Pakistan's Tech Exports Exceed $1.5 Billion in First 9 Months of Fiscal Year 2020-21

Pakistan's technology exports are continuing their growth trajectory, soaring 44% in the first 9 months (July-March) of the current fiscal year 2020-21 to reach $1.512 billion. March 2021 saw record exports of $3.2 billion with goods worth $2.612 billion and services worth $564 million exported during the month.  

Pakistan Exports July20-Mar21. Source: State Bank of Pakistan

Tech exports accelerated 55% in the month of March 2021 to reach monthly record $213 million ,according to data released by the State Bank of Pakistan.
Pakistan's Monthly IT Exports. Source: Pakistonomy

Information technology development depends mostly on available talent. Pakistan has seen significant increase in technology manpower since the massive expansion of higher education initiated by Dr. Ata-ur-Rehman and backed by huge increase in funding provided by President Pervez Musharraf's government. 

Higher education in Pakistan has come a long way since its independence in 1947 when there was only one university, the University of Punjab. By 1997, the number of universities had risen to 35, of which 3 were federally administered and 22 were under the provincial governments, with a combined enrollment of 71,819 students. A big spending boost by President Pervez Musharraf helped establish 51 new universities and degree awarding institutions during 2002-2008. This helped triple university enrollment from 135,000 in 2003 to about 400,000 in 2008, according to Dr. Ata ur Rehman who led the charge for expanding higher education during Musharraf years. There are 161 universities with 1.5 million students enrolled in Pakistan as of 2014. Pakistan now boasts 220 universities with 40,000 faculty members and 1.5 million students, according to Dr. Javaid Laghari, former chairman of Higher Education Commission of Pakistan. 

Pakistan is now producing over 25,000 information technology graduates annually, according to the Punjab IT minister Mian Aslam Iqbal. He says Pakistan has more than 2,000 IT companies and call centers, and 300,000 English speaking IT professionals. Pakistan Software Export Board (PSEB) says there are 2,826 IT companies have registered with the Securities and Exchange Commission of Pakistan (SECP) during this financial year alone. Dr. Umar Saif, ex chairman of the Punjab IT Board,  has told the media that the Indian IT exports stood at $100 billion, which is 30 times Pakistan's which he believes are actually closer to $3.5 billion, near double the figure reported by the State Bank of Pakistan. “This is because the Indian IT industry employs over 4.5 million people as compared to Pakistan which has only 125,000 persons in this sector.”  

Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets, reports  Payoneer, a global payments platform company based in Silicon Valley, in its latest report. Payoneer attributes it to government programs such as Punjab government's e Rozgaar program that has been offering free online courses in digital freelancing. The sudden rush to learn skills online boosted the demand for instructors. The Pakistan government filled this demand by hiring alumni of programs like e Rozgaar who were successfully participating in the gig economy.

Punjab government's e-rozgaar program logo

After a brief dip in January 2020, the demand for freelancers took off in February and increased by double digits each month starting in March until June when it surged 47% at the time the data was compiled by Payoneer for its report.“ Likewise, this response is reflected in the revenue figures where freelancing continued to grow year-on-year but temporarily slowing from 21 per cent growth in March to 16 per cent growth in May,” the report noted. e-Rozgaar’s latest group of graduates earned the highest ever income for a new class of the program--earning over Rs. 25 million in three months during the Covid-19 lockdown. PITB Chairman Azfar Manzoor told Profit magazine that e-Rozgaar was playing a pivotal role in curbing youth unemployment. 

Online Freelance Revenue Surge in Pakistan. Source: Payoneer

“One factor that goes a long way to explain this is that in April, local government authorities took the initiative to rapidly shut down educational institutes as a way to contain the spread of the virus,” the report said, adding that this led to the development of a new online education system and as part of this initiative, government training programs, such as e-Rozgaar, expanded its services throughout the country, offering people a new way to enhance their professional capabilities. “The mission was to help expedite freelancing skills for thousands and enable them to earn a living in the most in-demand fields and ultimately lead to a higher employment rate,” the report highlighted.

A global survey conducted by Payoneer, shows that Pakistani women freelancers are earning $22 an hour, 10% more than the $20 an hour earned by men. While Pakistani male freelancers earnings are at par with global average, Pakistani female earnings are higher than the global average for freelancers. Digital gig economy is not only helping women earn more than men but it is also reducing barriers to women's labor force participation in the country. The survey also concludes that having a university degree does not help you earn more in the growing gig economy. The survey was conducted in 2015.

Freelancers Hourly Rate by Gender. Source: Payoneer

An average Pakistani freelancer working 34 hours a week at $20 an hour earns $34,000 a year, or Rs. 5.7 million a year, a small fortune for a young Pakistani. This is one of the upsides of the online global labor market for skilled young men and women in developing nations like Pakistan. Sometimes freelancing experience leads to tech startups in Pakistan.

Another interesting survey finding is that freelancers with a university degree earn about 10% less on average than those with just the high-school diploma. This indicates that the freelancers skills matter more than the level of formal education.

Average Hourly Rate by Education. Source: Payoneer

Payoneer surveyed 23,000 freelancers worldwide, including emerging markets such as Pakistan, the Philippines and the Ukraine. Survey respondents comprise a random sample of Payoneer’s cross-border payment platform users, providing unique insights into how these globally-enabled freelancers operate, what makes them successful and what rates they command.

