ISLAMABAD: Pakistan has recorded the highest ever monthly IT exports of $348 million, up by 15 percent year-on-year and 12 percent month-on-month in Dec. 2024, while exports were up 28 percent year-on-year in the first half of fiscal year 2025, data from the Topline Securities brokerage house showed on Friday.
The growth figures come as associations and businesses have expressed alarm over slowing Internet speeds since last year, as the federal government moves to implement a nationwide firewall to block malicious content, protect government networks from attacks, and allow the government to identify IP addresses associated with what it calls “anti-state propaganda.” The government has also been cracking down on VPN use for months, with the Pakistan Telecommunications Authority (PTA) announcing that businesses and freelancers would be able to legally use VPNs by registering with the government, but unregistered VPNs would be blocked in Pakistan after Nov. 30, 2024. The deadline was later withdrawn, and a new one has not been announced.
The use of VPNs has sharply risen in Pakistan since February last year when the government banned X soon after allegations of rigging in general elections surfaced. The election commission denies them.
In a report released on Friday, Topline said monthly IT exports in Dec. 2024 were higher than the last 12 month’s average of $299 million. This is the 15th consecutive month of YoY IT export growth, starting from Oct. 2023. This takes IT exports for the first half of fiscal year 2025 to $1.86 billion, up by 28 percent YoY. Export proceeds per day were recorded at $16.6 million for Dec. 24, compared to $14.8 million in Nov. 24.
“YoY jump in IT exports is due to (1) IT export companies growing client base globally, especially in GCC region, (2) relaxation in the permissible retention limit by the State Bank of Pakistan, increasing it from 35 percent to 50 percent in the Exporters’ Specialized Foreign Currency Accounts, (3) allowance of equity investment abroad through these foreign currency accounts and (4) stability in PKR encouraging IT exporters to bring higher portion of profits back to Pakistan,” the Topline report said.
“Pakistani IT companies are active in engaging with global clients. Recently leading IT companies of Pakistan attended Oslo Innovation Week 2024, and Pak-US Tech Investment Conference.”
According to a Pakistan Software Houses Association (P@SHA) survey, 62 percent of IT companies are maintaining specialized foreign currency accounts.
A major development in FY25 was the state bank adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilizing up to 50 percent proceeds from specialized foreign currency accounts.
“This development will further boost confidence of IT exporters to remit proceeds back to Pakistan,” Topline said.
“We believe, IT sector will continue its growth trajectory and momentum with likely growth of 10-15 percent for FY25 to $3.5-3.7bn. Under ‘Uraan Pakistan’ national economic plan, the government has set a target of $10bn IT exports by FY29. This implies a target CAGR of 28 percent till FY29.”
Last August, the Pakistan Business Council (PBC) warned that frequent Internet disruptions and low speeds caused by poor implementation of the national firewall had led many multinational companies to consider relocating their offices out of Pakistan, with some having “already done so.”
The Pakistan Software Houses Association (P@SHA), the country’s top representative body for the IT sector, warned last year Internet slowdowns and the restriction of VPN services could lead to financial losses and closures and increase operational costs for the industry by up to $150 million annually.
