Amir Saeed

The State Bank of Pakistan has increased the foreign exchange retention limit for exporters of IT and IT-enabled services from 35% to 50%, bolstering the country's foreign exchange earnings and supporting the growth of its dynamic IT sector.

Talking to WealthPK, Jahanzaib Shafi, Manager International Marketing at Pakistan Software Export Board (PSEB), said that the increase in the foreign exchange retention limit for IT and ITeS exporters marks a significant step towards enhancing the country’s export capabilities. The SBP has raised the permissible retention limit in Exporter Special Foreign Currency Accounts (ESFCAs) from 35% to 50% of export proceeds. “This policy change allows IT companies and freelancers to retain up to $5,000 per month or 50% of their export proceeds, whichever is higher, without any minimum balance requirement.

This move is expected to encourage more exporters to bring their earnings back into the country, thereby boosting foreign exchange reserves,” he said. Shafi pointed out that the implications of this policy are profound. “By simplifying access to funds and allowing IT exporters to make payments abroad without prior approval from the SBP, the government has created a more conducive environment for business growth.” “The introduction of debit cards linked to these accounts by various banks further facilitates transactions for IT companies and freelancers, making it easier for them to operate both domestically and internationally.

Notably, banks such as Allied Bank, Samba Bank, and Bank Alfalah are already issuing these debit cards,” he pointed out. Shafi highlighted that the results of this initiative are evident. “Pakistan’s ICT exports reached an all-time high of $3.223 billion in FY24, reflecting a remarkable 24% growth compared to the previous year,” he noted. “The first four months of FY25 have continued this upward trend, with a staggering 34.9% increase in ICT export remittances compared to the same period last year. This surge underscores the effectiveness of government policies aimed at fostering sustainable growth within the ICT sector,” noted the PSEB official.

Talking to WealthPK, Awais Ahmad, Director at Tech Solutions Pro, provider of modern graphic design services, said that Pakistan boasts approximately 2.32 million freelancers contributing significantly to IT exports; yet only a small fraction holds bank accounts. “Encouraging more freelancers to open accounts and retain their earnings domestically is crucial for sustaining this growth trajectory.” “The recent policy changes by the SBP represent a strategic move that aligns with global trends in digital finance and export facilitation.

By raising the foreign exchange retention limit and easing account opening processes for freelancers and IT companies, the country is not only addressing immediate financial needs but also positioning itself as a competitive player in the global IT market,” he noted. Ahmad added that the increase in retention limits is particularly timely given the growing demand for IT services worldwide. “As companies increasingly rely on digital solutions, the country’s tech-savvy workforce is well-positioned to meet this demand.

The ability for exporters to retain a larger portion of their earnings will likely incentivise them to reinvest in their businesses, enhancing innovation and service delivery.” “Moreover, as evidenced by recent data, the response from the market has been overwhelmingly positive. The substantial increase in ICT export remittances indicates that exporters are taking advantage of these new regulations. The government's proactive approach in facilitating easier access to foreign currency accounts reflects an understanding of the unique challenges faced by the IT sector,” he highlights.

“Additionally, banks are now encouraged to streamline account opening procedures for freelancers and IT firms, which is expected to further enhance participation in formal banking systems. This move not only ensures that more forex earnings flow into the country but also strengthens the overall financial ecosystem by bringing more individuals into formal banking channels,” Ahmad noted.

Credit: INP-WealthPk