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Express Tribune
04-07-2025
- Business
- Express Tribune
Call to deepen digital city partnership under CPEC
Listen to article "The theme of our conference, build a digitally friendly city, highlights the harmonious coexistence between people and technology in the city, which is what we often call people-oriented in the digital age. We also highly agree with this in Pakistan's national development strategy," said Aslam Chaudhary, Economic Minister at Pakistan Embassy's Economic Wing. In his speech at the ongoing Global Digital Economy Conference in Beijing on July 2, the minister pointed out that building digitally friendly cities is not just about technology, but also about creating an environment where all citizens, whether urban or rural, could use safe and reliable digital technologies. Given this, Pakistan is fulfilling its national commitment to continuously expand the scope of digital economy services and try to cover every remotest area. Nowadays, the Pakistani government has established an inclusive service fund to strengthen the information and communication technology (ICT) infrastructure and under the framework of the Six One One Foundation, the fund is playing its role. "Through this, we have laid optical cables in large areas of the country, connecting about 22,000 villages," Chaudhary said. "By building digital-friendly cities, different cities are able to recognise each other's data standards. At the same time, cooperation agreements between countries are an indispensable boost to the digitalisation of developing countries." In April, the Secretary-General of the Riyadh-based Digital Cooperation Organisation (DCO), Deemah AlYahya, noted that Pakistan's forthcoming presidency of the multilateral body is part of ongoing efforts to position the country as a regional and global digital leader. Pakistan is scheduled to assume the DCO presidency in 2026, following Kuwait's term in 2025. "The 2026 presidency will see Pakistan hosting the Digital Future Development Initiative (DFDI) forum in Islamabad, marking a significant step in the country's digital transformation journey." "On this occasion, I am going to have three major initiatives," the minister stressed. "First, strengthen cross-border data flows and interoperability. We are establishing a cross-border data flow norm under the South-South cooperation framework. Second, inclusive digital technology development is essential, including in the fields of agriculture, medical and healthcare. Third, we need to conduct joint training of digital talents. Through the China-Pakistan Economic Corridor (CPEC) framework, the two countries have signed a talent training agreement. There is high urgency for digital talent training in Pakistan." Chaudhary listed cloud computing, flood warning, climate change, smart cities and other areas where China and Pakistan can achieve in-depth cooperation and suggested establishing a Digital Friendly City Innovation Centre with branches in Beijing, Islamabad and Karachi so that different branches can carry out a series of joint pilot projects. "We're seeing that Beijing is accelerating the construction of a global digital economy benchmark city and exploring the construction of a Digital Silk Road pilot zone. Pakistan is willing to work with China and all other partners around the globe to turn vision into tangible digital reality," he added.
Business Recorder
12-06-2025
- Business
- Business Recorder
Budget to spell doom for Pakistan's IT industry: P@SHA
KARACHI: Outrightly rejecting the budget 2025-26, IT industry said budget has fatally ignored Pakistan's IT and IT-enabled Services (ITeS) sector, terming disappointment and grave threat to the sector. In a statement, Pakistan Software Houses Association (P@SHA) said budget is decisive blow to an industry that has carried the hopes of export-led recovery; youth employment and digital transformation. It said an industry that today employs over 600,000 young Pakistanis—one of the country's largest and most vital pools of skilled talent. Yet in a stunning act of neglect, the budget fails to address two urgent and long-standing demands from the sector: first, a defined and fair taxation framework for remote workers; and second, the continuation—and expansion—of the current tax regime for formal IT exporters. What the industry has consistently asked for is not a one-time concession or patchwork relief, but a stable, 10-year tax policy framework—one that allows companies to invest, grow and compete with global peers. That has been ignored. For over a year, the Pakistan Software Houses Association (P@SHA) has warned of a growing imbalance. High-earning remote workers employed by foreign companies; often indistinguishable from full-time employees, remain largely untaxed. Meanwhile, P@sha said, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated. This makes local hiring more expensive; while incentivizing capital flight and informal arrangements. Talent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value. The government's refusal to act is particularly frustrating given the simplicity of the proposed solution: P@SHA has recommended classifying any individual earning over PKR 2.5 million annually from fewer than three foreign sources as a remote worker. This affects only the top 5% of earners and avoids harming freelancers and small remitters. The State Bank already tracks the necessary data. This is a policy that could be implemented overnight—yet has been ignored for years. Worse still is the government's failure to extend the existing tax regime for exporters. This regime was the foundation for over $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative. The country spent hundreds of millions of rupees to secure this investment. Sadly, with no continuity in tax policy and those investments are now in jeopardy. Foreign investors will not engage with a country where rules shift every year. This is not just bad policy—it is a signal to the world that Pakistan's digital economy is not ready to be taken seriously. The results will be devastating. Pakistan's IT sector—its fastest-growing, most globally competitive industry—may lose its momentum entirely. Export growth will stall; jobs will disappear and the government's dream of reaching $25 billion in IT exports will not just be delayed—it will become permanently out of reach. Copyright Business Recorder, 2025