Freelancers Average Work Week. Source: Payoneer 

Pakistani freelancers worked about 34 hours a week, a little less than the 36 hours global average. Indian freelancers log 37.4 hours a week and Bangladeshis 35.9 hours weekly. Freelancers from Kenya average the highest amount of hours per week (42.6) with Egypt coming in second (38.5). Professionals working in Morocco and Tunisia work the fewest hours per week, potentially as a high percentage of them are also working at companies as well

Pakistan's digital gig economy growth is the fastest in Asia and fourth fastest in the world, according to digital payments platform Payoneer.

Gig Economy Growth in Q2/2019. Source: Payoneer
United States led gig economy growth of 78% followed by the United Kingdom 59%, Brazil 48%, Pakistan 47% and Ukraine 36%. Asia growth was led by Pakistan followed by Philippines (35%) , India  (29%) and Bangladesh (27%).

The rapid gig economy expansion of 47% in Pakistan  was fueled by several factors including the country's very young population 70% of which is under 30 years of age coupled with improvements in science and technical education and expansion of high-speed broadband access.  Pakistani freelancers under the age of 35 generated 77% of the revenue in second quarter of 2019.

Growth in Freelance Work. Source: Payoneer

Mohsin Muzaffar, head of business development at Payoneer in Pakistan, has said as follows: "Government investment in enhancing digital skills has helped create a skilled freelancer workforce while blanket 4G coverage across Pakistan has given freelancers unprecedented access to
international jobs".

Global Freelance Revenue By Age. Source: Payoneer. 

In Q2/2019, Asia cemented its status as a freelancer hub.  Pakistan, Bangladesh and India, Philippines made it to the  top 10 list, collectively recording 238% increase from Q2/2018.

Online Labor Index. Source: Oxford Internet Institute

Pakistan technology exports are on a rapid growth trajectory, thanks to the investment made in education during Musharraf years. Pakistan is now producing over 20,000 information technology graduates annually, according to the Punjab IT minister Mian Aslam Iqbal. He says Pakistan has more than 2,000 IT companies and call centers, and 300,000 English speaking IT professionals. 

Silicon Valley based global payments platform Payoneer has reported that Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets. A global survey results on freelancing show that Pakistani women freelancers are earning $22 an hour, 10% more than the $20 an hour earned by men. While Pakistani male freelancers earnings are at par with global average, Pakistani female earnings are higher than the global average for freelancers.   The survey also concludes that having a university degree does not help you earn more in growing gig economy. The survey was conducted in 2015. As of 2017, Pakistan freelancers ranked fourth in the world and accounted for 8.5% of the global online workforce, according to Online Labor Index compiled by Oxford Internet Institute. India led with 24% share followed by Bangladesh 16%, US 12%, Pakistan 8.5% and Philippines 6.5%.

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Riaz Haq said…
Similar to the textile sector, Covid-19 proved to be a blessing in disguise for Pakistan’s technology exports as well given that IT exports soared 58% during March 2021 against the corresponding period of last year.

Information technology (IT) exports touched $213 million last month, stated a report from Arif Habib Limited.

Moreover, technology products worth $1.512 billion were exported during the first nine months of fiscal year 2020-21, contributing 35% to the overall services exports and reporting a 44% year-on-year jump, revealed the data.

“The government should focus on technology sector as it has massive potential for exports,” said Arif Habib Limited Head of Research Tahir Abbas in comments to The Express Tribune.

Insight Securities analyst Muhammad Ahmed attributed the increase in exports to Covid induced surge in freelancing activities.

Read: Turkey keen to expand ties in IT sector

According to him, fair value of rupee against the US dollar was a huge factor driving the surge in exports alongside divergence of inflows through legal channels following suspensions of flights over the globe.

The efforts of the government to document the IT sector by offering tax credit of around 80% of export revenue helped raise technology exports, he said.

Systems Limited, one of the largest IT services and products exporters listed on Pakistan Stock Exchange (PSX), recently posted all-time high yearly revenue of Rs10 billion and reported a profit of Rs2.1 billion.

“The firm surpassed our estimates for revenue by 2% and for profit by 8% which is mainly attributable to better receivables management,” said Ahmed.

Systems Limited sustained growth momentum by posting 22% revenue growth in dollar terms in calendar year 2020, he said.

The newly added European region contributes 8% to company’s revenue that jumped by 74% in a year.

Read more: Expanding narrow IT export base

The construction of planned Special Technology Zones (STZs) are expected to provide a conducive environment to IT companies as they will help enhancing quality competition, he said.

The pandemic has unleashed Pakistani companies’ ability to perform off-site jobs seamlessly.

Although 58% growth is huge growth for a Pakistani enterprise, global technology companies manifest growth amounting to 100%, 200% or 300% therefore, there is a lot of room for improvement.

In the last five years, technology companies in Pakistan have witnessed growth of 30-50%, experts say.

They highlighted that the government could invest in infrastructure as well as human development.

Industry sources say that out of the bulk of the IT graduates produced by Pakistani universities, only 40% are trained to serve the export industry.
Riaz Haq said…
#Pakistan #economy heading in right direction, says #IMF's Teresa Sanchez. "The government took bold steps to protect the country from bankruptcy and helped the lockdown-bruised economy recover from the slump in first phase of Covid-19 critical situation"

International Monetary Fund’s Resident Chief Teresa Daban Sanchez Sunday believed that despite the testing times, Pakistan’s economy is heading towards the right direction as the government’s extensive measures have helped it move progressively.

