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.

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[Riaz Haq]

Pakistan’s tech exports witness sharp 27% drop in May 2022

https://www.techjuice.pk/pakistans-tech-exports-witness-sharp-27-dr...

Pakistan’s tech exports have taken a plunge for the first time since February 2021, as new data reveals that the country’s exports in the tech sector dropped by 27 percent in May 2022 as compared to April 2022.

As per State Bank of Pakistan (SBP) data, IT exports in May amounted to $183 million while in April they were considerably higher at $249 million. Exports have fallen 8 percent year-on-year.

In May 2021, Pakistan exported $198 million worth of technology-related products and services. The technology sector witnessed exports worth $2.4 billion in 11 months of this fiscal year, contributing 38 percent to overall services’ export and marking a 25 percent year-on-year increase.

While IT export performance has certainly been encouraging, and has helped improve the country’s foreign exchange earnings, the monthly drop in exports in May is still far from an ideal scenario.

The reason being touted for the drop in IT exports is the extended Eid holidays. Since the pandemic resulted in a rise in freelancing, the export performance of country’s technology products and services stayed higher.

However, despite the Prime Minister of Pakistan’s ambitious declarations to target $15 billion in IT and IT-enabled services exports, the released budget brings down the industry’s potential to meet this aim. This was noted in a recent P@SHA press release.

According to Chairman P@SHA Badar Khushnood, the current taxation regime in place is “regressive” and has already proven disastrous for the IT industry’s growth.

“This year’s targeted exports of USD 3.5 billion are also not being achieved due to the introduction of an inefficient tax regime,” he stated. “Rather than facilitating the IT industry with more and better incentives to catalyze the existing organic growth, the previously announced one and the only benefit, i.e., ‘tax exemption’ committed till 2025 has been abruptly reneged and revoked. If nothing else, this is a recipe for disaster for a nascent yet fastest growing exports-led sector!”

[Riaz Haq]

Arif Habib Limited
@ArifHabibLtd
During Jun’22, technology exports were up 12% YoY to $ 235mn. During FY22, technology recorded exports worth $ 2.6bn (38% of the overall services’ exports) marking a 24% YoY jump.

https://twitter.com/ArifHabibLtd/status/1552323262889267203?s=20&am...

[Riaz Haq]

IT sector records sluggish growth at 5%
Analysts say growth hindered due to government indifference, inconsistent policies

https://tribune.com.pk/story/2392042/it-sector-records-sluggish-gro...

Despite being entirely free from the cumbersome process of acquiring Letters of Credit (LCs) and not being dependent on imports for its raw material, the export volume of the information technology (IT) sector only grew a meagre 5% in November year-on-year (YoY). Analysts are laying the blame for this low number on the government’s indifference towards unconventional export sectors.

Speaking to the Express Tribune on the condition of anonymity, an official from the Ministry of Information Technology and Telecommunication said, “Globally, IT companies’ exports grow in hundreds and thousands of times, a potential that Pakistan has in abundance but cannot tap into due to inconsistent policies. The cooperation of the finance ministry, Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) is crucial in this regard.”

“Any suggestion given to them by our ministry, however, is ignored,” said the official, lamenting that, “People in the government do not understand the export potential held by the IT sector.”

According to a Topline Research report by IT Analyst Nasheed Malik, “Pakistan’s IT exports for November 2022 increased by 5% YoY to $233 million due to a 29% jump YoY in telecom services. The exports also increased by 5% month-on-month (MoM) due to a 15% MoM increase in telecom services and 3% MoM in computer services.”

“The latest export number is also above the six-month rolling average of $221 million. Exports, however, are down by 10% from a peak of $260 million recorded in March 2022 but managed to cross the $230 million mark set in June 2022,” said Malik.

However, on a broader level, a slowdown is being witnessed with YoY growth averaging 6% in the last six months (June to November 2022), compared to the average growth of 17% YoY in December to May 2022.

“The IT Ministry has set an export target of $3 billion for FY2023,” said Malik, adding that, “With a current fiscal year monthly average rate of $217 million and a six-month rolling average of $221 million, there are concerns about whether Pakistan will be able to achieve the set target.”

In the five months of FY2023, IT exports are up by 3% YoY to $1.09 billion – the slight growth was witnessed due to a 5% YoY growth in computer services to $864 million.

According to a report conducted by Arif Habib Limited, the SBP’s reserves currently stand at around $6.7 billion, the lowest since January 18, 2019. Including the banks’ reserves of $5.9 billion, the total foreign reserves in the country stand at $12.6 billion – amounting to an import cover of less than one month – 0.99 months to be exact.

ICT Expert Parvez Iftikhar said, “So far, no government has been able to comprehend that the IT sector can help the country earn dollars without incurring any huge expenditures on raw material imports. This just indicates the lack of understanding in the government’s finance management team that decides on taxes and concessions.”

“If we equip our youth, however, with in-demand skill sets, facilitate them with in/out dollar payments, and high-quality internet connectivity, they’re quite capable of doubling the country’s exports within two years,” claimed Iftikhar, adding that the solution “isn’t even out-of-the-box!”

Si Global CEO Noman Ahmed Said told the Express Tribune that, “It is no secret that Pakistan is currently facing one of its worst economic crises yet and whilst the tech sector has consistently outperformed, it is no longer feasible for it to continue doing so at a snail’s pace.”

