Around 50 startups a year: Tech startup fund established to provide Rs1bn seed funding

ISLAMABAD: Prime Minister Imran Khan has announced establishment of the Pakistan Technology Startup Fund to provide Rs1 billion seed funding to around 50 startups annually. While chairing a meeting on Tuesday, the prime minister said that the information technology sector and technology savvy youth are the biggest asset of the country that can be utilised to bridge the huge current account deficit.

He said that the government is announcing a tax holiday and 100 percent forex retention for IT/ITeS companies and freelancers registered with the Pakistan Software Export Bureau (PSEB) to incentivise investment in the IT sector for economic turnaround.

The prime minister said that IT exports can be increased to $50 billion in the next few years.

He also highlighted the importance of unleashing the IT industry by providing them ease of doing business and the best incentives globally available. He announced a reform package for the growth of IT sector.

The prime minister directed to establish Special Technology Zones (STZs) on fast-track basis in the federal and all provincial capitals to create hubs of IT/ technology innovation and investment in cities in the first phase.

He said that sectors of the Capital Development Authority (CDA) in Islamabad will be declared as STZs, so that IT firms and freelancers can avail the benefits offered by the Special Technology Zones Authority (STZA).

Read more: PM approves incentive package for IT sector, freelancers

The premier also directed to introduce necessary changes in the foreign exchange and income tax policies in order to help IT Startups. These reforms include launch of Roshan Digital IT Accounts (RIDA) by the State Bank of Pakistan (SBP) to allow freelancers and IT firms to retain 100 percent of their foreign income in foreign exchange with no restrictions on the movement of forex; resolution of double taxation of IT sector by the Federal Board of Revenue (FBR) and the exemption from capital gains tax of venture funding into startups.

The prime minister directed to attract local and international funding into IT Startups (Global $643 billion in 2021) for creating jobs and bringing forex.

Earlier, the prime minister was informed that the ICT export remittances in fiscal year 2020-2021 remained US$ 2.1 billion as compared to US$ 1 billion in 2018, and Pakistan is exporting to 120 plus countries in the world.

Copyright Business Recorder, 2022