MoiTT Sets High IT Export Remittance Targets – Realistic or Overambitious?

The Ministry of Information Technology & Telecommunication (MoITT) has set ambitious targets to uplift IT and IT-enabled services (ITeS) export remittances from $4 billion in 2024-25 to $16 billion by 2029-30. This fourfold increase over six years prompts scrutiny regarding the feasibility of such objectives, considering the current growth trajectory and sectoral challenges.

The latest data showcases a positive trend. In October 2024, IT exports increased to $330 million, reflecting a 39% year-on-year (YoY) increase and a 13% month-on-month rise. It marked the 13th consecutive month of YoY growth. Cumulatively, exports for the first four months of FY2024-25 reached $1.21 billion, indicating a 35% YoY growth. In September 2024, IT exports were recorded at $292 million, a 42% YoY increase, contributing to a total of $876 million in the first quarter of FY2024-25, up 33.7% from the same period last year.

Despite these encouraging figures, achieving MoITT’s targets necessitates sustained and unprecedented annual growth rates. The IT sector has benefited from policy changes, such as the State Bank of Pakistan’s relaxation of permissible retention limits, increasing them from 35% to 50%. Moreover, the introduction of the Equity Investment Abroad (EIA) category, allows IT exporters to acquire interests in foreign entities using up to 50% of their proceeds from specialized foreign currency accounts.

Despite recent growth in Pakistan’s IT exports, significant challenges persist that could impede the ambitious targets of MoiTT. According to a credible source, infrastructure deficiencies, such as unreliable internet connectivity, have adversely affected freelancers and IT professionals, leading to missed deadlines and unfulfilled orders. The complex regulatory framework further undermines the confidence of aspiring entrepreneurs and hampers the growth of IT and fintech startups.

The Senate Standing Committee on Information Technology and Telecommunication also termed the IT export remittance target of $14 billion by 2029-30 unrealistic. The committee cited lack of infrastructure, internet issues as well as low fiber optic in the country as the primary reasons. It also reviewed plans to enhance the country’s IT exports. The committee expressed serious reservations over massive taxes on mobile phones in the country and recommended its rationalization.

Moreover, Pakistan’s share in the global freelancers market is declining, attributed to factors like internet shutdown and regulatory hurdles. These issues not only affect productivity but also deter potential international clients from engaging with Pakistani IT services. Besides, the implementation of a national internet firewall has led to disruptions, raising concerns among foreign clients about data privacy and operational stability.

Our Opinion

The global IT landscape is highly competitive, and Pakistan’s infrastructure, talent retention, and ease of doing business require significant improvements to attract and sustain international clients. While the government’s vision is admirable, it must be accompanied by concrete measures addressing these challenges to transform ambitious projections into reality. Moreover, a multifaceted approach, addressing both policy and operational challenges, is essential to achieve these goals.

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