IT exports defy slow internet, VPN ban; shoot up to $324m

KARACHI: Despite internet troubles, the official export figures for November 2024 released by the State Bank of Pakistan (SBP) show that Pakistan’s IT exports clocked in at $324 million. This is down from October’s IT exports of $330 million. However, for the comparison for the five months of the fiscal year 2024 (July to November 2024) the figure is still positive, up by 33 per cent.

According to a report by Topline Securities, the November’s figure shows a 25 per cent increase year over year as compared to November 2023. This is the 14th consecutive month when Pakistan’s IT exports have shown an increase. This time around, its twice as noteworthy because the Pakistan’s technology sector is undergoing a connectivity crisis.

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Topline Securities attributes the IT exports to the IT companies’ customer base growing on a global level, “especially in GCC region”, and to the “relaxation in the permissible retention limit by the State Bank of Pakistan”. SBP recently increased the retention limit from 35 per cent to 50 per cent in the Exporters’ Specialised Foreign Currency Accounts.

Stability in Pakistani Rupee (PKR) exchange rate with regards to the US Dollar has also played a part in encouraging IT exporters to bring higher portion of profits back to Pakistan.

The analyst report also said that the 2 per cent decline from October can be defined by the lower number of days in November as compared to October. One of the reasons for that was the countrywide shutdown caused by the Pakistan Tehreek-e-Insaf (PTI) protest rally.

“Pakistani IT companies are active in engaging with global clients. Recently leading IT companies of Pakistan attended Oslo Innovation Week 2024, and Pak-US Tech Investment Conference,” Topline Securities report said.

During the ongoing fiscal year, the SBP has also added a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. This means that the IT exporters can now acquire interest (shareholding) in entities abroad utilizing up to 50 per cent proceeds from specialised foreign currency accounts.

Also read: PTA clarifies submarine cable damage, not VPNs, behind internet slowdowns

With the Pakistan Telecommunication Authority (PTA) starting VPN registration and blocking unregistered users, coupled with the slowed down internet speed has caused significant problems for the players in the IT industry of the country.

The issue of bad internet connectivity has also been raised at the highest forums in the country, including the National Assembly. Social media platform X, formerly Twitter, has also been blocked in Pakistan for several months.

Ruling party Pakistan Muslim League-Nawaz’s (PML-N) member Zahra Wadood Fatemi spoke in the parliament on Twitter shutdown across Pakistan. “People have been disconnected due to Twitter shutdown,” she said, adding, “How long will [it take for] Twitter to be opened?”

Parliamentary Secretary Sajid Mehdi responded that the Ministry of Interior has shutdown Twitter on the basis of security reasons. “The Ministry of Interior will open Twitter if they say so,” he added.

Federal IT Minister Shaza Fatima Khawaja said that “Twitter was not closed to clamp down on freedom of expression. If freedom of expression had to be limited then TikTok and Facebook would also have been shut down.”

Pakistan People’s Party (PPP) member Abdul Qadir Patel spoke on the overall internet situation saying, “Why has the internet been completely destroyed [in the country]? People are getting affected due to the slowness of the internet,” he said.

Also read: Internet slowdown in Pakistan disrupts social media, online businesses

“The images do not open and the videos do not play due to bad internet,” he added.

To this Mehdi responded, “The Ministry of Interior is not sure how long the security situation will be right.”

PPP’s Shazia Marri took a jab, saying, “I was laughing when the Digital Nation Pakistan Bill was brought. There is no internet and the bill is being brought for the Digital Nation.”