Pakistan’s ICT Exports Contain Services Trade Deficit: SBP Report

Pakistan’s ICT exports grew by 24.1 percent to US$ 3.2 billion in FY24, representing the highest-ever ICT exports, accounting for 8.3 percent of Pakistan’s total exports of goods and services in FY24. Hence, considering the potential and target set of the ICT exports over the medium term, these exports could help in containing the services account deficit, thus contributing to a sustainable current account balance, according to an analysis published by the State Bank of Pakistan said. ICT services are categorized into three main sub-groups: telecommunication services, computer services, and information services. Computer services is the largest segment, accounting for more than 80 percent of total ICT exports in FY24. Within this category, the highest revenue comes from other computer services including freelancers, followed by software consultancy and software exports. The significant growth in Pakistan’s ICT exports, over the last year, is driven by a host of factors, including enhanced penetration of IT companies in the GCC region, the Prime Minister’s IT package, relaxation in the permissible retention limit by the SBP, new framework for freelancers, and stability in the exchange rate. At the same time, it is also important to address the challenges IT firms are facing, including seamless internet connectivity, state-of-the-art infrastructure, access to global payment systems (like PayPal), reducing cybersecurity risks, data protection, and the development of advanced technical skills. Pakistani IT companies are actively engaging GCC clients. There is an increasing focus of Gulf countries on diversifying their economies by scaling up digital infrastructure, particularly in sectors such as finance, healthcare, and education. And, with the shared cultural similarities between Pakistan and GCC nations. Pakistan has taken advantage of this opportunity with several leading companies setting up regional and representative offices in these countries to increase exports of IT services. Further, Pakistani delegations, led by high-level officials from concerned ministries, have been keenly visiting GCC countries in the outgoing year which are making investments to achieve the targets of their mega plans. It is important to address these issues to sustain this trajectory and harness the transformative potential of IT. The government must prioritize the digitalization of the economy in both public and private sectors. This includes tackling issues of uninterrupted IT service availability and affordability, fostering a supportive environment for start-ups and freelancers, ensuring robust technology by introducing ancillary frameworks, and improving the skillset of human resources through relevant training and equipment.