Pakistan’s IT Exports Surge by 39% in January 2024

Staff Report

Pakistan’s technology sector has witnessed significant growth, with IT exports soaring by 39% Year-on-Year (YoY) in January 2024.

However, there was a slight dip of 13% Month-on-Month (MoM) during the same period. Despite this, January 2024’s IT exports surpassed the 12-month average, reaching US$265 million.

This impressive YoY increase can be attributed to several factors, including the State Bank of Pakistan’s decision to raise the permissible retention limit from 35% to 50% in Exporters’ Specialized Foreign Currency Accounts.

Additionally, the stability of the Pakistani Rupee (PKR) encouraged IT companies to repatriate foreign income and deposit it locally.IT Exports up 17% in Dec-2023

The reported IT export figures reflect the amount remitted back to Pakistan by technology firms.

According to the IT Minister, these companies have an estimated US$1-2 billion parked outside of Pakistan.

In the first seven months of the fiscal year 2024 (7MFY24), IT exports totaled US$1.7 billion, marking a 13% YoY increase compared to US$1.5 billion recorded in the same period of the previous fiscal year.

Net IT exports (Exports-Imports) also experienced substantial growth, rising by 35% YoY, though there was a slight MoM decline of 9% to US$240 million in January 2024.

Nevertheless, these figures still exceed the 12-month average, indicating positive momentum. In 7MFY24, net IT exports grew by 11% YoY to US$1.5 billion.

The Minister for IT, Dr. Umar Saif, has lauded the achievements of the caretaker government, citing the successful fulfillment of 13 out of 15 goals aimed at promoting the IT sector and increasing exports.

Key accomplishments include allowing 50% retention in dollars, establishing Specialized Tribunals, enabling PayPal Remittances, ensuring 5G Spectrum availability, and establishing a Startup Fund.

Despite the notable growth in gross IT exports during 7MFY24, the government’s ambitious target of reaching US$5 billion appears challenging. Projections suggest that gross IT exports for FY24 will likely range between US$3-4 billion, compared to US$2.6 billion recorded in the previous year.

In the IT sector, Systems Limited (SYS) stands out as a preferred choice. SYS currently trades at a Price-to-Earnings (PE) ratio of 12.0x for 2023 estimates and 9.3x for 2024 forecasts.”