Growth in remittances on back of IT exports: P@SHA chairman

He believes 80% of IT export earnings come through remittance channel

KARACHI: The Pakistan Software Houses Association (P@SHA) has claimed that a robust growth in remittances sent home by overseas Pakistanis over the past few years has come on the back of improved earnings from IT exports as these are routed through the remittance channel.

“Around 80% of the total payment for IT exports has entered the country in the form of remittances; the IT export proceeds recorded by the State Bank of Pakistan represent just 20% of the total export value,” insisted Naseer Akhtar, P@SHA Chairman, while speaking at the ICT Awards 2016 organised by the association on Friday evening. At the ceremony, a total of 46 awards were given in 29 categories.



Akhtar was of the view that a lack of proper reporting of the source of remittances at banks had prevented the detection of IT export earnings coming through the remittance channel. He revealed that IT exports had grown by 30-40% in each of the past four to five years, but in absolute terms, they continued to be in the range of $2-2.5 billion during the same period.

“The size of the industry is growing continuously, however, it is not visible, why?” he asked. “Banks should improve their remittance reporting standards,” he said.

According to the State Bank of Pakistan, the Pakistanis working abroad sent $19.9 billion in remittances in fiscal year 2015-16. They stood at $18.45 billion in FY15, $15.8 billion in FY14, $13.92 billion in FY13 and $13.18 billion in FY12.

According to Akhtar, a majority of IT software engineers in Pakistan, including freelance and individuals, have got their export earnings through remittances.

He, however, acknowledged that the growth in IT-enabled services had slowed down to 10-15% last year because of poor policies.Citing the reasons for the fall in growth, he said, “we have not been able to turn small and medium-sized IT companies into successful entrepreneurs and the number of software graduates from certified universities also stands low”.

India, Vietnam, Middle Eastern and European countries have been constantly supporting their small and medium IT companies to encourage them to enter the next level of entrepreneurs. “This is helping them to increase export proceeds by 4-10 times,” he said.

The need of software graduates for the IT industry was much higher than the graduates produced by universities every year, Akhtar said, adding “we need more universities like IBA and Lums to produce more certified engineers at a reduced educational cost.”

Industry potential

Outlining the earnings potential of the IT industry, the P@SHA chairman disclosed that IT employees were earning between $10,000 and $20,000 per year compared to $1,000 by textile employees.

He expected the IT industry to grow at a rapid pace in the foreseeable future as opportunities were continuously emerging in the arena. “If the government frames prudent policies for the IT sector, it has the potential to take annual exports to $5-10 billion in the next 5-10 years.”



He was of the view that the services sector had the ability to make up for the falling overall exports of the country. Pakistan’s exports dropped below $21 billion in FY16 compared to around $25 billion in FY12.

Speaking on the occasion, P@SHA President Jehan Ara emphasised the need for remaining engaged with the policymakers. The association may appoint a secretary general in Islamabad for the purpose.

She said the government had exempted IT exports from taxes till 2019 and it was a great achievement as far as P@SHA was concerned.

Published in The Express Tribune, October 16^th, 2016.

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