ICT Roadmap Bangladesh: A Pilot Study

Moving Towards a Sustainable Growth of the IT Industry.

March 4th, 2013

Final Draft.

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Table of Contents EXECUTIVE SUMMARY DIGITAL BANGLADESH: AN OVERVIEW THE MISSING BRIDGES RECOMMENDATION TO GOVERNMENT 3 4-­‐7 8-­‐11 12-­‐27

CONCLUSION

28 ANNEXERS

29-­‐50 COMPILED QUESTIONNAIRE

30-­‐42 SURVEY RESULT

43-­‐50

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Executive Summary: This research was done to assess where does the Bangladesh’s IT industry stands now, and what needs to done to be at par with the Global IT market. We have identified certain indicators, drawbacks and barriers in the industry preventing its growth and polled and interviewed certain experts and entrepreneurs to confirm them. In early 2009, The Government declared Digital Bangladesh and setup 14 clear goals to be achieved by the end of 2013. Now even though The Ministry of ICT has taken up numerous projects under the title and their effort is remarkable, the IT industry has not been able to take off, as it has a market size of USD 300mn which is insignificant compared to India’s USD 100bn. The major causes behind this hold back are extensive focus on IT imports, delayed realization of the IT wave, lack of market access development, lack of government involvement, lack online business initiatives, missed opportunities and lack of funding and investment. In order to overcome this gap, the government should focus on providing Internet connectivity in primary schools thereby enabling e learning. They should also take up initiative, change to educational curriculums if necessary, to produce quality graduates who are capable of overcoming practical challenges in the industry. Implementation of new policies and modifying the old ones in favor of ICT startups to gain access to capital and reduce excessive imports by imposing heavy tariffs is also essential. The government should also make policies, which would make the ICT, and Science & Technology ministries run by technocrats and IT experts for efficient decision-­‐making. The government should also prior the improvement of net connectivity and power supply as it is the platform for online IT business and also the creation of special IT zones. Government should also instruct its subsidized firms to become completely export oriented so as to reach the international level. Attractive incentives should be arranged by the government for bringing in NRB IT professionals who would enhance the growth by sharing their precious knowledge and expertise to local producers. Finally the government should convince the foreign donors to provide jobs to local producers instead funds, which will increase their experience and also create a customer base. Following this road map would boost the growth of our industry and bridge its gap from the mainstream. The research methodology for this roadmap has been Desk Research, Three Key Informative Interviews, One FGD and an online survey. The transcripts and survey results have been attached as annexure.

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Digital Bangladesh: An Overview 2009, the first ‘National ICT Roadmap’ was drafted by then ‘Ministry of Science and ICT’ (Although a draft ICT policy was formulated in October 2002 by BCC). This roadmap was developed with active support from UK based management consultancy firm gov3, SPINNOVATION and D.Net. The report laid out 4 clear visions for Bangladesh over the next 10 years from 2009.

Ensure social equality Establish a transparent, responsive and accountable government

Ensure cost effective delivery of citizen services through public private partnerships

Use ICT to become a middle income country

Later on, this Report laid the foundation of the concept

‘Digital Bangladesh’

The report also laid 14 concrete objectives to be achieved by the end of 2013. Now we are already at the end of Q1 of 2013. And very few of the things are being done of those 14 objectives

Goals under Digital Bangladesh 1 Ensure that by the end of 2013, all Bangladeshi citizens and SMEs have access within their community to ICT and the skills to use them.

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E-­‐Bangla to ensure that Bangladeshis are easily able to produce and upload content in Bangla and that they are motivated and empowered to do so ICT in Education to ensure that, by the end of 2013, all Secondary Schools of Bangladesh have access to ICT-­‐ not only for the development of basic ICT skills but also to use ICT for E-­‐learning. Citizen-­‐centric eservices by the end 2013, Bangladesh is one of the regional leaders for e-­‐services maturity.

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Deliver a citizen-­‐centric, multi channel one stop shop for government. EGovernment Standards and Policies to develop a comprehensive eGovernment interoperability framework for the Government of Bangladesh. International ICT trade and investment Campaign to develop a globally-­‐recognized brand for Bangladesh as a center for ICT investment, outsourcing and exports, which helps the Bangladesh ICT sector to grow its levels of exports, turnover and foreign direct investment by at least 50% each year between now and 2013.

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Access to finance for the ICT sector to ensure that the growth of the ICT sector in Bangladesh is not constrained by lack of access to debt and equity financing. Meeting the skills Needs of the ICT Sector to ensure that Bangladesh is seen as a global source of high-­‐level ICT skills and that the ICT sector has a ready supply of skills that meet its needs as the sector grows.

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Develop clusters of high growth ICT companies based around Technology Parks in each Division of Bangladesh by 2013.

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Removing legal barriers to e-­‐commerce to ensure that all remaining legal barriers to doing business electronically in Bangladesh are removed and that the necessary business changes are put in place. Ensure that Bangladesh is a regional leader in availability, quality and cost of broadband infrastructure and services.

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Establish effective cross-­‐government leadership and governance of the ICT Roadmap. Improving ICT strategy and delivery within Ministries.