“The government took bold steps to protect the country from bankruptcy and helped the lockdown-bruised economy recover from the slump in first phase of Covid-19 critical situation,” she said while speaking to a private news channel.

She said that Pakistan was performing well under the IMF program during the pre-COVID-19 situation. She said that Pakistan’s GDP growth rate would turn into shrinking and negative mode for the current fiscal because of COVID-19 situation.

Pakistan would have to utilise an additional funds from its budget because of corona virus, adding, IMF was quite happy the way Pakistan was implementing different policies to achieve fiscal consolidation and would continue to provide its support to the country to face the socio-economic challenges posed by Covid-19. She also emphasised for recalibration of reforms as well as increase in revenue collection, ambitious tax policy reforms and broad base fiscal structural reforms are the need of hour.

She suggested that it will be better if the opposition sits with the government, current policies of the country need to be adjusted with reality and if there is any need in the third wave, then the IMF program will be adjusted accordingly.

She also stressed on reforms that have been recommended and are necessary for the help of the poor and vulnerable.
Riaz Haq said…
#Pakistan's #export of #engineering goods increases 16.95% in 9 months. Exports of engineered products for March 2021 were recorded at $25 million. Main engineered exports included #automotive parts, #electronics & electric fans. #economy #diversification

Export of engineering goods from Pakistan witnessed an increase of 16.95 percent during the first three quarters of fiscal year 2020-21 as compared to the corresponding period of last year.

According to data issued by Pakistan Bureau of Statistics (PBS), the export of engineering goods during July-March 2020-21 stood at $164.010 million against the exports of $140.243 million during first three quarters of fiscal year 2019-20.

Meanwhile, on year-on-year basis, the engineering goods export increased by 5.96 percent during the month of March 2021 as compared to the same month of last year. The exports during March 2021 were recorded at $24.880 million against the imports of $23.480 million in March 2020.

On month-on-month basis, the export of engineering goods from the country increased by 40.22 percent in March 2021 when compared to the exports of $17.743 million in February 2021, the data revealed.

During first nine months of the current year exports of electric fans, other electrical machinery and machinery specialized for particular industry also recorded significant surge and increased by 26.83, 21.62 and 32.44 percent respectively against the corresponding period of previous year.

The export of electric fans during July-March 2020-21 increased both in quantity as well as volume as 1.285 million fans worth $ 21.19 million were exported in nine months while in the corresponding period of last year the quantity and volume of exported electric fans was recorded 982,000 and $16.707 million respectively.

During first 3 quarters of current fiscal year other electronic machinery worth $ 32.84 million was exported while the volume in the previous year was recorded $ 27 million. The export of machinery specialized for particular industry reached at $ 47.795 million in three quarters of FY2020-21 with an increase of 32.44 percent against $36.088 million exports of the corresponding period.

The export of transport equipment during July-March 2020-21 stood at $9.136, auto parts and accessories $ 14.555 million and of other machinery at $ 38.495 million which represented a growth of 6.57, 9.92 and 2.86 percent respectively.
Riaz Haq said…
#Pakistan’s #exports to #US surge of 14.81% to $3.56 billion in July2020-Mar2021 as #US #economy returns to rapid post-#COVID19 growth. March 2021 monthly #exports soared 41.40%, from $342 million against the exports of $484 million in Mar 20. #pandemic

Overall Pakistan’s exports to other countries witnessed increase of 2.29 percent in three quarters, from $18.280 billion to $18.699 billion. On the other hand, the imports from USA into the country during the period under review were recorded as $1774.043 million against $1684.482 million last year, showing growth of 5.31 percent in seven months of this year.

Meanwhile, year-to-year basis, imports from USA during March 2021 also increased by 31.20 percent from $213.792 million last year to $280.511 million.

On month-on-month basis, the import from USA rose by 6.66 percent during March 2021 when compared to the import of $262.986 million in February 2021, SBP data said. The overall imports into the country increased by 9.43 percent, from $34.136 billion to $37.356 billion.
Riaz Haq said…
#Pakistan begins marketing #ICT (#technology) professionals in #Japan . SAPM Zulfi Bukhari: “Since Japan is an aging population and will be needing around 500,000 of workforce in future, it is our priority to fetch maximum quota for Pakistan out of this”

“This will not be a brain drain for Pakistan as the ICT workforce will have different type of job opportunities in Japan including online, freelance and in-person,” he insisted.

Pakistan has begun a process to market its professionals from Information and Communications Technology (ICT) sector in Japan, aimed at fetching a maximum quota in the jobs recently announced by Tokyo for the overseas workers.

Overseas Employment Corporation (OEC), an attached department of Ministry of Overseas Pakistanis and Human Resource Development (OHRD), has recently signed a Memorandum of Cooperation (MoC) with Inter-SES (a private organization) for the purpose, a senior officer told APP.

Under the partnership, the Inter-SES would not only market the highly qualified workforce in Japan, but also share the jobs’ demand, emanating from Japanese companies, with the OEC, he said, adding it would be posted on an online portal, to inform the youth about the new and lucrative employment opportunities.

“This will not be a brain drain for Pakistan as the ICT workforce will have different type of job opportunities in Japan including online, freelance and in-person,” he insisted.

Special Assistant to the Prime Minister on OPHRD also confirmed the development on his twitter account while announcing the beginning of recruitment of Pakistani workers from Information Technology (IT) sector in Japan in near future.

