Finance Minister Muhammad Aurangzeb has voiced concerns that despite growing export revenues, information technology IT companies are not fully repatriating foreign exchange earnings to Pakistan. This issue was highlighted during a meeting of the Prime Minister’s Committee on IT Export Companies Remittances.
IT Companies to Simplifying Capital Movement
Aurangzeb emphasized the need to simplify capital movement to enhance IT Companies export remittances, underscoring its critical role in Pakistan’s economic growth and the development of its digital economy. He noted that the IT sector could be a cornerstone for generating foreign exchange, but unlocking its full potential requires a unified approach, consistent policies, and targeted reforms to ensure the repatriation of export earnings.
IT Companies Addressing Barriers to Remittance Inflows
The meeting participants discussed several key measures to create a more conducive environment for IT businesses to repatriate their earnings:
- Streamlined processes
- Permanent tax exemptions for freelancers
- Classification of remote workers
- Solutions for small IT firms
Reports revealed that Pakistan has 2.32 million freelancers contributing 15% to IT exports, but only 38,000 freelancers have bank accounts. Officials from the State Bank of Pakistan (SBP) noted that approximately 500 new bank accounts are being opened weekly, encouraging more freelancers to participate.
SBP Governor Jameel Ahmed briefed the committee on measures to address these challenges, including simplifying account-opening procedures, launching awareness campaigns, improving grievance resolution mechanisms, and prioritizing the IT sector within the banking framework. Participants also considered leveraging Roshan Digital Accounts to facilitate international remittances for IT companies and freelancers.
Formation of a Working Group
To develop effective, data-driven policies, the meeting decided to establish a working group comprising representatives from the Federal Board of Revenue (FBR), SBP, Ministry of IT, IT industry stakeholders, and the Freelancers Association. This group will focus on aligning data, identifying key challenges, streamlining processes, enhancing transparency, and ensuring continuity in reforms initiated by the SBP and other stakeholders.
Stakeholders’ Perspectives
The meeting was attended by key figures including the Minister of State for IT and Telecom Shaza Fatima Khawaja, Finance Advisor Khurram Shehzad, FBR Chairman, CEO of Pakistan Software Export Board, IT and Telecom Ministry officials, and other stakeholders.
Freelancers Association Chairman Sajjad Syed reacted to the finance minister’s statement, calling it baseless. He explained that IT exporters have vendors outside the country, necessitating the retention of some earnings abroad.
“The real issue is that making payments from Pakistan to foreign vendors is extremely difficult,” Syed stated. “As a result, IT exporters prefer to park some funds outside the country to pay their vendors.”