Arsalan Ali

Pakistan’s IT industry has been identified as a potential powerhouse for the economy but it faces significant roadblocks hindering its growth. Experts suggested that by tackling key challenges head-on, the industry can boost the country’s exports and investment, reports WealthPK.

In an interaction with WealthPK, Asim Shahryar Husain, CEO Ignite, talked about the main objective of increasing the earning of dollars through IT exports and increasing the number of freelancers in Pakistan. “The startups in Pakistan face the issue of not being able to open forex accounts (used to hold and trade foreign currencies), which forces the investors to invest abroad rather than in Pakistan. This leads to a reduction in forex inflow, as the required initial investment has trickled down over a couple of years,” he said.

Asim suggested that if the State Bank of Pakistan (SBP) allows freelancers and startups to open forex accounts, they will be able to retain their investments in dollars. This will encourage more inflow to Pakistani startups and freelancers, as they will be able to cash up at the exchange rate that existed at that time. Additionally, it will make repatriation and international payments to vendors much easier.

The Ignite CEO believed that instead of burdening freelancers with hefty taxes, the government should consider providing them with cash rebates. He suggested that if a freelancer or startup brings in more remittances, they should be eligible for rebates based on different slabs. For instance, if an investor brings in $1,000, they should be entitled to a 1% rebate. Similarly, if an investor brings in $2000 USD, they should receive a 2% rebate. ”

This incentive, according to Asim, will attract more dollars to Pakistan and boost its economy. He believed such a scheme will encourage investors to bring more money to the country, thus creating more job opportunities and driving economic growth. “India has high IT exports because they provide incentives to foreign IT firms to set up their development centres. This has led to companies like Microsoft, Oracle, Google, Facebook, Cisco, IBM, and Amazon setting up their development centres there,” said the Ignite CEO.

“Pakistan should do the same thing with the IT parks that are being developed in Islamabad and Karachi. These parks should provide quality infrastructure and security to the multinational companies, motivating them to set up their development centers in Pakistan. This, in turn, will create job opportunities for the local talent and stimulate more IT exports, as the development centres will be paid in dollars by their parent companies,” he added.

Talking to WealthPK, Owais Zaidi, Executive Chairman of The Hive, sees the current crisis as an opportunity for the freelancers and startups to thrive. He said the structural framework of the economy is distorted, and there is a trend-seeking behaviour across all segments. He said economy needs to be restructured, and distortions need to be corrected.

Zaidi emphasized the need to simplify the process of doing business in Pakistan, as it is currently challenging to set up a company and comply with the regulatory requirements. “Withholding tax system is unlawful and creates cash flow problem for companies. Additionally, the government needs to make it easier for the startups and small businesses to function by reducing roadblocks and not creating unnecessary regulations,” he added.

Talking about the opportunities for startups and freelancers in the current economic climate, Dr. Sarah Qureshi, CEO and co-founder of Aero Engine Craft Private Limited, emphasized the need for indigenization and development of locally-made products, especially in the hardware and engineering sectors.

While there are challenges with importing raw materials and tools, Dr. Sarah believed the current economic crunch is a prime opportunity for startups to focus on research and development and real product development. “The startups have traditionally focused on solution development using imported products, but that turnkey solutions are not always reliable or sustainable. ”

Dr. Sarah also highlighted the importance of after-sales service and repair, which can be difficult to obtain when companies rely on imported products. By investing in research and development, the startups can gain a deeper understanding of their products, offer customization, and provide reliable after-sales support, she added.

According to the recent data released by the Pakistan Bureau of Statistics, Pakistan’s revenue from providing information technology (IT) services to various countries during the first seven months of the current fiscal year amount to USD1,523.280 million. This marks a growth of 2.38 percent compared to the corresponding months of the previous fiscal year, during which the country earned US$1,487.865 million.

Credit: Independent News Pakistan-WealthPk