“OPHRD and Inter-SES are collaborating to offer job opportunities in Japan for qualified youth of Pakistan,” he tweeted the other day.

A few days earlier, while addressing the signing ceremony of the MoU between OEC and Inter-SES, he announced that recruitment of 120 skilled workers, who had been imparted Japanese language by the ministry, was underway.

The SAPM said the government would soon appoint a Community Welfare Attachee in Japan to boost footprint of Pakistani workforce in Japan.

“Since Japan is an aging population and will be needing around 500,000 of workforce in future, it is our priority to fetch maximum quota for Pakistan out of this,” Zulfikar Bukhari maintained.

He said the ministry was exploring new markets to create maximum job opportunities for Pakistani workforce in other than gulf countries. “We want to digress as a country and ministry and do not want to be heavily populated in one region.”

The SAPM vowed all-out efforts for bringing the Pakistani diaspora in Japan at par with the gulf countries as it had immense potential to meet the growing employment needs of Pakistan.

It may be mentioned here that recently, Pakistan has signed a Memorandum of Understanding with Japan to engage Pakistani manpower in multiple sectors.

Riaz Haq said…
#Pakistan's quarterly #exports to #China jump 70% from $526 million in Q1/20 to $888 million Q1/21. Over 1,000 #Pakistani products now enjoy zero-duty access to #Chinese market under #FTA

Pakistan recorded nearly 70% increase in exports to China in the first quarter of 2021, an official said on Wednesday.

"Impressive figures of Pakistan's exports to China in 1st quarter of year 2021. $888 million as compared to 2020' Q1 $526 million. An increase of 69%," Moin ul Haque, Pakistan's ambassador to China, said on Twitter.

Haque praised his team for, encouraging for more: "Let us keep this momentum to achieve a historic record in 2021."

Last year, phase two of the much-touted China-Pakistan Free Trade Agreement came into effect, which now allows Pakistani manufacturers and traders to export around 313 new products to the Chinese market with zero duties.

Pakistan is already enjoying zero duties on exports of 724 products to China under the first free trade pact signed between the two countries in 2006. After implementation of the second pact, Pakistan has been now allowed to export more than 1,000 products to China with zero duties. The new facility is particularly benefiting the agriculture, leather, confectionary items, and biscuits product sectors as well.

In 2019, Pakistan also signed an agreement with China to use Chinese currency for bilateral trade to get rid of the dollar burden in $15 billion bilateral trade.

According to official data, Pakistan and China's bilateral trade volume grew to some $15.6 billion in the 2019 fiscal year, up from $2.2 billion in 2005.

The two longtime allies are also partners in the multi-million-dollar China-Pakistan Economic Corridor (CPEC), part of China's Belt and Road Initiative, an ambitious project to connect Asia with Africa and Europe via land and maritime networks to boost trade and stimulate economic growth.

The $64 billion mega-project signed in 2014 aims to connect China's strategically important northwestern Xinjiang province to the Gwadar port in southern Pakistan through a network of roads, railways, and pipelines to transport cargo, oil, and gas.

The economic corridor will not only provide China with cheaper access to Africa and Middle East but will also earn Pakistan billions of dollars for providing transit facilities to the world's second-largest economy.

- Exports to other countries

Despite rise in exports to China, Pakistan has witnessed fall in exports to its western neighbor Afghanistan and other regional countries apparently due to restrictions related to the COVID-19 pandemic during past year.

The country's exports to Afghanistan fell 5.57% to $746.3 million over the last nine month of fiscal year 2021, compared to $790.3 million during the same period of last year, according to leading daily Dawn.

A few years ago, Afghanistan was the second-major export destination for Pakistan after the US.

Meanwhile, Pakistan's exports to India also plunged 90.5% to $2.2 million this year from $23.1 a year earlier, according to the report.

Islamabad's exports in 2020 dropped by over 90% to $28 million from $311 million in 2019, following suspended trade and diplomatic ties with India after New Delhi’s move to scrap the special status of Indian-administered Kashmir.

However, Pakistan's exports to Japan and some central Asian countries witnessed an increase.

Abdul Razak Dawood, adviser to Pakistani premier on commerce and investment, said in a statement that Islamabad's exports to Japan grew by 47% to $86.4 million in the third quarter of fiscal year 2021.

Riaz Haq said…
#Pakistan to Spend ‘Bare Minimum’ $6 Billion to Boost Growth. Finance Chief Shaukat Tarin: “We need 2 million jobs every year. If we do not go into growth mode, we will have a major crisis on the streets.” #economy #jobs #infrastructure #CPEC #ImranKhan

Pakistan plans to boost spending on large infrastructure projects by as much as 40% to create jobs and foster productivity in an economy crippled by the coronavirus pandemic, Finance Minister Shaukat Tarin said.

The federal government will earmark as much as 900 billion rupees ($6 billion) for development expenditure in the year beginning July, Tarin, who took office last month, said in an interview in Islamabad. The economy needs to expand by 5% next year, he said.

“That’s the bare minimum we need for a country this size,” said Tarin, who is due to present a new budget next month for the world’s fifth most-populous nation. “There are almost 110 million youth.”

Tarin, a former banker, was appointed last month as the fourth finance minister since Prime Minister Imran Khan’s government took power in 2018. He also served in the role between 2008 and 2010, helping the nation avoid default by securing a bailout from the International Monetary Fund. He comes into office as Pakistan faces a third wave of coronavirus cases, prompting authorities to order a week-long shutdown that may weigh on economic activity and hurt incomes.

