Budget inconsistent with objectives of ICT sector

The budget for the fiscal year 2023–24 did not reflect the proposals of the information and communication technology sector as expected.

Rather, it is inconsistent with the purpose of Smart Bangladesh. The business leaders of the national trade organisations of the ICT sector said this at a press conference in a budget reaction on Sunday at BASIS Auditorium in Dhaka.

The Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS), Bangladesh Association of Contact Centre & Outsourcing (BACCO), Internet Service Provider Association of Bangladesh (ISPAB), and E-Commerce Association of Bangladesh (E-CAB) jointly organised the press conference.

BASIS President Russell T. Ahmed, BACCO President Wahid Sharif, ISPAB President MdImdadul Hoque and E-CAB Vice President Mohammad Shahabuddin were present at the press conference and gave their budget reactions on behalf of their respective associations and answered various budget-related questions from the media representatives.

In his speech, BASIS President Russell T. Ahmed said, "The government has announced a budget of about Tk7.62 lakh crore which is undoubtedly the biggest budget ever. Every time, the budget allocation for the ICT sector has increased in this year's budget. But in reality, there is no positive or significant good news for the ICT industry especially for the businessmen." "After making specific and logical proposals, extending the period of corporate tax exemption for this sector till 2030, withdrawing VAT on software and ITES, and increasing the cash incentive from 10% to 20% against software and IT services exports I proposed to give special incentives to software buyers to develop the domestic software industry. But none of these were taken into account. On the other hand, import duty on the operating system, database, and security software has been increased from 5% to 25%, and 5% VAT on software has been proposed, which is incompatible with the Smart Bangladesh goal. Smart Bangladesh means that every sector will be smart. Where the education sector, health sector, agriculture sector, and energy sector are smart, all sectors will be smart. But increasing the import duty and imposing VAT on software will increase the price of this software, which is inconsistent with the objective of implementing Smart Bangladesh," he added.

BCS representative said, "We are completely disappointed. The current total tariff is 26% as a result of the imposition of 15% duty on imports of laptops, FMC printers, and toner cartridges in the last fiscal year 2022–23, which was proposed to be withdrawn this year but remains the same. Not a bit has changed. This will completely undermine the determination to build a Smart Bangladesh."

BACCO President Wahid Sharifsaid, international buyers get BPO services from Bangladesh at a relatively low price, so Bangladesh is currently in an important position in the international ICT industry market.

Many contact centre software products are not yet being developed in the country and have to be imported from outside the country, but the operating system, database, security software, and other software are subject to an import duty of 25 percent along with 15 percent VAT. As a result, we believe that the cost of services in this industry will increase, which will have a negative impact on the international market.

He also said that as a result of the corporate tax exemption, employment in this industry has grown from just 300 to more than 70,000 people today. In the budget proposal, the request to extend the period of corporate tax exemption for this industry from 2024 to at least 2030 was not taken into consideration. As a result, the price of BPO services will increase in the future, customer attraction will decrease, new investment will be hindered, and overall, the BPO industry will be hindered.

ISPAB President Md. ImdadulHoque said, "ISPAB has been working for 25 years with the aim of building a digital Bangladesh. In spite of the directives of the Prime Minister in the proposed budget for FY2023–24, including not including all services of ISPs in ITES, not reducing the duty on the materials used in the IT sector, and not withdrawing the 10 percent advance tax on broadband internet service providers, the expansion of internet services, and ISPAB, will be hampered.

On behalf of ISPAB, I am expressing a strong reaction against such a retrograde decision. At the same time, through this press conference, we strongly request the Finance Minister and NBR Chairman to take the ISP sector forward through the inclusion of ITES in all the services of the ISP organisations to ensure the best use of the Internet and to remove the obstacles.

E-CAB Vice President Mohammad Shahabuddin thanked the Prime Minister for recognising the e-commerce marketplace.

He said, "This time the definition of the marketplace in the budget is the effort of E-CAB in the last three to four years. Only E-CAB has been meeting with NBR for the last few years for this definition alone. When this issue of VAT came to e-commerce, NBR also did not know what the definition of the marketplace was. We had to wait three to four years to fix that divination. Digital businesses will benefit from VAT as a result of this integration. Logistics companies will benefit.

Everyone can stand in a place of clarity. This sector will move forward in a more organised manner."