Software Export Board
Boosting Pakistan's IT business
From SHAMIM AHMED RIZVI, Islamabad
Sep 11 - 17, 2000
The Pakistan Software Export Board (PSEB) is an
organization that has been established by the Government of Pakistan
to ensure development and implementation of a national policy
framework for software and related services industry in Pakistan,
promotion of software exports, and match making between local and
foreign software companies.
To act as one Stop shop to cater to all needs of a
"Software House/Software Company" for setting up or
facilitating its business.
To plan, develop and execute a Technical Assistance
Program for computer training institutions as part of its institutions
To plan, develop and execute the "Software
Technology Parks (STP) Scheme" and to provide office space,
international data communication links as well as un-interrupted
electric power to Software Houses/Software Companies set up in these
parks. To facilitate development of a Computer Training Institute with
Export Promotion Bureau's Export Development Fund that will induct
graduate engineers and will train them as software engineers in a
short span of time.
To develop and execute a marketing plan to help
local "Software Houses/Software Companies" reach out to
potential clients abroad, to attract and facilitate foreign software
firms to establish their software development facilities in Pakistan.
Developing technical assistance programs with the
World Bank, IFC, GTZ, Protrade, CBI, and other foreign donor agencies
to develop Pakistani Software Industry.
To facilitate projects between the Pakistani
educational institutions and the computer industry to bridge the gap
between academia and the industry. The government of Pakistan has
extended very liberal fiscal and monetary incentives for software
exports. The incentive package consists of two major categories i.e.
Fiscal Incentives and Corporate Incentives as follows:
All computers and related hardware, peripherals
including communications, hardware and software, telematic
infrastructure and software development tools to be used exclusively
for software exports are exempt from all duties, taxes, surcharges and
leviable Octroi etc. The mandatory export obligation on net foreign
exchange terms in US dollar value is as follows:
Export obligation to be fulfilled over a period of
five years — 3 times CIF Value of the imported computer hardware,
software, and/ or software development tools.
"Software Houses/Software Companies" are
exempt from corporate income tax on export earnings from
"Software and Related Services" besides the exporter need
not be a company for availing of this exemption. Export earnings shall
be authenticated/verified by PSEB.
Profits and gains derived by an assessor from the
running of any computer training institution or computer training
scheme approved by the Central Board of Revenue (CBR), set up between
the first day of July, 1997, and the thirtieth day of June, 2000,
would be exempt from tax for a period of five years beginning with the
month in which such institution is set up.
Financial assistance will be provided to the
"Software Houses/Software companies" by extending the
facility of Refinance for Export of Computer Software by the Software
Houses/Companies and in the shape of loans to software
houses/companies by the nationalized/ commercial banks. The State Bank
of Pakistan under its Circular No.23 has fixed an export re-finance
limit of 50% of last year's exports.
The PTCL shall provide international high speed
data circuits to "Software Houses/Software Companies" at
rates which are highly competitive as compared to rates offered by
other telecom companies in the region.
Subsidized rentals for office facilities/office
space in Software Technology Parks (Software Technology Parks) shall
be charged which shall be competitive to such rentals offered by
techno-parks in the region. Software Technology Parks in Pakistan will
be made available to Software Houses/Software Companies". The
first such park has since been established at Islamabad.
Software Houses/Software Companies" are
allowed to re-export capital goods without any levies.
Foreign investors will be allowed up to 100%
ownership of equity in Software Houses/Software Companies".
The Software Technology Parks will act as a One
Stop solution to all the needs of a "Software House/Software
Company". Law from piracy will protect software that is developed
in Pakistan or part of which is developed in Pakistan and complaints
can be lodged with Pakistan Software Export Board (PSEB).
"Software Houses/Software Companies"
could be located either within STP or anywhere else in Pakistan.
"Software Houses/ Software Companies" located in STP's shall
be allowed to carry out Only "Software and Related Services"
business within the STP bounds and No Other Business.