Business Recorder
12-06-2025
- Business
- Business Recorder
Budget to spell doom for IT industry: P@SHA
KARACHI: Outrightly rejecting the budget 2025-26, IT industry said budget has fatally ignored Pakistan's IT and IT-enabled Services (ITeS) sector, terming disappointment and grave threat to the sector. In a statement, Pakistan Software Houses Association (P@SHA) said budget is decisive blow to an industry that has carried the hopes of export-led recovery; youth employment and digital transformation. It said an industry that today employs over 600,000 young Pakistanis—one of the country's largest and most vital pools of skilled talent. Yet in a stunning act of neglect, the budget fails to address two urgent and long-standing demands from the sector: first, a defined and fair taxation framework for remote workers; and second, the continuation—and expansion—of the current tax regime for formal IT exporters. What the industry has consistently asked for is not a one-time concession or patchwork relief, but a stable, 10-year tax policy framework—one that allows companies to invest, grow and compete with global peers. That has been ignored. For over a year, the Pakistan Software Houses Association (P@SHA) has warned of a growing imbalance. High-earning remote workers employed by foreign companies; often indistinguishable from full-time employees, remain largely untaxed. Meanwhile, P@sha said, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated. This makes local hiring more expensive; while incentivizing capital flight and informal arrangements. Talent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value. The government's refusal to act is particularly frustrating given the simplicity of the proposed solution: P@SHA has recommended classifying any individual earning over PKR 2.5 million annually from fewer than three foreign sources as a remote worker. This affects only the top 5% of earners and avoids harming freelancers and small remitters. The State Bank already tracks the necessary data. This is a policy that could be implemented overnight—yet has been ignored for years. Worse still is the government's failure to extend the existing tax regime for exporters. This regime was the foundation for over $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative. The country spent hundreds of millions of rupees to secure this investment. Sadly, with no continuity in tax policy and those investments are now in jeopardy. Foreign investors will not engage with a country where rules shift every year. This is not just bad policy—it is a signal to the world that Pakistan's digital economy is not ready to be taken seriously. The results will be devastating. Pakistan's IT sector—its fastest-growing, most globally competitive industry—may lose its momentum entirely. Export growth will stall; jobs will disappear and the government's dream of reaching $25 billion in IT exports will not just be delayed—it will become permanently out of reach. Copyright Business Recorder, 2025
Business Recorder
11-06-2025
- Business
- Business Recorder
Budget is ‘death knell' for IT industry: P@SHA
The budget has failed to address two urgent standing demands from the IT sector: a defined and fair taxation framework for remote workers, and the continuation and expansion of the current tax regime for formal IT exporters, according to the Pakistan Software Houses Association (P@SHA). In a statement on Wednesday, the association said the industry's repeated demand for a 10-year tax policy framework—one that allows companies to invest, grow and compete with global peers, has been ignored. It described this as a 'stunning act of neglect' and a 'quiet but decisive blow to an industry that has carried the hopes of export-led recovery, youth employment and digital transformation.' It added that for an industry that employs over 600,000 young Pakistanis and is one of the country's largest and most vital pools of skilled talent, 'this budget is not just a disappointment; it is a threat.' According to the association, high-earning remote workers employed by foreign companies, who are often indistinguishable from full-time employees, remain largely untaxed. Meanwhile, companies based in Pakistan, employing and training local talent, are taxed, audited and over-regulated. 'This makes local hiring more expensive; while incentivizing capital flight and informal arrangements.' It added that 'talent retention is collapsing; export dollars are being parked abroad, and formal firms are bleeding value.' Brain drain: Pakistan lost 727,381 workers to overseas employment in 2024 P@SHA said the government's refusal to act is particularly frustrating given the simplicity of its proposed solution: classifying any individual earning over Rs 2.5 million annually from fewer than three foreign sources as a remote worker. It believes this will affect only the top 5% of earners and avoids hurting freelancers and small remitters. It also said the government needs to extend the existing tax regime for exporters. It added that the $700 million in investment commitments secured through the Digital Foreign Direct Investment (DFDI) initiative is in jeopardy due to a lack of continuity in tax policy as 'foreign investors will not engage