Pakistan’s IT exports increase by 39% YoY in January 2024

Pakistan’s IT exports increased by 39% to $265 million in January 2024 as compared to the same month last year, though there was a 13% month-on-month (MoM) decrease from December 2023. 

IT exports in January 2024 were also higher than last 12-month average of $227 million.

The growth in year-over-year (YoY) IT exports is attributed to two key factors: the State Bank of Pakistan (SBP) increased the permissible retention limit for Exporters’ Specialized Foreign Currency Accounts from 35% to 50%, and the stabilization of the Pakistani rupee (PKR) encouraged IT companies to repatriate their foreign income.

Despite this growth, IT companies have retained an estimated $1-2 billion outside of Pakistan, as per the IT minister’s statement.

IT exports recorded at $1.7 billion during the first seven months (July to January) of the ongoing fiscal year FY 2023-24, a 13% increase from $1.5 billion during the same period in the previous year. 

Net IT exports in January 2024 were $240 million, up 35% YoY but down 9% month-over-month (MoM). The net IT exports in January 2024 also exceeded the last 12-month average of $199 million. In 7MFY24, net IT exports grew by 11% YoY to $1.5 billion.

Minister for IT, Dr Umar Saif, said that the caretaker government achieved 13 out of 15 goals for promoting the IT sector and increasing exports. Key achievements include the retention limit increase, establishment of specialized tribunals, enabling PayPal Remittances, ensuring 5G Spectrum availability, and establishing a Startup Fund.

While there has been an increase in gross IT exports during 7MFY24, the government’s target of $5 billion appears challenging. It is anticipated that gross IT exports for FY24 will likely be between $3-4 billion, as opposed to $2.6 billion last year.

Within the IT sector, Systems Limited (SYS) is highlighted for investment, with its shares trading at an estimated P/E ratio of 12.0x for 2023 and 9.3x for 2024.