Digital technologies have been changing the world economy where numerous nations still can’t seem to encounter the full developmental advantages of digital technologies, for example, inclusive and sustainable development, better governance, and responsive delivery of services. Given the size of change in competitive advantage that digital technologies can confer on adopters, the risks of slow or poor adoption of these innovations can be dire for industries, governments, individuals, and nations so, Government of Pakistan striving hard to document the international transaction with tax rebates to ensure not only economic expansion but encourage international financial tools to enter in our market.
For decades financial sector have employed the same static, highly business models. But today they find themselves confronted on all sides by innovators seeking to disrupt their businesses. Crowdfunding, peer-to-peer lenders, mobile payments, bit coin, robo-advisers all seems to be no end to the diversity, or to the sky-high valuations, of these ‘fintech’ innovators.
Overseas residents are the backbone of any country and a source of foreign currency inflow in the form of remittances and helped the country in reducing the current account deficit and external debt burden. The COVID-19 crisis bring a decline in remittances to Pakistan. Recession in global market and international travel restrictions due to COVID-19 accompanied with the decline in the oil prices have led to a significant decline in remittance flows. Gulf region is a major source of remittance for Pakistan as eighty per cent of the UAE population are foreign nationals. In Saudi Arabia, about 80 per cent of the labor force consists of migrant workers but the collapse of the oil prices, tourism and full or partial lockdown are the three main channels through which COVID-19 has affected the Pakistan’s economy. Overseas workers are either fired from their jobs or stuck in their houses (overseas) due to travel restrictions and lock downs as a result remittances almost decline from 9% to 14% in the FY20. The FY20 indicate that the remittances vary in between US$ 20446 million and US$ 21789 million and it is equally important to note the fact that there would be a significant decline in informal remittances that constitute around 40% of the total remittances, due to restrictions on cross border movement of migrant workers as the flight operation is halted across the world. These restrictions would lead to at least 50% decline in informal remittances in FY21. The uncertain situation of the COVID-19 crisis leads to an extraordinary degree of uncertainty about the full global impact of the virus on the world economy so, the recovery of the remittances flows is highly uncertain and depends largely on economic recoveries of the remittance sending nation that leads to the crisis in foreign reserves.
At this crucial time and being the struggling economy Government of Pakistan has announced a scheme called ROSHAN DIGITAL PROGRAM which is the brainchild of the Government of Pakistan and has been spearheaded by the State Bank of Pakistan .The RDA initiative aims at connecting the diaspora with Pakistan financially by facilitating their remittances with a target to regain the connectivity of their overseas residents by not only facilitating and easing the financial transactions to support their domestic families through opening their local digital accounts without visiting any local bank, embassy and consulate through which they may fully operate and manage their utility expenses remotely.
This program will also provide an opportunity to our overseas residents to invest in Naya Pakistan saving certificates that offers attractive interest packages on Rupee and Dollar accounts. Government’s move in this program will also allow Pakistanis abroad to earn a reasonable interest rate by investing in Pakistan and a non-resident Pakistanis (NRPs) are facilitated even to invest and work in stock markets. Government targets almost 25,000 bank account under the scheme. Of these accounts, 382 were routed for equity markets. NRPs can now remotely open bank accounts in Pakistan through online digital portals without having to visit bank branches. They are not required to go through the hassle of paperwork. An overseas Pakistani who opens a stock investment account will be able to start trading within 24 hours. Under the RDA (Roshan Digital Account), the government has made another effort to encourage NRPs to invest in capital markets as almost 8.5 million Pakistanis live and work outside the country and it is expected that our non-residents who park their savings in overseas banks and receive next to nothing in return may find Pakistani equities hard to resist. Collectively there is no doubt in the fact that, the overall concept of Roshan Digital Account, as well as its underlying policies, has been crafted from the ground up to provide NRPs a seamless banking experience, and to extend the net of financial inclusivity to the Pakistani diaspora. The account holder can opt for a fully digitized account in multiple currencies, which means they can choose whether to open a rupee dominated account, foreign currency (including USD, AED, GBP, Euros, and more) or both, and funds in the account will be fully repatriable and will allow for a withdrawal of funds without any extensive approval process or the need for any regulatory approval.
It is suggested that Government should review its initiative and will not limit the RDAs for NRPs, the program should welcome all foreign investors in equities that will stop the outflow of foreign investors’ portfolio investment which has been one of the main hurdles to market growth.