Pakistan’s IT Industry Appeals for Government Support to Foster Economic Growth

Pakistan's IT Industry Appeals for Government Support to Foster Economic Growth

The Information Technology (IT) industry of Pakistan is calling on the government to implement tax incentives that promise lucrative returns and to allocate funds for talent cultivation. The sector perceives its role as vital in enhancing the nation’s economy, with a substantial focus on expanding exports and developing domestic expertise to establish a vibrant technology landscape. 

Chairman of the Pakistan Software Houses Association (P@SHA), Muhammad Zohaib Khan, has stressed the necessity for income tax, dividend tax, capital gains, and profit exemptions during a discussion with the Prime Minister of Pakistan. Anticipating a potential export growth of 30% for the IT sector in the coming year, Khan asserted this could be achieved if the industry were granted its due incentives. 

Khan acknowledged the government’s recognition of the IT industry’s growth potential and proposed the allocation of more than Rs13 billion in the finance bill specifically for this sector. The bulk of these funds, he suggested, should be directed towards human resource and skill development, infrastructure enhancement, the promotion of ‘Brand Pakistan’, and strengthening the country’s tech ecosystem. 

The government is being urged to earmark a significant budget for IT education and skill development programs nationwide. This would cater to the local market’s burgeoning demands, create employment opportunities, and help alleviate poverty. Khan also argued for the provision of incentives and facilities to the IT sector and freelancers to boost their economic contributions, draw in foreign exchange, and encourage the transfer of knowledge and technology. 

Highlighting the importance of capacity-building, Khan called for boot camps and workshops and the integration of IT education into institutions in line with global standards. 

Noman Said, Convenor of the Federal of Pakistan Chamber of Commerce and Industry (FPCCI) on the ICT Committee, emphasised the need to establish dedicated IT institutions and colleges in major cities equipped with state-of-the-art equipment, proficient faculty, and updated curricula. 

In the IT workforce, nearly 90% are males. Yet, given the nature of certain roles, such as creative jobs, female IT professionals often deliver more productive output. 

The CEO of the Pakistan Freelancers Association (PAFLA), Tufail Ahmed Khan, underscored the rising demand for freelancing due to escalating unemployment and inflation. He advocated for subsidies for aspiring freelancers for internet access, skill development programs, and international certification, promoting the entry of both male and female professionals into the freelancing field. 

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Umair Azam, Founder and CEO of Integration Xperts, one of Pakistan’s leading technology firms, emphasised the IT sector’s potential to boost the national economy through direct job creation, cash inflows, and by enhancing the efficiency and profitability of local organisations, thereby generating more government revenue. He noted that the IT sector’s contribution to the GDP, currently at 1%, has been steadily increasing over the past decade and has the potential to substantially raise both the GDP contribution and exports in the coming years. 

The P@SHA Chairman expressed concerns regarding foreign exchange retention in the IT industry. He proposed permitting 100% forex exchange retention in foreign currency accounts and 100% repatriation, as the industry heavily depends on and operates in US dollars. 

Khan also spoke favourably about the concept of Special Technology Zones (STZs). He suggested that the benefits offered to STZs should directly support IT and ITeS companies. He underscored the need for single-window operations, virtual licenses, and strengthening provincial authorities in this area. 

Regarding financing, Khan recommended implementing cash rebate schemes for the IT industry, including a 5% rebate on export income. He also appealed to the government to prioritise export refinancing schemes with interest rates that are at least 10% lower than the current key policy rate of 21% set by the State Bank. These initiatives would improve IT exporters’ access to financing, rationalise business costs in relation to international competitors, and enhance Pakistan’s ease of doing business score. 

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