The rapidly expanding demand for software
professionals both domestically as well as worldwide can only be met
by a commensurate increase in Pakistan's output of trained software
professionals. The key requirements of such an export-oriented
expansion is quality and volume. 'The Pakistan Software Export Board (PSEB)
has turned this need into a business proposition and insisted private
sector to participate in a scheme of setting up educational
institutions called the "Action Learning Centers of Software
(AL-COS)" program developed by the PSEB.
Under this program the private sector has entered
into a business relationship with the Pakistan Software Export Board
and imparting training to students leading to a Post-graduate Diploma
in Computer Science. The will to create and sustain an IT education
industry in Pakistan is at the core of the ALCOS project.
The ALCOS Program ensures that maximum flexibility
is available to investors to tailor a large part of the curriculum to
their chosen area of expertise. The program is focused to develop
thousands of software professionals programmes to enter the market
armed with software development and engineering theory, basic
management concepts, business communications, knowledge of the
Internet, a bursh of English and another foreign language as well as
plenty of combat experience in his/ her own area of expertise. These
graduates will be formidable candidates for employment in the most
challenging environment possible.
Software houses/companies are exempt from customs
duties and leviable taxes on import of hardware/software tools which
are not manufactured locally and to be used for software development
and export purposes. CBR Notification NO. SRO 551(I)/98. A software
house/company must 'be a member of PSEB and hold membership
certificate to avail the incentives.
To get your equipment/tools released from Customs,
please get the invoice, whenever you purchase the items. Send copies
of invoice airway bill (if any) and items' list with a covering letter
to PSEB for verification. Your invoice and other documents will be
examined and verified by PSEB and sent back to you. The verified
invoice along with copy of PSEB's membership certificate should be
presented to Customs Authorities for clearance of items being imported
by your company.
Realization of earnings against export of software
by software companies.
Pakistan Software Export Board (PSEB) had
approached the State Bank of Pakistan (SBP) for evolving a procedure
for realization for export earning by the software houses/ companies
for export of software. Accordingly, the State Bank of Pakistan has
evolved a procedure, & issued Circular NO.2/FEB.1(51) Software-96
in this regard.
A software house/company must be registered with
PSEB and the State Bank of Pakistan, in order to realize its earnings
and to avail Export Finance/Refinance Scheme.
The Government of Pakistan has decided to allow
setting up of Call centres in Pakistan in spaces controlled by
Pakistan Software Export Board (PSEB).
The PSEB will take care to provide International
Private Leased (IPL) circuits for these call centres. A 2MB IPL
Circuit has been extended to STP at Islamabad and similar arrangements
are being made at Lahore and Karachi once STPs are established.
Islamabad is the ideal location for setting up such
Call centers because of its high literacy rate in Pakistan, friendly
environment, good logistics and a large population of bilingual
persons readily available.
A prospective Call center operator can take
advantage of low manpower cost and very low rentals of the STP at
Islamabad. The PSEB is willing to provide all possible help to
facilitate setting up of Call Centers.
Providing state of the art facilities at lowest
In late 1997 it was decided that the Awami Markaz
building in Islamabad may be earmarked for conversion into a STP. This
step was taken by the Government in recognition of the software
industry's immediate need for infrastructure. The STP project in
Islamabad is now well under progress. Several software companies have
already signed up for space in the STP.
The rent, certain terms and conditions and salient
features as determined by the government are:
The tenants of the STP must be registered with the Pakistan Software
Export Board and should be in the business of Software
development/software education/ exports of software.
Option of furnished or unfurnished space.
Rent payable quarterly in advance.
Ready connectivity via STP's high-speed
communication links. Network cabling.
Business centre complete with conference room and
video conferencing facilities is planned.
Ample room for further expansion.
Minimum of 1000 sq.ft. available for rent.
Total of 40,000 sq.ft. available immediately.
The Software Technology Parks (STPs) for Islamabad,
Karachi and Lahore have been conceived as one-stop-shop for all
software houses which seek working conditions conducive to create
inexhaustible bandwidth and power supply, "high IQ" (or not
just intelligent) buildings, minimum regulatory overheads, maximum
flexibility in the choice and use of space and minimal costs. The
project companies which will build and administer these STPs will
ensure that all these facilities are available with the barest minimum
hassle to the software houses themselves.