Karachi, January 17, 2024 – Pakistan has witnessed a monthly record high in Information Technology (IT) exports in December 2023, reaching $303 million.
Analysts at Topline Securities Limited reported a remarkable 17% Month-on-Month (MoM) increase and a substantial 23% Year-on-Year (YoY) growth. This figure surpasses the last 12-month average of $222 million, signaling a robust performance by the IT industry.
The surge in IT exports is attributed to two key factors identified by analysts. First, the State Bank of Pakistan (SBP) raised the permissible retention limit from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, providing more flexibility to technology companies. Second, the stability of the Pakistani Rupee (PKR) incentivized IT firms to repatriate their foreign income and deposit it in local accounts.
It’s worth noting that the reported IT export figures represent the amount remitted back to Pakistan by technology companies. According to the Minister of IT, an estimated $1-2 billion has been parked outside of Pakistan by these companies. The increase in IT exports for December 2023 reflects a positive trend in bringing foreign earnings back into the country.
In the first half (July – December) of fiscal year 2023-24, IT exports amounted to $1.5 billion, marking a 9% YoY increase compared to the same period in the previous year when exports were recorded at $1.3 billion.
The net IT exports, calculated as Exports minus Imports, also experienced a noteworthy increase, growing by 16% MoM and 13% YoY to reach $263 million in December 2023. These net export figures for IT in December 2023 surpass the last 12-month average of $197 million. In the first half of fiscal year 2023-24, net IT exports recorded a growth of 7% YoY, amounting to $1.3 billion.
The government’s recent initiative, the Pakistan Startup Fund, which commits an annual investment of Rs2 billion into startups as equity-free capital, is expected to contribute positively to the industry. However, analysts caution that a significant transformation will take time.
While there has been a notable increase in gross IT exports during the first half of fiscal year 2023-24, achieving the government’s ambitious target of reaching $5 billion appears challenging. Analysts predict that gross IT exports for the entire fiscal year 2023-24 will likely fall within the range of $3-4 billion, compared to the $2.6 billion recorded the previous year.
The dynamic growth in Pakistan’s IT exports reflects the industry’s resilience and potential, and stakeholders are optimistic about the sector’s future with continued government support and industry-friendly policies. As the country continues its efforts to position itself as a technology hub, the IT sector’s performance will be closely monitored for its role in contributing to the overall economic landscape.
