IT firms not fully remitting export earnings: finance minister

ISLAMABAD: Finance Minister Muhammad Aurangzeb noted on Friday that IT companies were not remitting the actual amount despite a steady increase in export earnings.

Chairing a meeting of the Prime Minister’s Committee on IT Export Remittances, the minister called for improving the ease of capital movement to boost IT export remittances.

The meeting noted that boosting the flow of IT remittances was crucial for Pakistan’s economic growth and digital economy.

The minister said that the IT sector could be a cornerstone of foreign exchange generation, and there was a need for a collaborative approach, consistent policies, and targeted reforms to unleash its full potential and repatriation of export earnings.

Aurangzeb calls for measures to remove hurdles to swift remittances

The discussions emphasised the need for simplified procedures, consistent tax exemptions for freelancers, and addressing issues related to remote workers classification and small IT firms to create a more favourable environment for IT businesses to remit their earnings back into the country.

It was noted that Pakistan was home to 2.32 million freelancers, contributing around 15 per cent to IT exports, whereas only 38,000 freelancers maintained bank accounts.

The officials of the State Bank of Pakistan (SBP) informed the meeting that around 500 new bank accounts were being opened every week, and it was likely that the trend would encourage others to follow the course.

SBP Governor Jameel Ahmed updated the committee on measures to address these challenges, including streamlining account opening procedures, awareness campaigns, improving complaint resolution mechanisms and prioritising the IT sector in banking frameworks.

Participants also explored leveraging the Roshan Digital Account to facilitate international remittances for IT companies and freelancers.

For data-driven effective policymaking, it was decided to form a working group comprising representatives from the FBR, SBP, the IT Ministry, and the representatives of the IT industry, including P@SHA and the Freelancers Association.

The group will focus on harmonising data, identifying significant issues, simplifying processes, enhancing transparency, and ensuring continuity of progress made by SBP and other stakeholders.

The meeting was attended by Minister of State for IT & Telecom Shaza Fatima Khawaja, Advisor to the Finance Minister Khurram Shehzad, FBR Chairman, Pakistan Software Export Board CEO, Secretary and Special Secretary IT & Telecom and other officials.

Reacting to the finance minister’s remarks about holding back export proceeds abroad, P@SHA Chairman Sajjad Syed told Dawn the accusation was unwarranted because the IT exporters, too, have their vendors outside the country.

“The real issue is that making payments abroad from Pakistan is very difficult. Therefore, IT exporters prefer to park some amount outside the country to pay their vendors,” he added.

Published in Dawn, December 14th, 2024