Pakistan now gears up for a software war

Pakistan software sector pales besides that of its big neighbour, where the industry grew by an astounding 55 per cent and billed in over a billion US dollars in export earnings, Financial Times reported.

To give boost to the industry, the new finance minister, Sartaz Aziz had removed all duties on computer equipment and software for use by software exporters and extended a seven year tax holiday for all export houses.

The paper said best industry estimates in Pakistan in the absence of any hard official figures suggest that the country’s 40 or so main software houses last year turned in a total of US $ 40 million in earnings.

The Financial Times in a special comparative report said “Pakistan software industry was still in embryonic stage in comparison to India where competitiveness was proving galvanising. But now as in politics, rivalry with jealous policy-makers prompted in the name of race with India opening up purses of national treasury.”

The “jealousy of the policy-makers is now proving a boon to us”, Waqar Ahmed, head of one of Pakistan major software houses `Cresoft’ was quoted as saying. As earlier, he said, the Benazir Bhutto government was stonewalling pleas for incentives and overtaxing the industry.

“But by sounding the note of rivalry to the new policy-makers, the industry is getting incentive after incentive”, media reports said adding “the software sector has captured the government’s attention as offering Pakistan a rare opportunity in an economy where manufacturing performance has consistently been dismal”.

Reports said last year Pakistan’s industrial output actually contracted and foreign exchange position was weak and totally dependent now on country’s erratic cotton crop. Anwar Rodney Rahman, secretary of the Pakistan Software Houses Association was quoted as saying that if the incentives are kept up, the Pakistan software industry was poised to top exports earnings up to US $800 million.

However, international experts believe that such calculations are “wildcat” and estimate that in next three years the industry had the potential to grow the export market to up to US $100 million.

The experts said that like India, much of Pakistan’s potential advantage lies in supplying labour intensive “offshore” services for clients in United States and western Europe rather than sales of proprietary software products.