Amir Saeed

Pakistan’s Information Technology sector is poised for significant growth driven by enhanced policies such as increased retention limits in Exporter Special Foreign Currency Accounts (ESFCAs) and simplified export payment processes, which foster greater foreign exchange inflows and business efficiency.

Talking to WealthPK, Jahanzaib Shafi, Manager of International Marketing at the Pakistan Software Export Board (PSEB), highlighted that Pakistan’s IT and IT-enabled Services (ITeS) industry had been one of the key drivers of the country’s economic growth, especially in the services sector. “To further foster this growth and enhance foreign exchange inflows, the government has implemented measures to make it easier for IT exporters to retain and access their foreign currency earnings.” “A pivotal step in this direction was the enhancement of the ESFCA framework in October 2023, which has since proven to be a game-changer for IT companies and freelancers.

One of the most significant changes to the ESFCA policy was the increase in the retention limit for IT and ITeS exporters,” he pointed out. Shafi further highlighted that under the new regulations, exporters could retain up to 50% of their export proceeds in their ESFCA, or 5,000 US dollars per month, whichever amount is higher. “This increase has removed the minimum balance requirement, which previously posed a challenge for smaller businesses and freelancers.” He pointed out that the ability to retain a larger share of their earnings gives IT companies and freelancers more financial flexibility, enabling them to reinvest in their businesses, pay international vendors, or cover operating costs more effectively.

“In addition to the increased retention limit, the revised ESFCA policy allows IT and ITeS exporters to freely make payments abroad for current account purposes from their accounts, without needing prior approval from the State Bank of Pakistan. This has greatly simplified international transactions, crucial in a fast-moving global digital economy.” Shafi mentioned that IT companies have widely welcomed the policy change as it significantly reduces the bureaucratic hurdles previously associated with overseas payments. Furthermore, the introduction of debit cards linked to ESFCAs has provided exporters with even greater ease of access to their foreign currency funds, he added.

“This feature allows IT companies and freelancers to conduct domestic and international transactions, improving operational efficiency seamlessly. Several banks have already begun issuing debit cards to ESFCA holders. Notable banks offering this service include Allied Bank, Samba Bank, Bank Islami, Bank Alfalah, Faysal Bank, JS Bank, Habib Metropolitan, and Al Baraka,” the PSEB official underscored. Talking to WealthPK, Ghulam Rehman, President of the Freelancers Association, Gilgit-Baltistan, said the Bank of Punjab, Meezan Bank, United Bank, Soneri Bank and Habib Bank have also tailored the service exclusively for freelancers. “These measures are already yielding tangible results.” In FY24, Pakistan’s ICT sector saw an impressive 24% increase in export remittances, reaching $3.223 billion, the highest-ever export figures for the industry.

The growth trend has continued into FY25, with the first four months of the year seeing a remarkable 34.9% increase in ICT export remittances, totalling $1.206 billion compared to $894 million during the same period the previous year. Rehman highlighted that this surge in earnings has helped position Pakistan’s ICT sector as a leading contributor to the country’s services export sector. “The impact of these reforms is not limited to increased export earnings alone as for the first four months of FY25, the ICT industry achieved a trade surplus of $1.063 billion, constituting 88.14% of total ICT export remittances. This represents a 39.3% year-on-year increase from $763 million in the same period of the previous year.” “Not only is this surplus impressive, it also highlights the growing competitiveness of Pakistan’s IT industry on the global stage.

With these enhanced measures in place, Pakistan’s IT and ITeS sector is set to become a cornerstone of the country’s economic development. The government’s commitment to facilitating business operations and a favourable policy environment has created an ideal ecosystem for the IT industry to thrive,” Rehman highlighted. “As the sector continues to evolve, these reforms are expected to contribute to sustainable growth, further solidifying Pakistan’s position as a key player in the global ICT market. The future of Pakistan’s digital economy looks increasingly bright as IT exporters are now equipped with the tools they need to succeed in the global marketplace,” said the president of the GB Freelancers’ Association.

Credit: INP-WealthPk