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Snapshot of Remarkable Works Done Under Digital Bangladesh:

Implementing Authority Projects Completed Ministry of ICT Establishing e-­‐centers in the unions where there is no electricity of Dhaka, Sylhet, Rajshahi, Khulna and Chittagong Division Establishment of SASEC Information Highway Building ICT infrastructures in the Secondary and Higher Secondary educational institutions of 20 Districts. YES. October, 2012 Status Ongoing

Allocated Budget BDT 36.16 Crore.

Comments:

Yes December, 2011 Yes. October, 2012

BDT 28.61 Crore. BDT 75.76 Crore

National Data Center Expansion Project costing

Yes

March, 2012

BDT

6.98 Crore BDT 281.48 Crore

Development of National ICT Infrastructure Network for Government of Bangladesh 2013 Making BCC stronger by developing the Infrastructure. This will cost BDT 37.85 Crore. The project timeline is July2011-­‐ June2014. Support to High-­‐tech Park Authority to establish High-­‐ Tech Park at Gazipur. Access to Information

Will be completed on June 2013. Will be completed on June2014

BDT 37.85 Crore

Will be completed on March 2013 Started in October 2006.

BDT 18.96 Crore

Prime Minister’s Office

US $4.5 million

7 BDT 36 Crore Sep 2011-­‐ Dec 2017 US $28 Million BDT 228 Crore The project aims to create an estimated 30,000 direct jobs in the IT and ITES sectors, which has the potential to create up to 120,000 indirect jobs, and expects to increase the IT and ITES industry revenue by over $200 million by the end of the initiative. Total Budget for this program is US $70m and 40% is reserved for ICT.

Ministry of Science and Technology

Leveraging ICT Growth, Employment and Governance Project

Ministry of ICT has completed 14 Programs costing BDT 147.41 Crore

At present 14 projects are on going costing BDT 430.93 Crore.

At Present there are 33 projects that have been proposed by the Ministry of ICT

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The Missing Bridges: So far, the government has done substantial work. But still our IT industry has not been able to take off. Since the mid-­‐sixties, despite fits and starts and great promise at all times, the country's IT industry has been a victim of policy apathy and investment drought that has brought the industry crawling to a market size of US$300 million (Japan International Cooperation Agency or JICA study 2008) of which only a third accounts for software and services. Some of the biggest failures and missed opportunities are as follows

1. Focusing only on import of computer technology for far too long:

The local IT entrepreneurs have largely focused on import and distribution of computer products -­‐ a trend that got a boost with the complete withdrawal of import duties and taxes on computers in 2000. This policy intervention -­‐ while made at the behest of the IT industry players -­‐ acted, strangely enough, as a strong disincentive for setting up manufacturing plants for any computer products, even accessories. This also highlighted only the tangible aspects of computer technology, that is, hardware while diluting the importance of software and services. What's more, piracy of software products is rampant and Bangladesh is a laggard in terms of computer usage, even compared with economies of similar standing.

2. Not recognizing the IT wave early on: In the early 80s, a pool of highly educated and motivated entrepreneurs jumped in IT ventures in the country. By the early nineties this group of entrepreneurs swelled to more than a hundred. However, most of these IT ventures focused on providing IT products and systems as opposed to services and locally developed software. The market for computer products was growing and there was easy money to be made from selling computer hardware and packaged software. The computer hardware vendors kept on pushing the latest this or latest that, garnishing them with all kinds of free-­‐of-­‐cost (FOC) pirated software applications. This hardware-­‐centric expansion of the computer market here completely blindsided the entrepreneurs to tap into the immense possibilities of local and international software and IT services markets. In the mid-­‐nineties, the IT entrepreneurs in Bangladesh were caught completely off-­‐guard by the new wave of software off-­‐shoring happening on an increasingly rapid pace in the so-­‐ called three Is -­‐ India, Ireland and Israel.

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3. Lack of market access development: Despite the strong demand for software and IT services from many developing nations such as India, Pakistan, Philippines, Sri Lanka, Vietnam and others, Bangladesh has to date remained outside the mainstream destinations for such services outsourcing. Even though Bangladesh featured prominently in the JP Morgan's "Frontier Five" or Goldman Sachs' "Next 11 Emerging Markets", the country failed to secure a spot in the IT services outsourcing rankings by industry monitors such as IDC and AT Kearny. There are presumably a slew of inhibiting factors; the most important of which is the lack of drive to foster market access in a systematic manner. The local market development has also remained sluggish. The absence of an incentive regime and the government’s no-­‐preference for local software and IT services has aggravated the situation.

4. Lack of e-­‐Government: According to the UK-­‐Intellect (British IT services industry association), the British government accounts for almost half the IT industry revenues and is automatically the single largest buyer of IT services there. Although we lack proper statistics for Bangladesh, we estimate that the government procurement of IT services is anywhere from a third to around half of the market, despite the lack of a coordinated and strategic push from the top. Government departments and affiliated organizations in Bangladesh have ramped up purchase of ICT products since the eighties, but buying of ICT services such as business process consulting, software development, staff training and adaptation, facilities management outsourcing etc. is not so visible. Thrust on local capacity building through government-­‐sponsored pilot programmed (such as those funded by the Department of Defense in the USA and Department of Electronics in India) is totally absent. Rather private sector-­‐ funded e-­‐government projects have been allowed to wither away without appropriate patronage causing both immediate-­‐term and long-­‐term damage (some irreversible) to the local software and IT services industry.

