacks, tax incentives, smart-lending, rewards etc.

These measures build habit and reduce friction. If we put our weight behind digital payments, it will ease cashflow issues and reduce time to market, and hence lead to an efficient retail sector.

BRR: What impact do you think the introduction and implementation of Raast will have on the development of the retail ecosystem?

MN: Raast is Pakistan’s first instant payment system that will enable end-to-end digital payments among individuals, businesses, and government entities instantaneously. It aims to act at the centre of the Digital Financial Services ecosystem. As this begins to grow, stakeholders will be able to make instant transactions, with ease, which will allow for real time settlements at very low costs. With our proposition of digitising the kiryana ecosystem through REDRETAIL, an initiative such as Raast will play a pivotal role - it will allow us to have real time settlements between our merchants, distributors, manufacturers, and consumers, thereby optimising the ecosystem. I look forward to the exponential growth in digital payments we will witness through Raast - currently such payments only account for 0.2 percent of Pakistan’s transactions.

Our goal at REDtone has always been to enable innovation and digitisation in the country, and SBP’s initiatives such as these play an enabling and complementary role, thereby propelling Pakistan towards a digital and cashless society.


https://www.brecorder.com/news/40063876

[Riaz Haq]

Pakistani IT Exports Cross $1 Billion Taking Clients From Indian Companies

According to data released by the State Bank of Pakistan, remittances under IT and IT-enabled services surged to $1.119 billion from July 2020 to January 2021 compared to $812 million recorded in the corresponding period of the last financial year, showing a handsome growth of 37 percent year-on-year

https://propakistani.pk/2021/02/23/pakistani-it-exports-cross-1-bil...

The growth in IT exports was driven by the increasing automation, and digitalized services in different countries after new ways of doing business emerged following the outbreak of COVID-19 worldwide.

Different foreign companies, mainly from the USA and EU markets, prefer placing their orders to Pakistani companies rather than Indian and the Philippines.

Barkan Saeed, Chairman Pakistan Software Houses Association (P@SHA) for IT and ITeS told Propakistani,

The growth in IT exports value was driven by the foreign clients moved from Indian companies to Pakistani companies in a post-COVID-19 scenario.

The government could double the exports from $2 billion per annum to $4 billion per annum by the next two years, with a concrete roadmap for the IT sector, which could not only fetch foreign exchange for the country, but it is a key sector that could provide the skilled job to millions of youngsters, Saeed further said.

Local IT companies and the government should work on a strategy to protect the growth of the IT sector on a sustainable basis for the future, he added.

Saeed demanded that IT should be declared a strategic sector with the same focus and treatment. The PM should resolve the pending issues of the sector immediately to unleash the true potential of the IT sector.

[Riaz Haq]

IT exports rise 41pc to $1.3bln in July-Feb FY2021

https://www.thenews.com.pk/print/808423-it-exports-rise-41pc-to-1-3...

KARACHI: Pakistan’s information technology exports increased 41 percent to $1.3 billion in the eight months of this fiscal year, the central bank data showed on Monday, as the coronavirus-related restrictions accelerated the demand for IT services to meet both social and economic needs of people.

IT exports rose 69 percent year-on-year to $179 million in February. The rise was 11 percent when compared with the previous month. Technology exports contributed 34 percent to overall services exports. Exports of services stood at $3.809 billion in July-February FY201, compared with $3.815 billion in the same period of the last fiscal year.

The growing use of digital means for making financial transactions and the measures taken by the State Bank of Pakistan (SBP) contributed to this rise in the exports of IT services. Electronic banking transactions increased 22 percent to Rs21.4 trillion in the second quarter of this fiscal year, according to the SBP’s Quarterly Payment System Review (QPSR) for the second quarter of the fiscal year 2020/21.

------------
Pakistan’s IT exports maintain growth of 40% over 8 months


https://www.techjuice.pk/pakistans-it-exports-maintain-growth-of-40...

Pakistan’s IT sector has remained impressive throughout the current financial year, with consistent growth of above 40 percent in exports between July 2020 and February 2021.

According to data released by the State Bank of Pakistan (SBP), the export of IT and IT-enabled services had surged to $1.298 billion during July and February of the financial year 2020-21 as compared with the values of last financial year that had stood at $918 million. This shows an increase of $380 million or 41.2 percent, year-on-year.

The growth in exports has mainly been driven by the high demand for automation, e-commerce, software development, and other services of foreign clients who now prefer to place orders with Pakistani IT companies instead of other countries including India and the Philippines.

Industry experts have projected $2 billion worth of exports of the IT sector this year while considering the penetration of the local companies in various exportable countries in the different fields of the sector.

However, the local industry is fearful of being taxed heavily by the revenue collection authority, which may destabilize the prevailing trends of growth in the IT industry and its expansion.

The industry also fears being taxed as the government is mulling over the possible withdrawal of the tax exemption in the upcoming budget. It is demanding that the industry should be taxed duly after it achieves a sustainable level of maturity with a solid contribution to the economy.

The growth in the IT exports sector will strengthen the industry and facilitate the maintenance of the current account in surplus and the generation of employment for hundreds of skilled professionals.

[Riaz Haq]

Arif Habib Limited
@ArifHabibLtd

Technology exports up by 41% YoY during 8MFY21

During Feb’21, technology exports was up 69% YoY.
During 8MFY21, technology recorded exports worth USD 1,298mn (+41% YoY)

https://twitter.com/ArifHabibLtd/status/1373720548316827648?s=20

[Riaz Haq]

While jumping 29 percent to $251 million in December, IT exports surged 36 percent to $1.3 billion in the first half of this fiscal year, mostly riding a massive stream of investment pouring into Pakistan’s technology sector, data showed on Saturday.


https://www.thenews.com.pk/print/927335-it-exports-surge-36pc-in-fi...


Technology exports amounted to $667 million in the second quarter. Pakistan’s total IT exports stood at $1.44 billion in FY2020, which increased to $2.1 billion in FY2021.

According to Khurram Schehzad, CEO of Alpha Beta Core, this growth will gather more momentum down the line.

“Increased investment in the startup ecosystem is helping Pakistan develop technology infrastructure, which will in turn increase IT exports growth,” Schehzad said.

However, the recent increase in foreign investments in Pakistan, especially in tech based startups doesn’t reflect in the IT exports.

But Schehzad says it has been helping develop technology infrastructure and increase job opportunities in tech-based companies, which will eventually help increase IT exports further.

“I see IT exports recording a historic high of $2.8 billion to $3 billion in the fiscal year 2022,” an IT sector analyst said.

“But it depends on if the government is willing to incentivise the sector.”

He said the government also needed to establish tech zones to help the sector grow more.

He said around 15,000 IT companies were being established and hiring fresh employees, adding, expansion of the technology sector would subsequently fuel IT exports growth.

Wajid Rizvi, Head of Strategy and Economy at JS Global, expects IT exports to grow to $2.6 billion by the end of FY2022.

“The market-based exchange rate and devaluation of rupee has also enhanced the potential of technology sector exports as the companies/individuals associated with the sector receive their payments mostly in dollars,” Rizvi said.

He added that Pakistan was a net exporter of IT services and the sector had a great potential to grow, evident from a rising trend of software and other IT exports.