ISLAMABAD: Prime Minister Imran Khan this week announced setting up a ‘Pakistan Technology Startup Fund’ to provide Rs1 billion in seed funding to around 50 startups annually.

Pakistan’s tech sector had a breakout year in 2021, with global investors pouring in money and startups raising around $375 million in the outgoing year, double the total investment received in the last six years, according to firms that monitor foreign investments in startups.

According to data published by the State Bank of Pakistan, the number of registered e-commerce merchants increased from 1,707 in 2019-20, to 3,003 in 2020-21, a 76 percent increase. IT export remittances in fiscal year 2020-2021 were $2.1 billion compared to $1 billion in 2018.

“We are announcing tax holiday and 100 percent Forex retention for IT Companies and freelancers registered with Pakistan Software Export Bureau to incentivize investment in the IT sector for economic turnaround,” the PM was quoted by state-run Radio Pakistan as saying at a meeting in which he announced the startup fund.

“Emphasising on his vision to boost IT exports to 50 billion dollars in the next few years, the Prime Minister highlighted the importance of unleashing the IT industry by providing them ease of doing business and the best incentives globally available.”

Khan directed authorities to establish Special Technology Zones on a “fast track basis” in Islamabad and all provincial capitals to create hubs of IT and technology innovation and investment in cities.

“In the first phase, sectors of CDA in Islamabad will be declared as Special Technology Zones so that IT firms and freelancers can avail the benefits offered by Special Technology Zones Authority,” Radio Pakistan reported.

Khan also asked authorities to introduce necessary changes in foreign exchange and income tax policies in order to help IT startups thrive in the country.

“These reforms include launch of Roshan Digital IT Accounts by State Bank of Pakistan to allow freelancers and IT firms to retain 100 percent of their foreign income in foreign exchange with no restrictions on the movement of forex, resolution of double taxation of IT Sector by FBR, and the exemption from Capital Gains Tax of venture funding (VC) into startups,” Radio Pakistan said. “The Prime Minister directed to attract local and international VC funding into IT Startups for creating jobs and bringing forex.”