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5. Lack of online businesses-­‐commerce initiatives: Bangladesh entered the realm of e-­‐commerce early on with excited entrepreneurs trying to carve out a market for online trading at the turn of the new century. Following the footsteps of Amazon.com, several vendors started hawking books online, such as 'munshigi.com,' but these businesses foundered owing to the absence of online payment system. However, two years have passed that Bangladesh Bank has lifted the artificial sanctions on online credit and debit card transactions (the statutory order was issued by the Bangladesh Bank in early 2010). and now almost all private commercial banks have launched e-­‐commerce payment settlement platforms for Visa Mastercard debit credit cards. And in December 2012, the central bank launched National Payment Switch, a common platform for the country's commercial banks for electronic payments. Once all banks in Bangladesh join the NPS, a customer using a credit or debit card of any bank will be able to draw cash from any ATM and POS (point of sales) in the country. And transaction costs will significantly go down, as the transactions will be routed through the NPS instead of Visa, Master or Amex card networks abroad. Moreover, purchase and sale can be done with cards through the internet and web portals within the country. Although only three banks -­‐-­‐ Dutch-­‐Bangla, Pubali and Southeast -­‐-­‐ have so far joined the NPS. BB officials said it would take two or three months for all banks to join the network. In this sphere, however, Bangladesh has barely scratched the surface. In a 2010 survey conducted by KPMG in India, 38 per cent of the respondents said they used mobiles to shop while 43 per cent for financial transactions. Clearly, in Bangladesh we have a very long way to go no doubt, but we suspect this market will grow at a breakneck speed for several reasons. First, more than 10 million Bangladeshi diaspora around the world are hungry to buy Bangladeshi gift items both for near and dear ones living in the country as well as in faraway lands. Second, large urban centers such as Dhaka and Chittagong have been ripe for online purchases for many years now with their congested roads and chronic traffic jams. An explosive growth of online offerings is right under our noses.

6. Pro-­‐active Agenda: Missed opportunities notwithstanding, Bangladesh has seen a steady growth of the IT industry, which gives us hope provided we push and promote adoption of ICTs as a core national agenda. The ICT agenda need to focus on the following, among others.

7. Funding Digital Bangladesh: Nothing good can ever happen if funds are not made available to implement even the best ideas in the universe. What would it cost to build a Digital Bangladesh? We estimate that the investment required to deliver on the promises of Digital Bangladesh would amount to about US$1.0 billion in the 2009-­‐2013-­‐ time period. And according to our estimate, less then $150 million injected to this sector. But the required investments for the next five years (2014-­‐2018) should add up to $2.0

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billion, to be followed by $4.0 billion for the 2019-­‐2023 period. Thus, the overall investment for these 15 years of digital development in Bangladesh is pegged at about seven billion US dollars. On an annualized basis, that's less than half a percent of our GDP. We have also conducted a survey on 30 participants ranging from International Institutes to local entrepreneurs to free-­‐lancers. At first we defined 14 indictors that are most important for the growth of our industry. And we assigned a percentage to each indicator. Then the poll was opened. According to the pole, we again revised our basic indicators and came up with a revised one. The detailed survey is attached in annexure.

Indicators

Government regulation: on setting up new private businesses E-­‐government strategy Foreign investment policy: Government policy towards foreign capital Freedom to compete: Freedom of existing businesses to compete in domestic markets Access to investment capital: Access to medium-­‐term finance for investment Public sector R&D: Gross government expenditure on R&D Internet penetration: Internet connections per 100 people Percentage 12% 10% 10% 9% 8% 7%

Quality of technology skills: The education system's capacity to train technologists with 7% business skills Public procurement of IT: Government spending on IT hardware, software and services 7% Market spending on hardware, software and IT services Enrolment in higher education PC ownership: Desktop and laptop computers per 100 people Employment in IT Prevention of Cybercrime Intellectual property protection: and Patents 6% 6% 6% 6% 3% 3%

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Recommendation to Government:

The students of primary level should be definitely provided with knowledge on computer. Students must be exposed and taught on how to browse and collect relevant information from Internet, which will also help them in their future studies. And in order to perform well, schools must be connected to Internet. Guided access to social media is also a must. And for those who are interested enough will go on exploring new things i.e. online book reading, online schooling such as by Salman Khan. And few of them will start basic computer programming, web designing or graphic designs. However, according to Ananya Raihan, practical knowledge using labs should be provided from class 6 onwards; but before that, interest can be raised among them through the use of computer aided practice work, colorful books and study materials. Computer labs have been set up in many schools, but it should be also mentioned that facilities are being underutilized. So far, no actions have been taken to engage the students in practical use of computer. 65.06 % of secondary schools in Bangladesh have computer facilities, but only 29.73% of them have internet connections, even 24.02% of them have no electricity connections (2011).

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“Computer means nothing without connectivity to internet ” -­‐ should be the motto of Governments school level educational policy.

