Pakistan’s foreign exchange could increase by up to $2 billion if banking regulations were changed to allow for faster payment options for IT companies that keep their earnings abroad in order to pay clients more easily.
The current government IT strategy is apparently weak, which meant that the industry was performing much below its potential.
Uzair Arshad expressed his thoughts in an exclusive interview. Uzair is a fourth-generation entrepreneur, a computer science graduate, and the founder of Emblem Technologies, one of Pakistan’s leading software game production firms.
He said that present IT policies were not actionable since they did not define the government’s digital agenda and commitment.
“To impose authority, the IT policy should also lay the groundwork for a governance structure and plan to accomplish clearly defined and quantifiable outcomes. The successful implementation of a digital strategy cannot be entrusted to a single ministry. Its ownership must stretch beyond departments, ministries, and government agendas,” he stated.
With long-term investments and government commitment, India has achieved the status of an international IT industry hub. Because achieving IT-led growth necessitates a long-term commitment, such a strategy necessitates public-private collaboration.
Pakistan’s IT policy makes no mention of human resource development. As a result, Pakistan must implement a brain gain policy.
“Brain gain means attracting not only ‘Wapistanis’ (returning Pakistanis from abroad), but also foreign nationals who can lead Pakistan’s IT industry to greater heights,” he said, citing the IIT (Indian Institute of Technology) as an example of how the Indian government brought foreign brains to India who educated, trained, and now rule the sector.
India employs almost 5 million workers in the IT sector, and its IT exports total around $150 billion. This has been accomplished by the long-term policy. Pakistan, on the other hand, employs around 300,000 people, with a reported sector export of $1.9 billion.
Uzair stated that most Pakistani IT businesses had a global presence and other foreign offices, despite problems with banking rules. These organizations prefer to bring only a portion of their worldwide earnings to pay for the maintenance of their local infrastructure and personnel.
Because “it’s not straightforward to move money out of Pakistan to pay for other overseas expenses and team upkeep, such as freelancers, consultants, and international teams, and international infrastructure upkeep,” IT businesses kept their money offshore.
Pakistan’s software exports were roughly $1.9 billion in fiscal 2020-21. According to Uzair, simply changing the banking laws may raise it by $1-2 billion.
Uzair further on the topic, admitting that it was inconvenient to build an electronic wire in Pakistan since the government wants to block dollar flights, which the IT business knows. However, for many businesses, it has created additional impediments to sending payments to their foreign headquarters.
For example, while paying freelancers, a firm may not pay into a personal account using the company account. To complete tasks in the IT business, one must recruit high-quality freelancers. Furthermore, the enterprises were unable to maintain 100% of their brought money (earned through the export of software and IT services) in USD accounts. Payments for their server fees, online software, and other services cannot be done in USD. It is debited from a company’s PKR accounts, which adds about 10% to the inter-bank exchange rate.
There are also needless administrative delays in banks crediting overseas payments. Even if the monies are received, they are not instantly deposited into the bank account. In certain circumstances, it takes them nearly 8 working hours to reconcile payments. Similarly, the banks need a signature on R forms before they can credit it which is a large manual step dependent on signatory availability.
These banking laws are impeding the sector’s expansion and must be rectified on a priority basis, as the IT sector internationally operates online in addition to physical offices, according to Uzair.