The newly planned budget for 2022–2023 was highly criticized by Pakistan Software Houses Association (P@SHA) for IT and ITeS, which represents over 1,000 member businesses. The planned budget not only abandons but decimates the industry’s potential to meet this aim, notwithstanding the Prime Minister of Pakistan’s bold declarations to achieve $15 billion in IT and IT-enabled services exports.
P@SHA Chairman Badar Khushnood claims that:
“The existing regressive taxation system has already had a terrible impact on the expansion of the IT sector. The implementation of an ineffective tax system has prevented us from reaching our $3.5 billion export goal for this year. The previously promised one and only advantage, i.e. “tax exemption,” pledged until 2025, has been unexpectedly reneged and removed, instead of providing the IT industry with more and stronger incentives to stimulate the present organic development.”
“This is a formula for catastrophe for a young but rapidly expanding exports-led sector if nothing else! The IT sector exported more than $2.1 billion in 2021. Since the primary raw material for IT exports is “skilled human talent,” which is already present in the nation, there is no need for imports to increase IT services exports, the sector holds the distinction of being Pakistan’s only export industry with a 75% trade surplus.”
“The IT sector has emerged as Pakistan’s fastest-growing industry, providing a living for 600,000 professionals and independent contractors as well as more than 10,000 businesses. It has proven that Pakistan can resolve its current account deficit while building a strong, independent, and sustainable financial future. The IT sector anticipates overtaking all other conventional industries as the second-largest export sector in 2022. (while the textile industry maintains the 1st position).”
An aggressive and heartless attack on the industry’s survival in the shape of an anti-IT budget is in response to its excellent achievement. It has raised concerns about Pakistan’s digital economy, including IT, ITeS, startups, independent contractors, and the e-commerce sector.
The budget draught intends to ensure the continuity of policy, but instead, it was the cause of uncertainty and disappointment in the IT sector and raised questions about the government’s understanding and political commitment to the one industry that has the potential to resolve Pakistan’s economic crisis in the shortest amount of time with the fewest resources needed.
P@SHA has been collaborating closely with the Pakistan Software Export Board and the Federal Ministry of Information Technology and Telecommunications (MoITT) (PSEB).
Despite the unmatched and laudable support of the Honorable Minister, Mr. Amin-ul-Haq, and his staff at the MoITT, the Finance Ministry’s proposed budget failed to capture the advantages of this model public-private partnership. It’s crucial to emphasize that this budget does not even come close to meeting the demands of the IT sector.
Furthermore, the implementation of previous packages did not yet occur, and abruptly detrimental alterations have been made. The newest victim of Pakistan’s political and economic unrest looks to be the IT sector.
P@SHA, the single organization that represents the industry, fiercely disagrees with the current budget draught. And has doubts about the Cabinets and the Ministry of Finance’s comprehension of the dynamics of the IT sector in a worldwide context.
The knowledge economy functions differently than conventional industries. Drastic policy changes generate concerns both domestically and globally about the government’s awareness of the seriousness of the problem. And how its policies may threaten the expansion of the IT industry. They also breed confusion and a sense of fear over contradictory policies.
Emphasize should be on the IT sector’s frequent work with overseas clientele. Such budgetary adjustments increase investor distrust and deter international businesses from bringing funds and investments to Pakistan.
Other nations in the area, as opposed to Pakistan, have developed mature ecosystems thanks to supporting governmental policies. P@SHA is a staunch supporter of creating a supportive atmosphere for the IT sector. The IT sector in Pakistan has already demonstrated its capacity for expansion to reshape the country. And generate over 100,000 new employment annually.
Finally, Khushnood said:
Before it’s too late, we have very little window of opportunity remaining. And we are hoping that the most senior decision-makers would see the difficulties facing the IT sector. As well as support continuity of policy for a better and more powerful Pakistan.
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