a day ago
- Business
- Business Recorder
Will the budget provide ‘deep reforms startups truly need to thrive'?
With the budget announcement just around the corner, Business Recorder spoke to several people associated with the country's startup ecosystem to understand their hopes and expectations.
Amid dwindling startup funding, some remain optimistic, while others believe the budget will only provide surface-level policies that will not truly go to the heart of the needs of the ecosystem.
According to Syed Azfar Hussain, Project Director Project Director National Incubation Center Karachi the upcoming budget, expected to be announced on June 10, 'can significantly support startups by including seed grants,tax incentives, and export facilitation.'
He told Business Recorder that investment in digital infrastructure like cloud services and skills development will also help startups scale more efficiently as will support for innovation through public procurement.
When asked if his expectations align with what he would like to see in the budget, he said he was optimistic.
'The government has shown increased interest in promoting the digital economy. We hope to see continued support for the Pakistan Software Export Board, which has advanced freelancer training and IT export promotion including the recent Digital Foreign Direct Investment event in Islamabad, and the Ignite National Technology Fund, whose role in funding incubation, R&D, and entrepreneurial programs has been vital.'
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He believes that if these efforts are further facilitated and expanded in the budget, 'it will align well with our hopes for a stronger startup ecosystem.'
Meanwhile a spokesperson at flexible workspace startup COLABS said that while some support is expected for the startup ecosystem, such as tax relief for the IT sector, youth loan schemes and digital service expansion, 'it has been apparent that these measures only tend to scratch the surface.'
Major challenges faced by startups like fragmented tax systems, regulatory uncertainty, limited access to finance, remain largely unaddressed, they said.
Their conclusion is that while the budget may offer some help, it still falls short of delivering the deep reforms startups truly need to thrive.
'We hope that the budget has taken into account expert advice that aligns with the startup and venture capital landscape so as to further address the issues of combating large import vs., export bills,' they added.
When asked what they would like to see from the government, they explained that access to capital remains one of the biggest hurdles for early-stage founders and scale ups.
For this reason, budget provisions that support government-backed venture funds or credit guarantees can be game changers, 'by de-risking investment and encouraging private capital as well via tax incentives and lower interest rates for financing.'
COLABS called for public funding for accelerators and startup hubs, especially in and around smaller cities, as it believes this will help grow an inclusive ecosystem by leveling the playing field for startups and SMEs.
'In fact, we hope that enabling space providers as strategic partners to this end will help contribute to the larger startup ecosystem and entrepreneurial community.'
Simplified procedures were also on the company's wishlist.
The representative said COLABS hoped the budget will introduce policies to add to the ease of doing business and moving with global best practice, introduce simplified and harmonized tax policies, offer tax holidays or incentives for early-stage ventures, and streamline registration, compliance and tracking through a one-window digital portal.
Hamad Dawood, founder of the e-commerce concierge service Farmaish, echoed some of these thoughts. He believes 'Building a startup is already hard, so compliance should be a lot easier.'
He said Farmaish is a small, bootstrapped e-commerce startup 'so I am liable to pay GST, but Saddar importers, and wholesalers can get away without paying it. So either I'm compliant or I'm priced out of the market by 18% and customers always want to save money.'
He also called for a tax holiday for at least 5 years: 'Let companies have a realistic chance to build before they start being taxed.'
On his wish list is tax credits for the investments that startups make early and an easier, simpler framework to understand and follow.
