IT sector key to increasing economic growth

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb has underscored the information technology sector's critical role as a rapidly growing industry that is contributing to Pakistan's economic growth.

"The IT sector has the potential to be a cornerstone of generating foreign exchange through export remittances. A collaborative approach, consistent policies and targeted reforms are essential to unlock its full potential and for the repatriation of foreign earnings," he stressed while chairing a meeting of the Prime Minister's Committee on IT Export Remittances on Friday.

The meeting was convened to explore ways for boosting the flow of IT export remittances, which were crucial for Pakistan's economic growth and digital economy, said a statement issued by the finance ministry.

It highlighted the sector's opportunities and challenges, focusing on improving the ease of capital movement to boost IT export remittances.

Participants noted that while IT exports were steadily increasing, a substantial portion of revenue had not been remitted. They emphasised the need for simplified procedures, consistent tax exemptions for freelancers and addressing the issues related to remote workers' classification and small IT firms.

Such steps will create a more favourable environment for IT businesses and encourage them to bring their earnings to the country.

It was noted that Pakistan was home to 2.32 million freelancers, who were contributing 15% of IT exports, yet only 38,000 had bank accounts.

While 500 new accounts are being opened every week, as per the State Bank of Pakistan's (SBP) data, retaining these account holders and encouraging others to follow suit is of critical importance.

At the huddle, SBP Governor Jameel Ahmad updated the committee on measures that had been taken to address the challenges, including streamlining the account opening procedures, awareness campaigns, improving complaint resolution mechanisms and prioritising the IT sector in banking frameworks.

Meeting participants also explored how the Roshan Digital Account (RDA) could be leveraged to facilitate international remittances for IT companies and freelancers.

They stressed the urgent need for access to the global payment gateways like PayPal and the creation of similar payment solutions at home to empower IT professionals and freelancers and enhance Pakistan's global competitiveness.

To ensure data-driven discussion and effective policymaking, it was decided to form a working group comprising representatives of the Federal Board of Revenue (FBR), State Bank, IT ministry, Pakistan Software Houses Association (P@SHA) and Freelancers Association.

The group will focus on harmonising data, identifying significant issues, simplifying processes, enhancing transparency and ensuring the continuity of progress made by the SBP and other stakeholders.

Finance Minister Aurangzeb reaffirmed the government's commitment to fostering the IT sector as a vital contributor to the economy. He urged all stakeholders to work collectively to overcome challenges, promote IT exports and establish Pakistan as a competitive player in the global IT industry.

Minister of State for IT and Telecom Shaza Fatima Khawaja, Adviser to Finance Minister Khurram Schehzad, FBR chairman, Pakistan Software Export Board chief executive officer, IT and telecom secretary and special secretary, Member IT and telecom and senior officials of the Finance Division were present in the meeting.