Government should increase spending on teachers training, electricity and classroom condition. Govt. has set up a budget of 294 core taka for development for economical year of 2012-­‐13 only for ICT sector where the total budget in Education is Taka 22,145 crore. The assigned teachers themselves are inadequately trained and demotivated individuals who follow a very monotonous and practically useless curriculum if they follow any at all. Mr. Shameem Ahsan, senior vice president of Basis, shared that computer education for primary level depends on the school curriculum but more importantly; trained teachers are needed to educate the students. Revising current policy where success is measured by the “number of computers distributed” is a must. Success should be measured by indicators

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such as number of quality materials published online i.e. Magazines from schools each year. And the revised indicators should rank individual schools and actions must be taken against schools that will perform poorly despite of receiving computers. In the last few years the government has paid much attention in the introduction of bringing IT in the primary education system. There is budget of 373.30 core taka on Establishment of Upazila ICT Training and Resource Centre for Education (UITRCE) in 128 upazilas of 64 districts. The government has established union information and service centers in 4,501 unions to provide information and services to people living in remote areas. “Computer means nothing without connectivity to internet ”. -­‐ This should be the motto of Governments school level educational policy.

Finding a job is the most important

aspect to any graduate student. But for this there has to be enough jobs. Out of 87 Higher Educational Institute, 77 of them offer courses on IT. About 185,000 students are graduating every year from 80 universities of Bangladesh, among them more than 4,500 possessing graduate and post-­‐graduate degree in IT. Though little behind, Bangladesh ranked 85 out of 142 in terms of quality of education system and scored same as Argentina, Chile, Russia etc. Noteworthy that the quality of Bangladeshi graduates are better than that of some other developed countries.

“The government should focus on creating skillful graduates who can overcome the practical challenges of entering into the IT industry.”

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For engaging this quality resource pool, some of the global giants like Samsung, VizRT, WPP etc. have set up their operation in Bangladesh. For example, Samsung already setup R&D Centre in Bangladesh with 250 persons and having master plan to recruit more. Some of the leading talent development corporations, like NIIT, having operation in over 38 countries, already showed interest to setup their operations in Bangladesh with state-­‐of-­‐ the-­‐art education center. Recently, BASIS also launched BASIS Institute of Technology and Management (BITM) to provide different IT industry-­‐ready programs for Bangladeshi young resources. Nevertheless, number of graduate programmers is plenty in comparison to job opportunities available for them in the market, thereby keeping a significant part unemployed. However, if they had a complete idea of how to enter the market as entrepreneurs, their skills would not have gone in vain. Thus the government should focus

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on providing the pupils with practical knowledge rather than theoretical studies. Graduates are coming out by attending examinations, then joining internships in companies for six months. Some are coming to BASIS and/or other institutions for advanced courses, which prepare them for joining the industry. So they have to attend a course of 3-­‐6months after their 4years’ graduation, thereby proving that the reformation is essential. In order to maintain or exceed the industry growth of 56% we would need another 10,000 world standard IT Professionals in next two years according to BASIS. For this to happen, government has to ensure that the job market is an attractive one through fixing range of salaries according to qualifications or determining standard-­‐working shifts, in which case, more number of people will get employed for different shifts. Moreover, a healthy wage rate will attract more workers. The job market at IT industry in Bangladesh has just started to grow. Therefore, with proper support from both the public and private sector, the industry will be able to flourish. More lab activities can be incorporated into the course outlines. . The standards of the curriculum should also be enhanced, thus there will be more quality graduates. The universities can seek contracts with actual companies to give projects to the students. So both the companies are gaining their works, and the students are also getting real experiences, so both sides are being winners. Cooperative programs can be initiated. Some foreign universities make their students study in their first semester and then make them do jobs in their next semester so as to learn how to apply what they have studied. Then again study in the next semester and work in the following semester. Bangladeshi universities can follow the same idea; seek out contracts with actual companies in our country and foreign ones if possible. This will also enable the universities to attract foreign aid. The computer labs should also be made available 24 hours so that the students never feel the lack of opportunity while doing something productive. Government should provide accurate incentives for people to study mathematics and science; everyone wants to learn business since it brings in high paid jobs, which is a major problem. The standards of the curriculum should also be enhanced, thus there will be more quality graduates. This is one of the main reasons why India could grow so fast, high quality graduates focused on mathematics and science. Additionally, courses like ‘ Management for Engineers’ should be included in University level. This will help them understand that they can be entrepreneurs as well. They will also learn about the know-­‐how of investing, which will increase the number of entrepreneurs and create more job facilities. We recommend that the government establish entrepreneurial development centers in Public-­‐Private Partnership (PPP) model around at least 10 major public and private universities of the country. We believe that ten-­‐year roadmaps should be developed for these 10 centers and money should be doled out to implement the plans. Not only will

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these centers create the countrywide regional research and development activities and drive high-­‐tech job growth in start-­‐up entrepreneurial companies, they will also be the pride of the nation. The National Science Foundation (NSF) in the US drives this type of science-­‐driven research programs with government funding.

According to our interviewees,

banks have to change their perception on IT. As they want instant profits and they do not know that IT can actually provide them with such profits, they are not interested in investing in IT companies. To make them aware about this notion, government has to play its role by developing a clear conception about IT firms, providing courses to bankers.

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Access to Capital remains the biggest obstacle to growth for IT startups.

