Asif Peer discusses IT exports in GEO News' exclusive Great Debate

July 14, 2024 – Asif Peer, Group CEO & MD of Systems Limited, Pakistan’s leading provider of IT and IT-enabled services, recently participated as a panellist on Geo News' exclusive Great Debate on the economy. The discussion began with an analysis of the current budget and then shifted focus to strategies aimed at guiding Pakistan out of its current challenges and towards sustainable growth. 
The panel, which included dignitaries such as prominent economists, business tycoons, analysts, and industry leaders, analyzed the multifaceted challenges and discussed actions needed by both the government and private sector to achieve economic recovery and pave the way for sustainable growth. 

In a series of questions posed by Shahzeb Khanzada, host of the Great Debate, Asif Peer, CEO at Systems Limited provided valuable insights. 

While talking about the recent budget issues and whether we can rely on IT to drive our economy forward, Asif Peer expressed that the budget is favorable for IT exports as we are not under the normal tax regime. However, taxes on laptops and mobile phones contradict the goal of a Digital Pakistan, which needs affordable technology. 

The budget allocates 79 billion for IT, including human resource training and marketing. Recent changes now allow: 

1. IT companies retain 50% of export earnings in special accounts and invest abroad without SBP approval. 
2. Foreign investors can now invest in Pakistan and take their raised investments abroad if the foreign exchange impact is neutral. This policy encourages inorganic growth, and the private sector must capitalize on this opportunity. 
3. Domestic companies to take their profits outside Pakistan to grow exports. 

The government has provided the framework, and now the private sector must leverage these opportunities, raise investment, and reinvest profits abroad to boost remittances and benefit Pakistan’s economy. Small to medium companies should become competitive in exports to unlock growth. 

Commenting on the brain drain in HR, he said that it is a significant issue. People in the 50-100 thousand salary bracket face a 1250 tax increase, feeling their taxes have doubled. Talented individuals in our sector question fairness, feeling the salaried class is an easy target. 

This exploitation leads to brain drain and tax avoidance strategies like cash salaries or multiple accounts. Remote workers may become freelancers to benefit from a lower tax rate (0.25%), negatively impacting our IT industry. We urge for a fair tax policy to prevent these issues and support growth. 

When asked about the top five things the government should do to move the country from stabilization to growth, he said that the focus should always be on growth. The outflow of human resources abroad is inevitable, but the alarming issue is the loss of motivation among those who wish to work in Pakistan but are deterred by heavy taxation and lack of growth. This leads to a brain drain, particularly in the middle management of every company. 

Right now, it is most important to motivate and train individuals for middle management roles, although this takes time. Middle management is crucial in every country; while lower and higher management roles remain stable, the core of our company—the backbone—is experiencing turnover among middle management with 5-10 years of experience. We need to motivate them and invest in training more people for middle management, despite the time it requires. 

Secondly, investment in IT is crucial. This includes market investment and human resources. Investors are hesitant due to concerns about physical security, fraud protection, approved data protection laws, reliable internet, power supply, and cybersecurity. Enhancing digital infrastructure is essential for IT growth. 

Telecom companies are already struggling, with low average revenue per user making sustainability difficult. We need to focus on fiberization, and broadband, and offer many incentives, as well as improve the right of way to support the sector. 

The business community must develop compelling value propositions and plan for ROI, while the government needs to create a conducive environment for investments. Collaboration between both sectors is crucial for executing these plans and ensuring stability and security for investors.  
The IT industry is already growing at a 30% rate. With the right investments, environment, stability, and HR development, we can potentially double our current figures in 3-4 years. Emphasizing digital transformation and creating a conducive environment for wealth creation and reinvestment will be key drivers for this growth.  

In a nutshell, Asif Peer highlighted that the new budget offers favourable measures for IT growth, emphasizing the need to address the brain drain and retain talent. He outlined five key actions: retaining talent, encouraging investment, improving digital infrastructure, supporting BPO growth, and digitizing the economy. Peer stressed the importance of collaboration between the government and private sector to drive significant growth and stability in the IT sector. 
The consensus among the panellists was clear: Pakistan’s economic recovery depends on achieving political and economic stability, implementing comprehensive reforms, and fostering a secure, investor-friendly business environment.