Friday, 19 August, 2022
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ICT Sector Expanding Export Basket

Hiren Pandit

ICT Sector Expanding Export Basket
Hiren Pandit

Bangladesh expects US$ 500 million in export earnings from the IT sector by 2025. The country is expected to employ at least one lakh people in the IT device manufacturing industry. By 2025, a roadmap of $500 million in export revenue from the IT sector has been set. In the IT sector, the export revenue of digital devices made in the country is planned to increase from the current one billion dollars to 5 billion dollars by 2025. At the same time, the domestic market for ICT products and IT-enabled services is expected to reach $500 million.

The government believes that IT products such as mobile devices, computers and laptops will play a major role in capturing the potential 10 billion IT market at home and abroad in the next four years. As part of this, the Department of Information and Communication Technology (ICT) has taken a 'Made in Bangladesh' roadmap to expand the opportunities for setting up digital device manufacturing industries in the country and to brand local products in the international market.

Proper implementation of this roadmap will ensure the employment of at least one lakh people in the IT device manufacturing industry in the country. Laptops and mobile phones will be exported abroad to meet the domestic demand of about 200 million. Recently the ICT department has been prepared. The ICT Department hopes that if the 'Made in Bangladesh' action plan is implemented, Bangladesh will become one of the hubs for the production of ICT and IoT (Internet of Things) products. It will also help the government implement a digital access agenda for all.

The growing demand for digital devices and consumer gadgets from the country's emerging middle class and affluent class has created a favorable environment for Bangladesh's entry into the international high-tech industry. The roadmap recommends giving priority to the use of ICT products produced in the country in government procurement. To this end, initiatives have been taken to increase the awareness of the officials of the government agencies involved in shopping. Efforts are also being made to set up hubs in Singapore, Dubai, England or any other country to facilitate the export of domestically produced products.

The new roadmap focuses on various issues including the creation of skilled manpower, product quality improvement, quality assurance, global demand assessment, image enhancement of Bangladeshi products worldwide, protection of intellectual property, and research growth.

Apart from the ICT department of the government, the Ministry of Commerce, Ministry of External Affairs, Ministry of Planning, Ministry of Posts and Telecommunications, Ministry of Industry, Ministry of Education and other ministries are also involved in this huge task. Bangladesh Investment Development Authority (BIDA), Bangladesh Export Processing Zones Authority (BEPZA), Export Promotion Bureau (EPB), Bangladesh Standard Testing Institute (BSTI), Skills Development Authority and University Grants Commission will work together. To make the roadmap a success, various non-governmental organizations, as well as various organizations of entrepreneurs, will have important responsibilities.

According to the International Data Co-operation (IDC), Bangladesh imported 34 million mobile phones in 2017, valued at $118 million. In 2018, the company valued the country's laptop market at 300 million. The Bangladesh Hi-Tech Park Authority (BHTPA) was established to take advantage of this potential internal market. Several series of incentives are being given for this. BHTPA (Bangladesh High-Teck Park Authority has announced income tax rebates for IT park founders and investors. In addition, the production of ATM kiosks and CCTV cameras in the country will be given supplementary duty exemption including exemption from import and regulatory duty. In addition, investors will also get a duty exemption on imports of capital equipment and construction materials. The new roadmap has been prepared to make the 'Made in Bangladesh' enterprise dynamic by utilizing these facilities.

Moreover, the availability of manpower in a relatively competitive pay structure, local market demand, and the supportive framework of government policy seem to be playing an important role in making Bangladesh an attractive venue for digital device production.

With the example of Walton, Samsung, Oppo, and Data Soft, which have already successfully set up production lines in Bangladesh, the department says, these initiatives have raised the possibility of further development in the local device manufacturing industry in the future. However, the Department of Information and Communication Technology has identified some obstacles to the implementation of the roadmap, including the high cost of capital in Bangladesh. In addition, lack of skills, weakness of industrial support ecosystem, quality assurance and international certification of locally produced products, lack of rules for prioritizing local products in government procurement, lack of public awareness about local products, and lack of financial incentives for digital device makers are identified as major problems. Strategic Aspects: A new roadmap has been formulated focusing on four strategic issues. These include capacity building, awareness raising and branding, research and development, and policy support at the local level in the public-private sector. Under this, there are some short-term action plans to be implemented by 2023, medium-term to be implemented by 2026 and long-term by 2031. In the short run, domestic and international markets for technology products will be analyzed and demand assessment, capacity building and marketing strategies will be formulated.