Moreover, banks can provide EEA funds to startup companies on easier terms; on the other hand, the startups should also maintain their ability to make themselves worthy of the funds during the assessment of banks, according to Sharif Islam. If Bangladesh Bank becomes a bit more serious about it, by encouraging the banks to invest in IT by helping the productive capability of the industry, such as providing manpower or operational assistance, then the perceptions of the banks will change. Thus, it is important for both commercial banks and also the central bank to work together to change this scenario. ICT entrepreneurs have to manage fund from personal sources, as there are not any loan opportunities for them. the entrepreneurs also have to pay higher interest rates than traditional loans. For these reasons, these finances are not suitable for SME ICT entrepreneur’s growth and sustainability. Considering the situation Mutual Trust Bank has taken the initiative to design MTB IT Genius for ICT entrepreneurs. It is a tailor-­‐made loan product exclusively developed for ICT entrepreneurs. It is the first and a very timely initiative taken by MTB to stand beside IT entrepreneurs In 1996, a policy of providing loans to SME had been made, to finance the small enterprises at low interests. But the IT firms are not being able to utilize the facility due to the conditions. So the conditions should be made easier so that start-­‐up IT firms can get finance.

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The most recent, and now best regarded, study is the World Bank Global Financial Index (FinDex). The following figure compares access to bank accounts in Bangladesh with neighboring countries and the regions, showing that Bangladesh ranks well in South Asia but is behind East Asia & the Pacific and the Global figures. An earlier World Bank study examined access to finance specifically for SMEs, which ranked Bangladesh ahead of other South Asian countries, as shown below, in terms of both the amount of SME lending as a percentage of GDP and as a percentage of total lending. In order to meet the demand for fund by the SMEs, the government of Bangladesh has taken various steps. The initial BB target for all banks and financial institutions was Tk240bn (US$3bn) in SME loans for 2010. This was achieved and the target for calendar year 2012 is nearly two and half times the same amount at Tk590bn (US$7.37bn). As of 31 March 2012, the total outstanding SME loans from all banks stood at Tk3,851bn (US$48bn). This is 22% of their total loans and advances and an increase of 20% from a year earlier, mainly because of private commercial banks' increased lending to SMEs. The largest lender to SMEs by far is Islami Bank Bangladesh Limited (IBBL). At 31 May 2012, its OLB for SMEs was Tk159bn (US$2bn) -­‐ equal to approximately 42% of its assets. The second largest SME bank lender is BRAC Bank. Now it has to be done for IT industry. Recently Bangladesh Bank has modified the terms and condition for EEF (Entrepreneurship Equity Fund). Now companies aged 1 year or more can apply for the fund. The new Regulation is now SME friendly. And private banks and SME’s should step up and take advantage of this. Also Government should provide safety cushion for the IT industry and it will not involve “moral hazards” There are many risks involved in ICT business, for instance, failure to meet the deadline or existence of an error in the programming language could result in the termination of a contract. And as our target is to make our markets more compatible in international markets, there are many external shocks involved. In order to provide safety cushion the government should learn what are problems the 63% of the firms are facing. Then the government should take necessary steps to solve them. It is also vital that they ensure their share in the local market in order to be sustainable. Provision of safety cushion is essential for the growth of ICT industry in Bangladesh. Suppose if one of the problems is lack of contacts, the government embassies can find out contacts and act as an agent or middleman between the buyer and the seller. Firms in the ICT industry should be given loans on easier terms. The government should convince the commercial banks and other institutions to provide such loans so that they can become SMEs. They should also be made aware of the benefits they would gain from becoming a SME. Govt. can also manage better working condition for them. Government should focus on providing the required infrastructure for the industry, Internet facility and

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uninterrupted electricity supply etc. Finally more training workshops and programs should be launched in the basic IT centers. Most ICT firms, incapable of bearing such a significant sunk cost, turn down such contracts, which might have been quite profitable. Thus if they know, they have a safety cushion, they would be willing to take the risk and ultimately turn out generating impressive revenue.

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High Tariffs should be imposed on few specific software, i.e. Accounting and EMS.”

Cellphone operators, banks and multinational companies imported software worth Tk 25 billion (Tk 2500 crore) in the last three years, putting further pressure on balance of payment, while undermining local firms' capacity. The rising growth of software imports by multinationals and banks are linked to the rise to lower taxes. Grameenphone alone purchased overseas software of Tk 652 crore during the period. The imports by five other mobile phone operators amounted to Tk 534 crore. Other than mobile companies, both government and private commercial and specialized banks imported software worth Tk 464 crore. Low import duty of 6.71 per cent may be one of the reasons the multinationals are importing software instead of locally manufactured ones. Leading ICT personality Mostafa Jabbar mentioned stated importing foreign software by passing capable local companies is a crime. "We have been discussing with the government since long to impose higher duty on imported software but the government did not respond to our demand.” Multinational companies might have other reasons including transfer of profit in the name of software import. He suggested for an investigation into the massive import. Mostafa Jabbar said bank directors sometimes influence bank management to import software so that they can earn additional money from foreign companies behind the scene. Habibullah N Karim, a software exporter and ICT expert said the local companies could produce all types of software other than some switching software for mobile companies. "There is no rationale to import such huge amount of software. The cost will be ten times less if those are manufactured locally," Habibullah N Karim, a software exporter said. He expressed dissatisfaction over import of banking software by government banks. He said Sonali Bank, Bangladesh Commerce Bank and Rajshahi Krishi Unnayan Bank (RAKUB) formed a consortium and appointed Indian company Polarish to install automation system.

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BASIS has 503 members who develop software in the country. There are some other companies outside BASIS who also develop software.