Tarin’s plan will reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimates to be a little above 7% of gross domestic product in the current fiscal year through June, against 8.1% in the previous year. Tarin said he expects the deficit in the next fiscal to be 1 or 1.5 percentage points lower.

While balancing the budget will be key for Pakistan’s current $6 billion loan program with the IMF, the new finance minister is negotiating with the organization for more wriggle room to support economic growth.

The government’s GDP target for next year is a percentage point higher than the IMF’s 4% projection, and Tarin is seeking to boost growth to 6% in the year after. The Washington-based lender sees the economy expanding 1.5% in the current fiscal period after a rare contraction last year.

We need 2 million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”

The central bank, which has cut interest rates to a three-year low to support the economy, has been on pause mode for a while and has left some of the heavy lifting to the government.

“First we have to get more revenues,” Tarin said, adding that he’s targeting about 6 trillion rupees next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target. “Unless we get more revenues, forget about any incentives to boost the economy.”

Other comments from Tarin’s interview:

On talks with the IMF: “All we are saying is that we are just basically going to give them alternate ways of achieving the same objective” including revenue generation and reducing energy debt, adding that the aim is for this to be the last IMF bailout in Pakistan’s history
Plans to tap undrawn allocated funds from Asian Development Bank and World Bank that total $20 billion
Aims to increase tech exports to $8 billion in two years, from an estimated $2 billion this fiscal year, a sector he said that he aims to support
Nation plans to soon launch global sukuk bond
Riaz Haq said…
The State Bank of Pakistan has said that the FY21 growth is expected to rise to 3.94 percent, as post-Covid recovery underway since last summer has strengthened.

In a statement on Monday, the central bank said that the nine-month current account is also in surplus for the first time in 17 years and the foreign exchange reserves are at a four-year high. “This rebound was fueled by a well-calibrated policy response,” said SBP.

Given high public debt, fiscal support was targeted to the most vulnerable, notably through the globally-acclaimed Ehsaas program, said SBP. "At the same time public debt and deficit were kept under check which has supported market sentiment, investment outlook, and economic recovery," it added.

SBP said that it provided a targeted economic stimulus of Rs2 trillion to support the recovery through interest rate cut, principal deferment & loan restructuring, Rozgar payroll finance scheme to prevent layoffs, and concessional finance for investment in industry and health facilities.

The SBP on Saturday night said the provisional estimate for FY21 growth of 3.94 percent released by the National Accounts Committee (NAC) on Friday reflects the strong economic recovery underway since the beginning of this fiscal year, which has been highlighted in recent monetary policy statements and quarterly reports of the SBP.

SBP said that it had raised its own growth forecast in March on the basis of buoyant economic activity reflected in different high frequency data.

“This was done in an appropriately conservative manner while noting upside risks to growth. Data received since then, and discussed in the NAC, suggest these upside risks have materialized,” said SBP.

According to SBP, in some sections of the media, needless apprehensions are being cast about the deliberations that took place in the NAC on Friday and SBP‘s views.

Finance Minister Shaukat Tarin in a presser on Sunday also said that figure of 3.94 percent should not be made controversial because it was worked in a very transparent way by the Planning Division and Finance Division has nothing to do with it.

Riaz Haq said…
During Apr’21, technology exports was up 66% YoY to USD 196mn. During 10MFY21, technology recorded exports worth USD 1,708mn contributing 35% to the overall services’ export and marking a 46% YoY jump.
Riaz Haq said…
#Pakistan Aims to Double IT Industry in Two Years With #Tech Zones.Half a dozen global & 50 domestic firms have expressed interest in setting up in proposed zones. As much as $1.5 billion of private investment will pour into these projects in next 2 years.

New tech zones may double IT industry to $6 billion in 2 years
Pakistan has huge youth population, world’s No. 3 gig economy

Pakistan is looking to double its IT industry in two years by setting up dedicated tech zones across the country, after missing out on tech booms that helped nations like India and Philippines become back-end operators for the world.

The world’s fifth most populous nation expects to open a dozen such zones by next year, said Amer Hashmi, who heads the government body responsible for developing science and technology zones. It’s offering a 10-year waiver on corporate tax and imports of any equipment or building material needed for the areas, which will give Pakistan’s IT industry a “catapult push” that could double its size to as much as $6 billion in two years, he added.

Pakistan is banking on the new tech zones to create employment for its masses of young people -- nearly two-thirds of its population is below 30. It’s already home to the third-largest gig economy globally after India and Bangladesh, according to Online Labour Index by Oxford Internet Institute. A flood of overseas capital into startups from fintech to e-commerce that began during the coronavirus pandemic is also creating demand for dedicated zones to serve these industries.

The initiative first emerged after Prime Minister Imran Khan sought answers at a meeting last year as to why Pakistan was missing out on the tech boom. Tapping on his own experience as an entrepreneur, Hashmi told the prime minister that the South Asian nation lacked a tech eco-system or an enabling environment.

Hashmi, who left his job with International Business Machines Corp. in Canada and moved back to Pakistan to open a technology company, had to grapple with people asking for bribes and faced delays with setting up his own fiber network and data centers. The new areas will not have such issues and will be a plug-and-play model, he said.

