Hajra Naz
KARACHI: Despite obstacles like firewalls and internet outages, Pakistan’s IT industry has fulfilled an essential breakthrough, as proven by the record-breaking $348 million in IT exports in December 2024. This outperforms the 12-month normal of $299 million and represents a 15% year-over-year (YoY) and 12% month-over-month (Mom) rise. This month has seen YoY development for 15 straight months, proceeding an effective pattern that started in October 2023.
Impressive Growth in FY25
For the first half of the fiscal year 2024-25 (1HFY25), IT exports totalled $1.86 billion, reflecting a 28% YoY increase. According to Nasheed Malik of Topline Securities, this consistent growth is attributed to several key factors. The growing client base of Pakistani IT companies, especially in the GCC region, has played a critical part in the sector’s success.
Furthermore, steady government measures, such as the increment in the allowable maintenance constraint for remote cash accounts from 35% to 50%, have energized IT exporters to bring a bigger portion of their benefits back to Pakistan. Additionally, the introduction of equity investment abroad through these accounts has bolstered exporter confidence.
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Record Proceeds in December 2024
In December 2024, the average daily export proceeds were recorded at $16.6 million, an increase from the $14.8 million seen in November 2024. These figures reflect the quality of Pakistan’s IT division despite challenges like irregular internet disturbances and slow networks, which proceed to pose boundaries for numerous businesses.
Government Measures Fuel Growth
The success of Pakistan’s IT segment has been altogether impacted by the government’s proactive measures. The State Bank of Pakistan (SBP) presented a new category for Equity Investment Abroad (EIA), particularly for export-oriented IT companies. This approach permits IT firms to secure up to 50% value in foreign entities utilizing their remote profit, boosting certainty among exporters. These policies are aligned with the ‘Uraan Pakistan’ national economic plan, which aims to reach $10 billion in IT exports by FY29.
Expansion in Global Markets
Pakistani IT companies have successfully engaged with international clients, evident in their participation in global events like the Oslo Innovation Week 2024 and the Pak-US Tech Investment Conference. Additionally, the Pakistan Software Houses Association (P@SHA) reports that 62% of IT companies are now maintaining specialized foreign currency accounts, taking advantage of the relaxed retention limits and new investment opportunities.
Impact of Internet Disruptions
Despite the positive development, concerns remain around the long-term effects of Pakistan’s internet network issues. Frequent internet slowdowns and the government’s crackdown on unregistered VPNs have made noteworthy challenges for the division. Experts warn that these issues seem to lead to financial misfortunes, with the Pakistan Business Council (PBC) evaluating that the IT division seems to lose up to $150 million yearly due to moderate internet speeds and firewall restrictions.
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The national firewall, aimed at blocking harmful content and anticipating cyberattacks, has raised caution among businesses and IT affiliations. The later crackdown on VPN utilization has been especially troublesome, as VPNs are broadly utilized by businesses and freelancers to bypass these limitations. Even though a due date to register VPNs was set for November 2024, it was later withdrawn, taking off businesses uncertain about the future of their operations.
Predictions for Continued Growth
Despite these challenges, experts stay hopeful about the future of Pakistan’s IT exports. Senior analyst Muhammad Yasir estimates that IT exports might reach between $3.6 billion and $4 billion by the end of FY2024-25. However, Yasir emphasizes that this potential might be higher if network issues were tended to. With proceeded government support, a talented workforce, and growing worldwide organizations, the IT division is well-positioned to support its development trajectory.
Addressing Connectivity Issues for Sustained Growth
The developing significance of the IT sector in Pakistan’s economy cannot be exaggerated. As one of the key businesses driving export development, IT plays a vital part in stabilizing the country’s economy and moving forward the current account balance. To maintain this positive momentum, Pakistan must address its internet connectivity issues. Without resolving these challenges, the country risks losing its competitive edge in the global IT market.
The Road Ahead: $10 Billion Target
Looking ahead, the Pakistani government’s target of $10 billion in IT exports by FY29 under the ‘Uraan Pakistan’ plan requires a compound annual growth rate (CAGR) of 28%. Achieving this driven target will depend on proceeded development in the division, overcoming network challenges, and advancing Pakistan’s presence in worldwide markets.
The IT division has appeared noteworthy resilience hence distant, and with the right back and infrastructure, it is balanced to make indeed more prominent strides in the a long time to come.
Conclusion
An important factor in Pakistan’s economic recovery and extension is the country’s IT industry. The sector’s resiliency and potential are illustrated by the record-breaking exports in December 2024 as well as several government-backed activities.
To keep this rising trend going, it is imperative to address the persistent connectivity issues. By 2029, Pakistan’s IT industry is expected to reach and maybe surpass its $10 billion export goal thanks to sustained innovation, encouraging regulations, and a growing international clientele.