However, many buy software from foreign companies. They should be discouraged to buy it from the foreign market, as it would turn out to be quite expensive due the heavy import tax levied by the government. They can instead buy the quality measurement system that already exists, such as ISO and CMMI. A significant number of companies (18%) have developed software products or productized services. Over 70% of the companies are found to be involved in development and maintenance of software for their clients. However it might seem unaffordable for startups to obtain. Thus they should be made less expensive. We suggest an increased rate of duty on software like -­‐ERP, application, core banking and billing software. Imposition of import tariffs will not only would it aid the growth of smaller ICT firms, it would also increase the brand name of the products in the international markets. However the tariff should only be imposed on software that has domestically produced alternatives in order to avoid forceful dysfunction. Industries that have high brand loyalty on imported software such as banks might suffer from a rise in their costs. "Terms and conditions can be implemented by the BSTI. Benchmarks that the software must meet to be released in the market", said Ananya Raihan. And there should be a policy, which makes it mandatory for government institutions to deploy domestically produced software. However it would also be somewhat similar to cutting down on the degree of freedom of the government institutions as they are being bound to purchase that software. It might lead to separation of market, as the domestic producers would tend to produce only for the government institutions, as the government institutions are the autonomous consumers. The programmers might also take unfair advantage by reducing the quality of their products, in which case the government institutions would suffer. However, this can be avoided by the integration of local and foreign companies to produce quality products; joint ventures will provide the local producers with sufficient knowledge and experience required to produce good products.

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ICT or Science and Technology Ministries are best run not by the regular bureaucrats but technocrats

Employment of specialists in ICT ministry is essential for the healthy growth of the sector. People who have work experience in this industry have a 360-­‐degree view of the total process. They know exactly what problems the industry is facing right now. Recently our ICT minister agreed over the issue of forming the BCS (ICT) cadre service. One more thing that should be incorporated is they should not only take fresh graduates but people with experience should be given seniority based on their experience. Employment of specialists in ICT for ICT ministry is essential for the healthy growth of the sector. They will be able to figure out the actual lacking in the sector, and thus take necessary steps to overcome them, along with proper prioritization. 100% DE politicization of the ministry is also a must. There should be a 10-­‐year plan for this ministry and regardless of the government in power, work towards that vision should press on. An example for that can be India’s ‘Department of Science and Technology’ that is strictly run by technocrats. They develop specific 5-­‐year plans for different industries. Incorporated in 1971, the department is working reluctantly to take India’s science and technology forward. Indian right now have 5 Professional bodies and 18 Autonomous bodies under Ministry of Science and Technology. Comparison to that our ICT ministry doesn’t have any Professional or Autonomous body.

20 Net speed in Bangladesh is the major hindrance to IT export.

Although

overall net connectivity in Bangladesh is improving, according to net index, the country stands at 172 among 182 countries with a average speed of 1.45 Mbps where as Srilanka, India, Nepal and Pakistan stands at 125, 141, 166, 169 with average speed of 3.31 Mbps, 2.74Mbps, 1.94Mbps and 1.84 Mbps. Improving overall connectivity should be prioritized over improving net connectivity for IT industry. According to BBC, 39% of India’s population has access to Internet; of that 10% of them have access to broadband connection. In comparison to that, in terms of fixed (wired) broadband subscription, our user base is just over 1.5 million (BTRC, Feb 2012), which is slightly less then 1% of our total population. In terms of mobile-­‐broadband subscription, Bangladesh stands at a dismal 155th position out of 177 countries. All South Asian countries and Myanmar are ahead of Bangladesh. The percentage of individual Internet users was 5% in Bangladesh in 2011 while the world average was 32.5 per cent. Although one good sign is our mobile broadband rate which starts at extremely low prices i.e. $0.45 along with inexpensive mobile broadband prepaid vouchers. Internet has now become a media of income for the ICT sector. While it is true that improving net connectivity only for the industry would increase their revenue through bringing in more large-­‐scale jobs, it is also true that improving the overall net connections would increase the revenue of industry in other ways such as by bringing in more freelancers. Right now 18% of the population has access to Internet. Although only 2% of the people have access to Internet from a computer, the rest depends on Mobile Internet.. However, total desktop internet users in Bangladesh is actually far greater than that number, likely driven by heavy usage in offices, internet cafes and multiple users accessing the internet from a single household. Local industry estimates suggest that in 2011 access to the web was closer to 8 million users, having grown 300% since 2010 and expected to grow a further 500% by 2020 (BCG, 2010). This acceleration of Internet consumption is undoubtedly fueled not only by the growth in access, such as through WIMAX modems, but also through the proliferation of increasingly affordable laptops, desktops and tablets. There is also the factor of bandwidth limitation, in which case the IT industry might have to sacrifice some of its opportunity. Bangladesh Average Upload Speed for mobile Broadband is: 239 Kbps (30 KB/s). Bangladesh Average Download Speed: 668 Kbps (84 KB/s). It is