“How do you get a Google or Microsoft or Amazon? You attract them and for that you have to give special incentives, which well I think we would have probably been the last in the region to give,” Hashmi, now chairman of Special Technology Zones Authority, said in an interview. “Dubai Internet City gave them. They got all the big companies.”

Cash-strapped Pakistan has tried several times to start similar projects in the past. In 2006, it planned to spend $1 billion to build dozens of software parks, though that effort failed. This time, the government’s efforts will involve attracting global investment to ensure the project takes off.
Riaz Haq said…
#Pakistan reports 10-year high #exports in fiscal year 2021 despite #covid19 #pandemic. #Tech exports reached record $2 billion. #Textile exports increased 18.85% while #pharma exports increased 27%. Exports of #copper and copper derivatives increased 44%.


Pakistan's exports increase to $31.3 bln in FY21: Razak Dawood$31.3-bln-in-FY21-Razak-Dawood

Adviser to Prime Minister on Commerce and Investment, Abdul Razak Dawood said Thursday that the country’s exports increased to 31.3 billion during the last fiscal year (2020-21), reflecting government’s successful trade policy.

As Compared to the previous financial year (FY2020), exports increased by 18 percent during 2020-21, despite the negative impact of Covid-19, the adviser said this while addressing a press conference here.

He said that during the outgoing financial year, country’s merchandize exports stood at $25.3 billion, while services exports reached to $ 6 billion. He said that during the last month of June 2020-21, domestic exports exceeded $2 billion.

Similarly, Information Technology (IT) exports remained above $2 billion in last Fiscal Year, he added.

He said that the government would sign a Preferential Trade Agreement (PTA) with Uzbekistan on July 7.

He said the government was working on ‘Tariff Rationalization’ and would rationalize 4,000 tariff lines in the next financial year 2022.
Riaz Haq said…
#Pakistan's #tech ecosystem is finally taking off. In 2021, Pakistani #startups are on track to raise more money than the previous 5 years combined. This capital is coming from investors from #Asia, #MiddleEast & top #SiliconValley VCs. via @techcrunch

Pakistan, the world’s fifth most populous country, has been slow to adapt to the internet economy. Unlike other emerging economies such as China, India and Indonesia, which have embraced digitization and technology, Pakistan has trailed the region in the adoption of technology and startup formation.

Despite this, investors have dreamed for years of the huge opportunities in unlocking Pakistan’s potential as a digital economy. As a country of 220 million people, almost two-thirds of whom are under the age of 30, Pakistan draws natural comparisons to Indonesia — which has rapidly emerged as one of the most vibrant technology ecosystems outside the U.S. and China.

After years of lagging behind, over the course of the past 18 months, Pakistan’s technology ecosystem has come to life in unprecedented fashion. In 2021, Pakistani startups are on track to raise more money than the previous five years combined. Even more excitingly, a large portion of this capital is coming from international investors from across Asia, the Middle East and even famed investors from Silicon Valley.

The rapid emergence of Pakistan’s technology ecosystem on the international stage has been no accident — it’s the result of a confluence of changing facts on the ground and shifting dynamics in the startup and investing world as a result of the pandemic.

The sudden emergence of Pakistan’s tech ecosystem on the international stage has been driven by three major factors: an improving security situation, quickly growing mobile connectivity, and critical legal changes and deregulation.

As a frontline state and coalition partner in the United States’ invasion of Afghanistan, Pakistan saw fatalities from terrorist violence soar from 295 in 2001 to a peak of over 11,000 in 2009. This climate of instability and violence scared away international business and investors from Pakistan for much of the first two decades of the 21st century.

Riaz Haq said…
Pakistan's DigiKhata raises $2 million seed to help small businesses digitize bookkeeping and start online stores

Faisalabad-based fintech DigiKhata has raised $2 million in a seed round, it announced in a statement today. The round was led by Chinese VC MSA Capital, and joined by Shorooq Partners, SOSV, +92 Ventures, and some angel investors.

Founded in 2020 by Adnan Aslam, DigiKhata enables micro and small businesses to manage their bookkeeping using its web and mobile app. The app replaces offline registers and diaries and helps merchants digitize their bookkeeping by recording financial transactions digitally. It also sends automated reminders to their customers for (due) payments, helping merchants recover debts.

The first user of the app was Adnan’s father who runs a wholesale business in Faisalabad. It claims to have grown the number of registered businesses to over 1 million since then. DigiKhata declined to share the details about their active userbase but told us that their retention numbers are excellent. Once a user has a large number of transactions recorded on the platform, it becomes difficult for them to switch to alternatives, said the startup, adding that in 2020 alone, its userbase has recorded over $1 billion worth of transactions on its platform.

“The MSME sector contributes significantly to the Pakistani economy in terms of GDP, exports and employment. If empowered with the right tools and resources, their value addition to the economy can grow manifolds. With this round of funding, we are looking to scale our team and continue building world-class utility solutions to help these MSMEs generate real economic value and grow,” noted DigiKhata’s founder and CEO in a statement.

Prior to starting DigiKhata, Adnan led finance and accounting functions at different companies in Pakistan, United Arab Emirates, and Africa. He’s a chartered accountant by profession and bootstrapped the business before raising this round, with his savings.

The startup has recently also launched its second product, DigiDokaan, a mobile app that helps MSMEs build and launch their online stores. Since going live three months ago, DigiDokaan has helped users set up 50,000 stores, claimed the startup.

