Pakistan offers a very opportune market for tech startups: Governor SBP

May 9, 2021 (MLN): Foreign exchange environment of Pakistan has decidedly improved compared to the last few years, which provides the right macro background to foreign investors to invest in Pakistan and has also given the confidence to SBP to ease a lot of restrictions that existed before to bring money in and to take money out, Governor SBP, Dr. Reza Baqir in a webinar organized by The Nest I/O said.

“In the months to come, we will continue this journey of embarking upon further reforms to make it easy for foreign investors to invest and divest,” he said.

Responding to a question regarding foreign investors’ view about Pakistan, he said that the profile of Pakistan is one which favors the growth of new industries especially startups which caters to a young population, cell-phone penetration and in general the penetration of tech-related things is reasonably high in Pakistan and offers a very opportune market to anybody considering investing in Pakistan.

Commenting on the country’s financial statistics amid the pandemic, he asserted that Pakistan is entering in 3rd wave of Covid19 with much better financials and real economy indicators than it entered the first wave.

“On the financial front, our reserves today are much higher than they were when we entered covid last time around. Our exchange rate system has already survived the tests of covid.  Our stock market recently has been demonstrating a great deal of momentum and all our real economy indicators are in green and have much more momentum than last time around,” he stated, adding that when the first wave of covid came there was a synchronized global lockdown and shutdown of activity, thus, Pakistan has no fear from the external demand side that it had in the first wave of covid.

“In short we are looking at the situation very carefully, we do believe right now that Pakistan's economy has a lot more going in its favor for this wave of covid than the previous wave of covid,” he further said.

With regards to digital currency, he reiterated that SBP is studying Cryptocurrency like many other central banks, particularly, central bank digital currency (CDBC), adding that this is an area where it holds the promise of many benefits including financial inclusion, digitization, and visibility to help us in our fight against any anti-money laundering as well.

However, at the same time, it does have some challenges, it requires a level of robustness technologically, nevertheless, the successful rollout of RAAST, an instant payment system by SBP, has put the country in a good position to study CDBCs, he believed.

“It is an active area, and we also welcome input from stakeholders to share thoughts with us,” he said.

Commenting on the digitization drive, he mentioned “we are only accepting FX cases digitally from authorized dealers.” We have a portal, and authorized dealers are being required to submit only digital, he said.

In addition, a circular requiring commercial banks to create digital portals themselves for their clients for end-to-end digital experience, and by June’21, the banks are expected to become fully digital in this regard, he informed.

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