ICT Export up by 17.4% During July-March 2024
Staff Report
ICT export remittances have surged by US$ 339 million (17.44%), reaching US$ 2.283 billion during July 2023 to March 2024 of FY2023-24, compared to US$ 1.944 billion reported for the same period last year.
The efforts of the Ministry of IT and Telecommunication and the Pakistan Software Export Board (PSEB), in close coordination with the Special Investment Facilitation Council (SIFC), to accelerate international business development and improve the ease of doing business environment, have enhanced IT & ITeS exports and bolstered confidence in the IT industry. Pakistan’s IT Exports Surge by 39% in January 2024
In March 2024, ICT services export remittances surged to US$ 306 million, marking an astounding increase of 36% compared to US$ 225 million in March 2023.
Compared to the previous month of February 2024, ICT services export remittances increased by US$ 49 million (a growth of 19.1%) in March 2024.
Pakistan recorded monthly IT exports of US$306mn, up by 37% YoY and by 19% MoM in March 2024. This is the highest ever export number in a single month with the previous highest being US$303mn in Dec-2023. These monthly IT exports in March 2024 are higher than the last 12-month average of US$238mn.
YoY jump in IT exports is due to (1) relaxation in the permissible retention limit by the State Bank of Pakistan (SBP), increasing it from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, and (2) stable PKR currency which encouraged IT companies to repatriate their foreign income and deposit it in local accounts.
To highlight, the reported IT export number indicates the amount remitted back to Pakistan by technology companies.
In 9MFY24 IT exports clocked in at US$2.28bn, up by 17% YoY compared to US$1.94bn recorded in 9MFY23.
Net IT Exports (Exports-Imports) also recorded an increase of 37% YoY and of 20% MoM to US$275mn in Mar-2024. These net IT export numbers in March 2024 are also higher than the last 12-month average of US$208mn. In 9MFY24 net IT exports recorded a growth of 16% YoY to US$1.99bn.
In a recent interview with a private TV channel, the newly appointed Finance Minister, Muhammad Aurangzeb, stated that IT exports are likely to reach US$3.5bn this year.
Although there has been a growth in gross IT exports during 9MFY24, the government’s target appears challenging. We anticipate that gross IT exports for FY24 will likely fall around US$3.0bn compared to US$2.6bn recorded last year.
Within the IT sector, Systems Limited (SYS) is our preferred pick. SYS is currently trading at 2024F and 2025F PE of 10x and 8x, respectively” Topline said in a report.