On all fronts, DigiKhata faces competition from multiple players. In the digital ledger space, the local alternatives include CreditBook, Bazaar’s Easy Khata, and Uhdaar, and for building stores, there are options like Dukan and Chikoo. Adnan termed competition good for business, “It keeps you on your toes. We’re focused on serving our userbase by building the best-in-class products.”

Riaz Haq said…
Silent revolution in education
By Atta-ur-RahmanDecember 29, 2021

As a result of numerous projects undertaken by the technology-driven Knowledge Economy Task Force set up by Prime Minister Imran Khan in early 2019 under his chairmanship, the landscape of higher education, science and technology are presently undergoing a major positive change.

There has been a huge 600 percent enhancement in the development budget of the Ministry of Science and Technology over the last three years and projects of over Rs100 billion have either been approved or are in the final phase of approval. I happen to be the vice-chairman of this task force and the members include the federal ministers of finance, planning, education, science & technology, and IT/Telecom.

The fact that the prime minister himself oversees the working of this critically important task force and personally intervenes if matters are blocked by the bureaucracy gives it the political clout needed to forge ahead quickly in our plans to change the strategic directions of Pakistan from a weak natural resource based economy to a powerful knowledge economy. It is only by doing so that we can unleash the creative talent of our real wealth, our youth, through investments in education, science, technology and innovation/entrepreneurship.

It was under the Musharraf regime that the nation witnessed the first major thrust forward in science and technology, when I succeeded in convincing Gen Musharraf that the future of this great nation lay in investments in higher education, science & technology, thereby paving the way for developing a strong knowledge economy. The result was a 6000 percent increase in the development budget for science when I was the federal minister of Science, IT/Telecom. Later, when I became the founding chairman of the Higher Education Commission, a similar budgetary enhancement was witnessed in the budget of the higher education sector.

The programmes launched during the first decade were largely focused on strengthening the scientific manpower of the country, strengthening social sciences and linking universities with industry. There was a complete transformation of the IT sector with thousands of the brightest young men and women being trained at PhD level in leading universities abroad, and over a hundred computer science departments being strengthened with faculty and facilities. The first IT policy and implementation strategy was approved under my leadership in August 2000 which laid the foundations of the development of this important sector.

There was razor-sharp focus on the quality of education in universities rather than numbers during that period with the top priority being given to high quality faculty development. About 11,000 students were sent abroad to leading universities in the US and Europe for PhD level training. To ensure their return, salaries of professors were increased under a new contractual salary structure so that they became four times the salaries of federal ministers. However, to ensure top quality, there were six international evaluations by foreign experts introduced to judge the quality and productivity of the research output of the persons appointed. Each student abroad was offered the opportunity to win research grants of up to $100,000 for which they could apply a year before their return.

The state of university libraries was pathetic before the formation of the HEC. A digital library was therefore created that provided free access to 65,000 textbooks and 25,000 international journals. The Pakistan Educational Research Network was established, connecting all universities with high speed internet access. All students returning after PhD degrees from abroad were guaranteed jobs in universities. These and a host of other measures resulted in an astonishing 97.5 percent return rate of scholars sent abroad.

Riaz Haq said…
Silent revolution in education
By Atta-ur-RahmanDecember 29, 2021

The state of university libraries was pathetic before the formation of the HEC. A digital library was therefore created that provided free access to 65,000 textbooks and 25,000 international journals. The Pakistan Educational Research Network was established, connecting all universities with high speed internet access. All students returning after PhD degrees from abroad were guaranteed jobs in universities. These and a host of other measures resulted in an astonishing 97.5 percent return rate of scholars sent abroad.

To boost the IT sector, I persuaded the CEO of Intel to join hands with Pakistan, with the result that some 220,000 school teachers were trained with funding from Intel in 70 districts of the country. To boost mobile telecommunications the ‘Calling Party Pays regime was introduced. Previously subscribers had to pay for receiving calls. The result was an explosive growth in the mobile phones sector from 200,000 phones in the year 2000, now to about 180 million phones. The internet was also rapidly spread across Pakistan and our first Satellite PakSat 1 placed in space, thereby securing the only slot available in space for this country.

The amazing progress made in a short period was applauded by the UN and other experts and Pakistan was considered a model for developing countries to follow. In an article, ‘Another BRIC in the Wall’, the world’s leading ranking agency Thomson Reuters applauded the quality of research publications that were being published in international journals as compared to the four BRIC countries – Brazil, Russia, India and China – and concluded that the highest percentage of good quality highly cited papers was from Pakistan as compared to the BRIC countries. Some pseudo experts have tried to downplay these developments by publicising that some 258 papers have been retracted over the last 20 years. However about 20,000 papers are published annually from Pakistan in international journals and retraction of a small fraction of 0.1-0.3 percent of these is normal and comparable to the retraction rate from other developing countries such as India.

A number of excellent foreign engineering universities are now being established in Pakistan through our efforts. The Pakistan Austrian University of Applied Science and Engineering started functioning last year in Haripur in collaboration with eight foreign universities from Austria and China. Two other similar foreign engineering universities are now being established in Sialkot and Islamabad in close collaboration with local industry to help develop a strong knowledge economy. The focus of these new universities is on the new and emerging technologies such as AI, robotics, industrial biotechnology, new materials, energy storage systems, minerals development, bullet train manufacture and advanced agriculture.