with a country where rules shift every year.' P@SHA said the budget 'is a signal to the world that Pakistan's digital economy is not ready to be taken seriously. The results will be devastating. Pakistan's IT sector—its fastest-growing, most globally competitive industry—may lose its momentum entirely.' It warned that export growth will stall; jobs will disappear and the government's dream of reaching $25 billion in IT exports will become permanently out of reach. It said the budget 2025, in its current form, is a direct threat to the survival of the formal tech ecosystem. It penalizes compliance; discourages investment and incentivizes informality. It warned that 'this is not about incentives anymore. It is about preserving one of Pakistan's only working economic success stories. The stakes could not be higher.' Pakistan's IT sector a bright spot The warning comes amid a report from i2i, which notes that Pakistan's IT sector has emerged as a bright spot in the country's otherwise sluggish economy, with exports set to reach around $3.7 billion (FY2025) and a predominantly young, tech-savvy population fueling growth. It said that in the first ten months of fiscal year 2025, IT exports reached $3.1 billion, marking a robust 21% year-on-year (YoY) increase. Notably, April 2025 saw monthly IT exports of $317 million, up 2% YoY, though down 7% month-on-month (MoM). This figure remains above the 12-month average of $314 million, reflecting the 19th consecutive month of YoY export growth starting from October 2023. Looking ahead, experts predict Pakistan's IT sector will continue its upward trajectory, expecting 10-15% growth in FY25, reaching $3.5–3.7 billion in exports. The government's ambitious 'Uraan Pakistan' economic plan targets $10 billion in IT exports by FY29, implying a compound annual growth rate (CAGR) of 28%. However, it warned that despite this momentum, structural issues remain. Freelancers, who contribute significantly to digital exports (projected to exceed $500 million in FY25), face hurdles such as limited access to international payment gateways like PayPal, unclear taxation, and a lack of tailored banking services. Moreover, the regulatory landscape around emerging fintech, including cryptocurrencies and digital assets, is still evolving.
Business Recorder
21-05-2025
- Business
- Business Recorder
Pakistan's IT, ITeS sector: P@SHA underscores need for consistent tax policy
ISLAMABAD: The Pakistan Software Houses Association (P@SHA) has strongly recommended a consistent tax policy with no changes in the tax structure of IT and IT-enabled Services (ITeS) sector in the Federal Budget 2025-26. Addressing at a press conference here on Tuesday, Sajjad Mustafa Syed, Chairman P@SHA stated that the government must ensure policy stability and tax clarity for the IT and IT-enabled Services (ITeS) sector in 2025–26. As a cornerstone of Pakistan's digital economy, the IT industry has demonstrated resilience amid economic turbulence, contributing USD 3.2 billion in exports in 2023–24, and is projected to close the current fiscal year at nearly USD 4 billion. Forecasts estimate a USD 15 billion export potential by 2030. Despite these promising numbers, policy inconsistency, ad hoc taxation, and operational challenges continue to undermine investor confidence and economic contributions, he regretted. Policy stability is essential for sustaining the momentum we've recently achieved. The recent DFDI event alone resulted in over USD 700 million in investment commitments — of which USD 600 million was facilitated by P@SHA, he said. Frequent changes in tax laws — whether related to export incentives, withholding taxes, or other fiscal instruments — discourage long-term investment. The lack of predictability threatens to undo the combined efforts of public and private sector stakeholders, including MOITT, PSEB, SIFC, and TDAP. If investor confidence is shaken, Pakistan risks forfeiting years of progress, including advances in branding, skill development, and digital infrastructure, he added. 'We are not asking for exemptions that jeopardize international obligations. However, if our practical, fair recommendations are implemented in both letter and spirit, Pakistan's IT sector can contribute substantially more to national growth,' Sajjad said. He recommended there is a critical need to align tax treatment between employees of IT firms and independent remote workers. The P@SHA urged the government to formally define remote workers in the Income Tax Ordinance (2001). The proposed classification applies to individuals earning over Rs 2.5 million annually through foreign remittances or working with fewer than three international clients, taxing them similarly to salaried individuals. This recommendation aims to expand the tax base while leveling the playing field. The current disparity creates an uneven labor market where it's more cost-effective for global companies to hire Pakistani talent directly rather than through local firms. As a result, local IT businesses lose both competitiveness and valuable export revenue. A clear and fair framework will bring transparency for taxpayers and authorities alike and help protect Pakistan's economic interests. IT firms, especially call centres and BPOs, operate on narrow margins, have service level agreements and cannot afford such disruptions. Legislation must be enacted to shield them from outdated and misaligned labor regulations. Until reforms are complete, temporary exemptions must be provided to IT companies from EOBI and other arcane labor laws. Despite being one of the region's lowest revenue-per-employee markets, Pakistan's IT sector employs a massive formal workforce of over 600,000. The sector's resilience is remarkable, bearing some of the highest input costs, yet continuing to grow. Copyright Business Recorder, 2025
