KARACHI – Pakistan, the South Asian nation with total economy reaching over $400 billion, has potential to become a regional fintech powerhouse, but only if it tackles complex taxes, costly compliance, and outdated regulations, according to a new report by the Asian Development Bank (ADB).
The report titled “Unlocking the potential of fintech in Central Asia,” warns that Islamabad lags behind its regional peers in key fintech indicators. While digital finance could dramatically expand financial inclusion and drive economic growth, fiscal bottlenecks, regulatory hurdles, and capacity limitations remain major roadblocks.
ADB urges Pakistan to reform its tax system to be fintech-friendly by clarifying obligations, offering targeted tax cuts, and simplifying procedures including online filing. Boosting tax awareness through training programs, incubators, and academic institutions is also highlighted as critical to fostering a compliance-focused ecosystem.
Equally important is closer coordination among the Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), and the Securities and Exchange Commission of Pakistan (SECP). This would ensure unified oversight, reduce overlaps, and lay the groundwork for stronger regional collaboration.
The report calls for tailored licensing categories reflecting the diverse risks and business models of fintech firms. Proportional licensing fees would lower barriers for startups while encouraging competition and innovation. Collaborative regulation and information-sharing among authorities are emphasized as vital for supporting innovation and regional integration.
The report further spotlights financial inclusion, urging streamlined licensing for new products and offering grants, funding, and capacity-building programs to accelerate fintech adoption. Investment in human and institutional capacity, digital literacy, specialized policymaker training, and R&D is essential to close the country’s fintech gap.
The financial organisation stressed that regional partnerships within CAREC bloc, through investor meetings, conventions, and joint projects, could enhance cross-border investment and extend digital finance to underserved populations.
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