IT sector for swift policy adoption

Policy enables exporters to keep more foreign earnings in their accounts

ISLAMABAD:

IT industry experts have praised the State Bank of Pakistan’s (SBP) recent policy measures aimed at boosting IT and IT-enabled services (ITeS) exports and have called for their immediate implementation. The IT sector has set an ambitious target to raise IT exports to $5 billion annually.

Pakistan Software Houses Association (P@SHA), Chairman, Muhammad Zohaib Khan lauded the collective support of the Special Investment Facilitation Council (SIFC) and the Ministry of Information Technology & Telecommunication (MoITT) in getting the IT industry’s longstanding demands addressed. He emphasised the need for the SBP to ensure commercial banks promptly comply with the new measures.

Khan highlighted the readiness of the IT industry to increase exports from the previous year’s $2.62 billion to $5 billion annually within 12-18 months. He underscored that until commercial banks facilitate IT companies by allowing them to retain 50% of their earnings in Exporters Specialised Foreign Currency Accounts (ESFCAs), issue corporate debit cards with international features, and permit outward repatriation of foreign exchange through digital or online banking channels, challenges related to foreign exchange retention and utilisation will persist.

The SBP’s policy has increased the permissible retention limit for IT exporters from 35% to 50%, enabling them to keep more foreign earnings in their accounts. Furthermore, it has advised commercial banks to facilitate the issuance of debit cards to IT exporters, allowing them to make online payments using their ESFCAs balance.

Experts stress the importance of building trust and confidence with IT companies regarding the swift implementation of these new measures and establishing them as a consistently applied policy. They believe the SBP, as the regulator of commercial banking, has the authority and tools to ensure the rapid enforcement of these policy decisions.

However, there are concerns about the delayed issuance of corporate trade cards.

“The SBP has not yet issued the corporate trade cards which must be given. On top of that, the SBP is halting commercial payments of personal and individual trade cards and it is right as such payments on these cards should not be made, but that said, it must give some alternatives including issuance of the cards, permission of 100% repatriation so that people could make better use of a level playing field. All exporters must be given the level playing field in all sectors of the country. If you give a couple of small prerogatives-cum-facilities, it will be gruelling to increase IT exports to $5 billion. It will take ample time to notch the target and it will go up in dribs and drabs,” said IT and Technology Expert Khurram Shehzad while speaking to the Express Tribune.

Shehzad acknowledged that some businesses have established companies abroad to hold their money, making it challenging to convince them to repatriate funds. He emphasised the urgency of implementing the new policy without further delay, as the sector has already faced substantial delays. The impact of the new policy is expected to boost exports gradually once implemented.

Published in The Express Tribune, November 1^st, 2023.

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