Pakistan’s foreign exchange income would increase by up to $2 billion in Pakistan IT sector, if banking regulations were amended to enable swift payment options for IT companies that keep their income abroad so paying clients was easier.

IT sector to earn Pakistan $2bn if bank regulations amended

Current government policy for the pakistan IT sector was toothless, which meant the sector was performing much below its potential. These were the thoughts shared by Uzair Arshad in an exclusive interview with The News International. Uzair is a fourth-generation entrepreneur, a computer sciences graduate, and founder of one of the top software gaming producing studios in Pakistan, Emblem Technologies. He said the current IT policies did not constitute actionable documents, as they did not define government’s digital agenda and commitment. “For the IT policy to have teeth, it should also set the stage for a governance structure and roadmap to achieve clearly stated and measurable results. The successful execution of a digital plan cannot be left to one ministry. Its ownership must be extended across departments, ministries, and government priorities,” he asserted. India has achieved the status of international IT industry hub with long-term investments and commitment from the government. Since the achievement of IT-led development requires a long-term commitment, such a plan requires public-private support. IT policy of Pakistan does not talk about human resource development. Thus, there is need to adopt the policy of brain gain in Pakistan. “Brain gain means attracting not just ‘Wapistanis’ (returning Pakistani from abroad) but also foreign nationals who can lead Pakistan’s IT industry to greater heights,” he said quoting the IIT (Indian Institute of Technology) example as the Indian government brought the foreign brains to India who educate, train the Indians in IT, and now rule the sector. India has employed almost 5 million people in IT sector and their exports from the sector stand at around $150 billion. They have achieved this through long-term policy. On the other hand, Pakistan has employed around 300,000 persons, so the declared sector export is $1.9 billion.

Pointing out flaws in banking regulations, Uzair said that most of the Pakistani tech companies were with a global footprint and held other global offices. These companies choose to only bring a fraction of their global revenue to just pay for the upkeep of their local infrastructure and team. The reason IT firms kept their money abroad was that “it’s not easy to send money out of Pakistan to pay for other international expenditures and team upkeep, like freelancers, consultants, and international teams, and international infrastructure upkeep.” During FY 2020-21, Pakistan’s software exports were approximately $1.9 billion. According to Uzair it could be increased to $1-2 billion more by amending the banking regulations alone. Elaborating the issue, Uzair admitted that it was not convenient in Pakistan to set up electronic wire as the government wants to stop dollar flight which the IT industry also understands. But, for many companies, it has added barriers to conveniently dispatching funds to their international offices. For example, a company could not pay into a personal account via the company account, which was a major hurdle when paying freelancers. In IT industry, one needs to hire good quality freelancers to do the projects. Further, the companies could not keep 100 percent of brought revenue (earning from export of software and IT services) in USD accounts. Payments cannot be made in USD to their server costs and online software and other services. It gets deducted from a company’s PKR accounts which costs around 10 percent extra at inter-bank exchange rate. Also, there are unnecessary procedural delays in crediting of foreign remittances by the banks. The funds do not immediately get credited to the bank account even if the companies have received it. It takes them almost in some cases 8 working hours to reconcile payments. Similarly, the banks need a signature on R forms before they can credit it which is a big manual step dependent on signatory availability. These banking regulations are hampering the sector’s progress which need to be addressed on priority basis as globally the pakistan IT sector works on online mode besides the physical offices

Source: This news is originally published by thenews

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