IT Industry Demands Consistency in Govt Policies for At least 10–15 Years
According to Muhammad Zohaib Khan, Chairman of the Pakistan Software Houses Association (P@SHA), there are some signs that the government is considering offering incentives to the IT & ITeS sector in order to increase IT exports in FY24 from the anticipated $2.5 to 3.0 billion to $4.5 billion once the final figures are in.
However, Mr. Khan vehemently demanded that the IT industry wants legally-covered consistency in fiscal, financial, taxation, exports, HR, and infrastructure policies for a period of 10 to 15 years. Only then, he argued, will we be able to attract FDI to the nation along with long-term private-sector investments in the IT industry, increase exports quickly and sustainably, increase the pool of qualified IT professionals, and form joint ventures with international players.
As he recalled, there have been numerous IT policies & incentive packages for the IT industry over the last decade; however, with the change of the government, policies & packages become redundant – this phenomenon, in fact, causes more harm than good. Zohaib Khan stressed that the IT industry wants nothing less than the state of Pakistan to provide a guarantee of the consistency, continuity, implementation, and reliability of IT industry policies.
For instance, according to Zohaib Khan, the federal government changed in April 2022, rendering the entire IT Policy & Incentives Package obsolete. This change in government was announced with great hoopla and received praise from IT businesses at the time.
As the top demand of the IT sector, P@SHA Chairman has emphasised that the government should, like many other nations around the world, announce a 10-year tax holiday for the IT and ITeS sector in income tax, dividend tax, capital gains tax, and profit tax; considering the very real potential to achieve an enormous growth rate of 30% in IT exports every year in a row.
In the federal budget for 2023–2024, significant funds should be set aside for the IT sector, according to Zohaib Khan. These funds should primarily be used for infrastructure improvement, human resource and skills development, brand promotion, and capacity building of Pakistan’s tech ecosystem.
The retention of foreign exchange is another issue for the IT sector, according to Muhammad Zohaib Khan, who also serves on the PM’s Advisory Council on Digital Economy. P@SHA has proposed allowing 100% retention of foreign exchange in foreign currency accounts and 100% repatriation because the IT sector is entirely dependent on and runs on USD.
Chairman P@SHA continued, “The special technology zones authority (STZA) has not been able to deliver on its promises, despite being established for many years and given funds in the billions of rupees so far. The IT industry appreciates the concept of special technology zones (STZs), but.” In order to effectively and efficiently assist the exporters directly, P@SHA urges that in the future budget FY24, incentives intended for STZs should immediately flow to IT & ITeS firms.
Zohaib Khan elaborated on the financing requirements for the IT sector, stating that, like many other nations, Pakistan’s government must introduce cash rebate programmes for the sector; preferably, a 5 percent on export income, and it must prioritise export refinancing programmes for the sector through discounted interest rates of at least 10 percent as compared to the industry’s key policy rate of the State Bank, which is currently 21 percent. This will improve the country’s ranking for ease of doing business and open up access to financing for IT exporters. It will also rationalise business costs in comparison to competitors across the world.
Mr. Ali Ihsan, Senior Vice Chairman of P@SHA, argued that the government must act quickly to meet the expectations of the IT industry. By doing this, we can fully realise the potential of IT exports, creating jobs, sustaining economic growth, and establishing Pakistan as a force to be reckoned with in the global digital arena.
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