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“Growth has slowed, but the trend still remains positive,” said Khurram Schehzad, CEO of ABCore.

[Riaz Haq]

Pakistan’s IT exports boost by 37% YoY to $306mn in March 2024 - Profit by Pakistan Today



https://profit.pakistantoday.com.pk/2024/04/22/pakistans-it-exports...

Pakistan’s information technology exports increased by 37% year-on-year (YoY) and by 19% month-on-month (MoM) to $306 million in March 2024.

These are the highest-ever exports in a single month with the previous highest being $303 million in December 2023.

These monthly IT exports in March are also higher than the last 12-month average of $238 million.

According to Topline Pakistan Research, this yearly jump in IT exports is due to a relaxation in the permissible retention limit by the State Bank of Pakistan (SBP), increasing it from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, and a stable local currency which encouraged IT companies to repatriate their foreign income and deposit it in local accounts.

During the first nine months (July-March) of the ongoing fiscal year, IT exports clocked in at $2.28 billion, up by 17% YoY compared to $1.94 billion recorded in 9MFY23.

Net IT exports (exports-imports) also recorded an increase of 37% YoY and 20% MoM to $275 million in March 2024.

These net IT exports in March are also higher than the last 12-month average of $208 million.

In 9MFY24 net IT exports recorded a growth of 16% YoY to $1.99 billion.

In a recent interview, Finance Minister Muhammad Aurangzeb stated that IT exports are likely to reach $3.5 billion this year.


“Although there has been a growth in gross IT exports during 9MFY24, the government’s target appears challenging. We anticipate that gross IT exports for FY24 will likely fall around $3.0 billion compared to $2.6 billion recorded last year,” read the brokerage note.

[Riaz Haq]

Major tech show in Dubai offers Pakistan opportunity to increase IT exports manifolds — envoy


https://www.arabnews.com/node/2575249/pakistan

The annual GITEX Global exhibition is considered one of the world’s largest tech shows that connects industry leaders with major tech and innovation startups
Pakistan's ambassador encourages business leaders, IT professionals to visit the Pakistan pavilion, where 24 exhibitors are showcasing innovative technologies

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Pakistan showcases IT sector's potential at Tech Week Singapore 2024 - Technology - Dunya News


https://dunyanews.tv/en/Technology/843215-pakistan-showcases-it-sec...

(Web Desk) - Pakistan's vibrant technology sector took center stage at Tech Week Singapore 2024, as leading companies from the country presented their cutting-edge software and IT solutions.

High Commissioner Rabia Shafiq inaugurated the Pakistani Pavilion, commending the participants for their commitment to driving innovation and fostering international collaboration.

"Pakistan's IT exports have surpassed $3.2 billion, and events like Tech Week Singapore provide an excellent platform for our companies to showcase their expertise and capabilities to the world," said High Commissioner Shafiq.

"Our presence here demonstrates Pakistan's growing influence in the global technology landscape."

She said, "Pakistani IT companies have proven they are ready to compete globally, and we are excited to see them making an impact at Tech Week Singapore."

Pakistan's participation in Tech Week Singapore 2024 is a joint effort by the Pakistan Software Export Board (PSEB), Pakistan IT Industry Association (P@SHA), and the Trade Development Authority of Pakistan (TDAP).

These organizations collaborate to promote Pakistan's IT industry, catalyzing growth and boosting global competitiveness.

Tech Week Singapore brings together business leaders and visionaries across all technology verticals to learn, network, and shape their organizations' futures.

Tech Week is running from 9-10 Oct 2024. The participation of Pakistani companies in this prestigious event highlights their capability to develop advanced solutions and contribute to the global technology landscape.

[Riaz Haq]

IT exports surge to $1.2bn in July-Oct - Business - DAWN.COM


https://www.dawn.com/news/1873376

KARACHI: Despite internet disruptions and firewall issues, Pakistan’s IT exports rose 35 per cent to $1.21bn during July-October 2024-25.

Nasheed Malik of Topline Securities said exports have risen due to IT export companies’ growing client base globally, especially in the Gulf Cooperation Council (GCC) region, relaxation in the permissible retention limit increasing it from 35pc to 50pc in the Exporters’ Specialised Foreign Curr­ency Accounts, and exch­ange rate stability encouraged IT exporters to bring a higher portion of profits back to Pakistan.

IT exports surged 39pc year-on-year and 13pc month-on-month to $330m in October.

These monthly IT exports in October 2024 are higher than last 12-month average of $287mn. This is the 13th consecutive month of YoY IT export growth, starting from October 2023, he said.

He said the MoM increase in IT exports is due to a higher number of working days in October (23) compared to September (20). Export proceeds per day were recorded at $14.3mn for October 2024 versus $14.6mn in September 2024.

Pakistani IT companies are actively engaged with global clients. He added that leading IT companies recently attended Oslo Innovation Week 2024 and the Pak-US Tech Invest­ment Conference.

According to a Pakistan Software Houses Asso­ciation (P@SHA) survey, 62pc of IT companies maintain specialised foreign currency accounts.

Nasheed said a major development in FY25 was SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilising up to 50pc proceeds from specialised foreign currency accounts.