IT export target must be increased to $5 billion: Infotech CEO

Claims industry has the potential and resources to grow, but lacks a viable plan.

KARACHI:

“We need to set a realistic information technology (IT) export target of $5 billion by 2015, which will be around 25 per cent of total exports,” said Infotech CEO Naseer Akhtar, explaining that services was the only sector that Pakistan could expand so significantly.

Infotech, one of the leading software houses in Pakistan, is growing up to 30 per cent annually and works on large commercial markets.

“The country must increase exports to survive, however, we cannot increase exports of goods as significantly as we can for services. For example, cotton exports can be enhanced by around eight per cent but exports of services can grow substantially by up to 40 per cent,” explained Akhtar in an interview to The Express Tribune.

However, he informed that there was no viable plan in place to achieve this growth, even though the industry had the capability to do so. The whole industry needs to relate to national objectives to increase the country’s revenue and gross domestic product. “Everyone realises that we have the potential and raw materials required – all we lack is a plan.”

Akhtar urged greater cooperation with the government and policy-makers, saying, “The finance minister should be worried. He must sit with relevant officials and pressurise them to contribute to revenue expansion.”

He emphasised the importance of investment in the IT sector, saying, “The industry is growing, but policies and goals are not set properly and the investment required is not present.”

He gave the example of his own company, explaining that a significant amount of investment would be needed to expand his business, whether it was in the form of capital, land or labour.

“Investment should be the focus of the government. We have sufficient graduates coming out of universities but we must invest in training to make them productive. The government is not spending on IT, which is depriving the industry of the opportunity to grow.”

The government’s spending on IT is negligible. In 2007, the budget for e-government services was Rs500 million, which was cut down to Rs250 million a mere six months later. Moreover, actual spending at the end of the year stood at Rs65 million.

“Even in less developed African countries where we are operating, average spending is around $100 million. The authorities are unaware of the huge potential of increasing tax revenues by spending and helping the sector grow.”

Akhtar explained that Infotech was carrying out projects in dozens of countries, where it was engaged with governments to widen the tax base. “We are carrying out tax automation in Sri Lanka, Bangladesh, Zambia and Ghana.” Tax bases in these countries had expanded and their governments appreciated the value of going from a manual to an automated tax processing system, which cut processing costs drastically.

“The World Bank is funding such projects. Pakistan, too, had $150 million allocated for the last 10 years by the World Bank to improve the tax system. The funds were not utilised and the government was able to use only a fraction of the allocated amount.”

“All that is needed is a few million dollars spending on tax system automation. The number of registered taxpayers is not increasing from the current 1.75 million, it must be a minimum of five million.”

The amount of spending required to revamp the technology side of the tax system would also lead to hiring of thousands of people from the IT industry as they would be accumulating functional knowledge and processes which could be replicated in other countries, he said.

“Currently, we are involved in small-scale projects in other countries and we are not as big enough to carry out larger, worldwide projects. Government projects will give us the experience we need,” asserted Akhtar.

Published in The Express Tribune, April 20^th,  2011.