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also quite a lengthy process. Access to 3G will mean 10 times the speed of the present system to a cheaper price. Thus if the government prioritizes the improvement of net, for the IT industry, the increase in revenue would be more drastic and in the short run. The IT firms would get a greater opportunity to improve the standards of their products to meet the international level. It would also increase their connection with the social media thus they will be able to conduct a better marketing campaign for their products, featuring their latest achievements and specialty. For example, state-­‐owned mobile operator Teletalk launched an experimental 3G service in Dhaka in October 2012,making it the first operator to provide 3G services in the country and paving the way for the auction of six 3G licenses in 2013 (one of which will be reserved for Teletalk). One of the new licenses is to be reserved for a new entrant while the remaining four licenses will be contested by the country's five privately owned mobile operators. Mobile banking services became more widely available in Q312. Islami Bank Bangladesh teamed up with Robi to launch the Islami Bank mCash service while Airtel expanded its mobile banking service through a partnership with Dutch-­‐Bangla Bank (DBBL). Meanwhile, central bank data showed that mobile banking transactions reached BDT10.08bn in the financial year ended June 30 2012. Fourteen banks are offering services and approximately 780,000 accounts had been opened so far. With new services being launched all the time, it is expected that more than 40mn people will eventually commit to mobile banking. Bangladesh rose to 11th position in BMI’s Asia Pacific Telecoms Risk/Reward Ratings with telecoms rating score of 50.4. A new scoring methodology means that some of the more mature markets in the region saw their overall scores rise appreciably, raising the regional average. Bangladesh now sits below that average.

Bangladesh's software Expected growth of IT exports in the industry could not be achieved first 10 months of until we become fully export-­‐ fiscal 2011-­‐ 12 stood at oriented industry.

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$56.7 million, a 54 percent rise from the same period of the previous fiscal year.

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Going by the trend, Bangladesh Association of Software and Information Services (BASIS), the country's IT trade body, expects the exports of IT and IT-­‐enabled services (ITES) to hit the $70 million-­‐mark for fiscal 2011-­‐12. But the actual amount could be upwards of $100 million, if all the ITES exports and exports by the 15,000-­‐odd freelancers are taken into account. At present a number of ITES exports remain unrecorded, due to problems with the coding system of the Bangladesh Bank, along with the exports of freelancers who earn around $25 million. If we can accelerate the growth to 75% for 4 years it is possible to hit the $1 billion export mark by 2016 and create employment for 100,000-­‐odd graduates if proper support is given to the sector. The industry is facing a number of challenges, dearth of skilled human resources and project management skill being just two of them. Lack of infrastructure remains another big challenge for the industry. The Internet bandwidth price remains very high, the alternative of sub-­‐marine cable is yet to materialize, and there is no software technology park in the country. Only 37% of the basis members focus on international markets. Bangladesh essentially gets small or mid-­‐level commissions, which are not of much interest to the neighboring countries. Our Neighboring country India’s IT Export now stands at $75.8 Billon and they are experiencing a growth of 10.2% (Source: India IT exports picking up, Dawn, 13th Feb 2013) IT firms should focus international markets over meeting the demand of our local industries i.e. RMG. Demand in the international markets mainly comprises of high quality output, whereas price is a major determinant of demand in the local markets. This is because a major portion of our IT consumers who prefer quality, rely on foreign products. Thus domestic firms focusing on international market would eventually have to improve the quality of their products, which is likely to change the preference of consumers of foreign products toward national products. However risk of technical disasters due to errors and software crashes rise significantly. It will also increase the cost of the products, which might exceed the affordability of consumers in which case they will be deprived off the opportunity of automation. In such circumstances, the export market can be diversified in both products and locations. The government can provide cash incentives to the exporters to help them and arrange soft-­‐expo and fairs in foreign countries.

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However, becoming fully export oriented is not an easy task as this requires skilled workers. IT firms should first focus on the local market to create a customer base, and then they should focus on foreign markets. It is difficult for the local firms to ensure the quality demanded in the foreign market. They do not have enough skilled or quality workers who would be able to produce such product or provide the after sales service. Also they do not have any comparative advantage. This is a problem, but focusing on IT services can surmount this. Bangladesh has been doing well in this sector and it is still an opportunity. Providing more IT services will help the growth of the industry significantly. The government can carry out researches to determine where we have comparative advantage, and focus there. Bangladeshi IT and ITES companies have already made their footprint in global outsourcing market and are exporting to Europe, North America and East Asian countries. Right now, they are ready to present high-­‐end engineering and product development services ranging from web and mobile application development to customized enterprise software.

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Firms residing in special facilities like STPs should be 100% export focused.

Firms residing in special facilities, STP should be 100% export oriented. STP 1 provide several advantages to its tenant firms i.e. internet at 25% cheaper rate, rent of 40tk per square feet at a prime location etc. 63% of tenant firms focus mainly on local markets while the others focus on both local and international markets. Ananya Raihan identified the importance of creation of special zones with available space (for firms), schools (for the children of the workers), banks and it should have persuasive incentives that will attract entrepreneurs such as low rent, low interest financing, high speed internet connections etc. The STP Scheme in India provides various benefits to the registered units, which include 100% foreign equity, tax incentives, duty free import, duty free indigenous procurement, CST reimbursement, DTA entitlement, deemed export etc. Besides regulating the STP scheme, STPI centers also provide variety of services, which includes High Speed Data Communication, Incubation facility, Consultancy, Network Monitoring, Data Center, Data Hosting etc. STPI provides physical hosting for the National Internet Exchange of India.

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STPI has played a seminal role in India having earned a reputation as an information technology superpower. STP units exported software and information technology worth $40 Billion in FY 2010-­‐11. The state with the largest export contribution was Karnataka followed by Maharashtra, Tamil Nadu and Andhra Pradesh.