The exciting initiatives now introduced by the HEC after three years of stagnation include the magnification of research programmes to support bright young faculty, a huge Rs13 billion knowledge economy task force project to send our brightest students for doctoral level training abroad, introduction of blended education in universities so that excellent online courses are integrated into the teaching programmes and encouraging university-industry linkages so that focus can shift from basic research to industrial and agricultural research.

Thanks to Prime Minister Imran Khan, a silent revolution is underway. The declaration of a National Education Emergency is now under active consideration so that Pakistan can tap into its real wealth – the 67 percent of its young population below the age of 30.

The writer is chairman PM National Task Force on Science and Technology, former minister, and former founding chairman of the HEC.
Riaz Haq said…
Pakistan’s startup boom has triggered a “war for talent”
Flush with venture funding, tech companies are offering staggering salaries and perks, while recruiters struggle to hang on to candidates eager for the best deals.

Only two years later, Hasan was making 50 times his original salary as a staff software engineer for a global travel tech company.

This kind of steep career growth was unheard of in Pakistan until a couple of years ago.

A few years ago, a software engineer in Pakistan who had work experience of around three years would make about 150,000 rupees ($1,000 at the time) a month, according to Shahid of Kamayi. Now, someone with the same skills and experience earns double that. More than 40% of Pakistani tech companies gave over 30% increment raises to their employees in 2021, while 41% of firms gave hikes of between 15% and 30%, according to a survey by the Pakistan Software Houses Association (P@SHA). Yet, the annual turnover rate for the industry shot up to 30% in 2021 from 18% the year before.

There are over 500,000 people working in the IT and business process outsourcing (BPO) sectors in Pakistan. The country produces around 25,000 fresh computer science graduates every year, which is growing by 5% each year. Most of these graduates cannot be put on jobs immediately. “Only 20% of those graduates are actually employable. Very few local universities are actually training their students on newer technologies, like Javascript and Python, which account for almost 80% of our exports,” Mustafa Najoom, vice president of growth at, a recruitment startup that helps Pakistani engineers find jobs with U.S. companies, told Rest of World.

To navigate the situation, Pakistani tech companies are coming up with unique solutions.

Salesflo, a supply chain software catering to consumer goods companies, has launched a structured graduate program, which recruits recent college graduates and trains them across a range of business functions. “In our first year of Salesflo, we hired four fresh graduates because that’s all we could afford at the time. But the results were so encouraging that from next year onwards, we developed it into a structured graduate program,” Yasir Suleman Memon, co-founder of Salesflo, told Rest of World.

Salesflo has also chosen an unlikely destination to set up its engineering hub: Hyderabad, the eighth largest city in Pakistan. “There’s a lot of wonderful talent in cities like Hyderabad, Multan, Bahawalpur, etc., who have to move to metropolises for jobs, so why not take the jobs there?” Memon said.

Several tech companies are also trying to tackle the problem of talent shortage via coding camps and open-source courses.

One of the largest export-oriented IT services companies in Pakistan, 10Pearls, has set up “10Pearls University,” which offers free training and online courses in different technical disciplines. “To double our IT exports, we need to increase our workforce by two times,” Zeeshan Aftab, managing director and co-founder of 10Pearls, told Rest of World. “To address this, we need to combine multiple strategies: provide software development training to graduates of other engineering disciplines who haven’t secured jobs, incentivize women with professional IT qualifications who have become homemakers to rejoin the workforce, and adjust the current degree programs so students can join the workforce after two to three years of studies and complete the final year while working.”

Riaz Haq said…
If you like IT, put a ring on IT
The recent fall in IT exports, Pakistan’s great new hope, is a reality check posing a number of biting questions for the industry and authorities

“What gave India the respect that they are interacting with the world today? It was their IT industry, which is why you people (Pakistani IT industry) are extra important,” Abdul Razak Dawood, the then Adviser for Commerce and Investment, said in January while praising the industry in his address to the Board of Investment (BOI) IT roundtable conference.

The optimism from back then may have fallen flat in recent times as IT exports and services for May 2022 were recorded at $189 million – decreasing by 27% compared to April 2022 and 8% from May 2021. The final numbers are still awaited, but the financial year 2021-22’s export target for the sector, around $3.7 billion, is likely to be missed by a massive $1 billion.

Many experts anticipated the end of what has been a dream run for the IT sector, primarily because of the unstable rupee and demand slowdown in the two key markets of North America and Europe.

“The post-Covid boom in the IT sector was partly because central banks across jurisdictions printed money and governments announced schemes to promote business activity. This led to demand creation, which translated into greater interest in the country’s IT sector by foreign businesses,” Asad Ghauri, President Asia-Pacific, and Group MD Europe at NetSol Technologies Inc, told Profit.

“Now, the focus is on contractionary measures, and as the funding dries up, demand is likely to plunge, resulting in a difficult next few months for the industry.” Ghauri added.

However, the industry has a consensus on the issue that these temporary jitters can do some permanent damage if the structural and policy flaws of the sector are not addressed.

IT sector treated like a stepchild?

The reservations of the industry stem from the lack of policy continuity and initiative by the government. An example is the reversal of the tax-exempt status of the sector in March 2021.

“IT industry, unlike traditional industries, operates differently. Changing the tax regime in the mid of the fiscal year, despite the original commitment till 2025, creates not only uncertainty and a state of panic about inconsistent policies but also raises questions about the understanding of the government about the gravity of the situation of how it will jeopardize the growth,” Pakistan Software House Association said in a statement on their website.

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