The fund will help around 50 firms and 30,000 graduates annually. Stakeholders applaud the initiative but need better startup fund management
KARACHI: Officials and insiders said on Saturday that Pakistan will launch a $5 million technology startup fund this month to help the country’s startup sector. PTSF allows tax exemptions and 100% foreign exchange retention for IT firms and freelancers registered with Pakistan Software Export Board. Its mechanics and legislation are still being worked on, according to Badar Khushnood, a member of the government’s National E-Commerce Council.
“Hopefully the process will be done in a few weeks and the ordinance will be promulgated this month,” said Khushnood, who helped get the incentive package approved.
“The main goal is to help the IT industry develop unhindered.”
With the Roshan Digital IT Account, freelancers and IT enterprises can keep 100% of their foreign exchange earnings with no limits on mobility. The tax authorities will no longer double tax the IT sector.
“IT companies can now hold dollar accounts and spend 100% of the funds without any restrictions,” said Khushnood, who is also the chairman of Pakistan Software Houses Association (P@SHA).
“This was a major concern for IT firms that was resolved.”
Officials in Pakistan say efficient financial management will benefit the country’s ecosystem.
“It is a terrific idea. It will surely assist the overall ecosystem, but efficient administration is key,” said Omar Abedin, head of the IT Ministry’s National Incubation Center Karachi (NICK).
Incubation centres can help maximise the impact of disbursements by ensuring that funding go to the most worthy and hardworking companies. Investors praised the government for exempting them from capital gains tax.
“I think this is a fantastic attempt by the government, but execution is key,” said Kalsoom Lakhani, co-founder and general partner of i2i Ventures.
Transparent criteria, sourcing, and screening will enable entrepreneurs to obtain this form of finance, especially early in their journey.
According to experts, many other countries have used private investors to boost their startup ecosystems.
“This is a significant development and a much-needed initiative,” said Khurram Schehzad, CEO of Alpha Beta Core, a startup investment advising platform.
According to Schehzad, many other countries have done this by spending seed money and bringing in private investors to improve the local environment.
We tried to maximise investor and startup benefit till the idea was approved by PM in December 2021 through this platform.
The cash, incentives, and the previously announced boot camp will help new grads receive needed training and jobs.
“Every year, 25,000-30,000 IT students graduate, but only 10% are employable, and 90% don’t obtain jobs,” Khushnood said, adding that the new measures would help them find work.
He said the government’s Rs1 billion boot camp programme to train IT graduates was also in the works and would be completed by June.
Khushnood said that the government’s incentives would boost IT exports to $4 billion next year, up from $2 billion previous fiscal year.
Because of the changing circumstances in Eastern Europe, global corporations who were previously outsourcing to the region may now seek to Pakistan for support, he added.
Pakistani IT specialists and officials praised the premier’s instruction to build Special Technology Zones (STZs) quickly, citing a lack of progress in this field.