At this time, testing labs will be set up by the universities to ensure the quality of IT products. The Ministry of Commerce will take initiative to increase exports through bilateral and multilateral international agreements. Hubs will be set up in Singapore, Dubai, England or any other country to export goods abroad. With the help of the ICT department, the universities will build five lakh, skilled workers, for the ICT sector in the country at this time. Skills Development Authority will develop international standard training modules and syllabus. In the next two years, the Ministry of Foreign Affairs will formulate and implement an action plan to understand the attitude of other countries towards Bangladesh and to overcome the negative attitude. The ICT department will create a national portal with details of ICT products produced in the country. Besides, initiatives will be taken to increase the awareness of the officials involved in government procurement about domestic products at this time. The National Board of Revenue will work to bring down various tariffs and taxes on the digital device and its backward linkage industry to a reasonable level.

The Ministry of Finance will have to provide loans on easy terms to the manufacturers of ICT products. The Ministry of Commerce will look into the issue of incentives for the export of these products. The initiative to reduce imports by increasing the production of ICT products, as well as export growth, is certainly commendable. However, if there is no plan to increase value addition, such initiatives will not yield effective benefits. Most of the entrepreneurs of technology products are importing almost 100% of the materials from abroad and adding only to the domestic factories. As a result, the government is being deprived of revenue as it is not taxed as a finished product. On the other hand, the factory is being run by hiring only nominal people as it is only an additional work. The Chinese mobile phone brand domestic factory, which was launched a few days ago, employs only 25 people. But if 100% of the materials were produced in the country, a few thousand people would be needed. Despite the importance given to industrialization in our country, the issue of backward linkage has always been neglected. If raw materials and parts cannot be produced in the country, value addition will not increase. There will be no employment. To provide other opportunities, including tax exemption, to the entrepreneurs of technology products as a domestic industry, to make it compulsory to impose a certain amount of value addition.

The software development and solutions sector in the country has reached a stable position. Now we need to strengthen the hardware industry in tandem with the software industry. Although dozens of companies are currently producing mobile phones in the country, very few companies have developed laptops. Initially, local factories will only add digital devices. This is a fact.

Emphasis should be placed on job creation and value addition. This roadmap was very useful as there was still very little investment in setting up a high-tech park. There is a lack of coordination between various ministries and departments of the government to support the digital device industry. The investment will also increase if the new roadmap ensures coordination. We like to receive praise from foreigners when they appreciate the progress of our social sector and the national ambition to become a middle-income country without extreme poverty by 2031 and a developed country by 2041. Traders should focus on research for product diversification and their branding in the field.

The age of technology in the world is moving forward. Before the Fourth Industrial Revolution, we took steps to create skilled human resources. We have been able to continue all this during the epidemic, where many countries around the world are facing problems. The government has been able to boost growth to 8 percent in the past and hopes to surpass it in the future. For the economic development and sustainable growth of Bangladesh, export products need to be diversified. If this is possible, on the one hand, the dependence on foreign products will be reduced, on the other hand, the total export earnings will increase. Employment will increase and women will also benefit.

According to the report, 1600 types of products are exported from Bangladesh to different markets of the world. Eighty-five percent of the total export income comes from 292 types of readymade garments. Only 15 percent of the income comes from the remaining 13 hundred products. But out of these 1,300 products, there are a lot of products whose market is very big and the demand is constantly increasing. In particular, the market for leather and leather products, plastic products, light engineering products and medicines is growing. Bangladesh's capacity in these sectors is higher than in many countries. As a result, with the appropriate policy support of the government, there is a huge possibility of increasing export earnings from these sectors. In this case, the information technology sector can play an important role in exports.

 

The writer is a columnist and a researcher