STPI has a presence in many of the major cities of India including the cities of Bangalore, Mysore, Trivandrum, Bhilai, Bhubaneswar, Chennai, Coimbatore, Hyderabad, Gurgaon, Pune, Guwahati, Noida, Mumbai, Kolkata, Kanpur, Lucknow, Dehradun, Patna, Rourkela, Ranchi, Gandhinagar, Imphal, Shillong, Nashik etc. India and Vietnam are way ahead of us in terms of IT. Bangladesh is currently in the level of some eastern European countries and Philippines. Therefore, special zones like STPs and HTPs are crucial and these should be set up with facilities like free internet, subsidized bills, shared peripherals, shared conference area etc, which will reduce the headaches of startups which could have hampered their business. The government will have to develop the basic infrastructure for the firms. The government can provide facilities at a subsidized rate, there are many such companies, and they are not capable of establishing such a building at first, it is too risky. This will enable them to produce world-­‐class products and also compete in foreign markets. in the process instead of benefiting many mediums, the local firms are benefitted. These are making it difficult for the firms outside STP to compete in the market as they are incurring higher cost for producing the product. Therefore, the firms that are residing in special facilities should be having various cost advantages, which enable them to reduce their cost of production. As a result, they are able to provide products at lower costs. This makes the IT industry more competitive in the foreign markets. Hence, these firms can be export oriented completely. The Government of Bangladesh is willing to support IT investment and has declared the second software technology park, Janata Tower, located in central Dhaka, to reduce the business startup cost, time and to save infrastructure cost as well. Also, land has been acquired for developing a larger High-­‐Tech Park very near at Gazipur. Government should prioritize on creation of more small-­‐scale technology incubators then spending on one full ledged High Tech Park. If the government emphasizes on making more small-­‐scale STPs, it will be a safer approach, as there will be gradual development in the IT sector along with people’s interest side by side. There will be insignificant possibility of not have enough tenants to occupy the available space, which will most likely prevail as the major drawback of building a High-­‐Tech Park in Gazipur, first. However, building such a park is sure to grab the attention of the international community and it will also provide

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the tenant firms with the opportunity to perform in the international platform, due to significantly levels of reduced costs. They should be given loans on easier terms. The government should convince the commercial banks and other institutions to provide such loans so that they can become SMEs. They should also be made aware of the benefits they would gain from becoming a SME. To make them into small enterprises, they will need to be provided the assistance of private equity funds, incubators, angel investors and also the government in the form of subsidies and working places. When you obtain an identity, people will know about your activity and services. They can also be helped with EEA loans for which they will have to pay no interest for 7 years. In terms of the BPO industry, the government is giving tax breaks or holidays of 10 years or longer. The government is in the process of building several IT parks. The government is going to provide this land at very low costs to any IT company that comes in here. There are a couple of locations within Dhaka city and they are building an IT city just on the outskirts of Dhaka. Besides the tax incentives they also have a fund set up by the Bangladesh Bank to provide low interest loans to the IT industry. So, small startup firms in Bangladesh can take advantage of this provision.

A major

part of the IT exports are done to USA through NRB linkages. Lack of NRB entrepreneurs have also prevailed as a limiting factor for exports, which proves the significant role of NRB in the export market of ICT. Thus the government should make strategies to bring back NRB professionals to the country so as to get them more involved in the IT industry. Government should bring in NRBs with high payment as professionals if necessary. Both their investment as well as their knowledge is important for the growth of ICT industry. Strategies might include the awarding of lands to those who return to Bangladesh after 10+ years of professional IT service abroad whereby they will work in the STPs and High Tech parks, develop the infrastructure required for IT activities.

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NRB IT professionals and new consultancy firms should be used for boosting the growth of the IT sector."

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Salman Amin "Sal" Khan is a Bengali American educator, entrepreneur, and former hedge fund analyst. He is the founder of the Khan Academy, a free online education platform and nonprofit organization. From a small office in his home, Khan has produced over 3,500 video lessons teaching a wide spectrum of academic subjects, mainly focusing on mathematics and the sciences. If people like him would contribute in the IT sector of Bangladesh then it would have been a major contribution in the IT industry. As an emerging Information Technology (IT) and Information Technology Enabled Services (ITES) outsourcing destination. International renowned bodies like Goldman Sachs, JP Morgan, and Gartner etc endorse Bangladesh. The main catch is that Bangladesh offers 40% lower cost than that of India and the Philippines. Given this information, the NRB IT professionals should be proud that they belong to a country with such capability and also should be motivated to contribute to their own country. The government should strengthen property rights so that the NRB IT professionals feel secure in participating in the IT industry of Bangladesh. This copyright law, in Bangladesh is still not being enforced, but there are attempts to do so. It is still in the awareness creation level. There are laws related to IT, such as intellectual property rights. Moreover, joint ventures between the NRB IT professionals and local companies will provide the local producers with sufficient knowledge and experience required to produce good products. Some might think that this will promote unhealthy competition, but it will actually help the industry grow larger as it will be a learning process. We welcome the government’s decision to open a NRB Bank. This Bank will have a paid up capital of no less then money equivalent of BDT400 Crore. Shareholding of the NRB bank shall be 50% from the NRB Sponsors and the rest from Public Offer. Now Government should also introduce consultancy firms who would advise the remittance senders to invest their money in the IT industry instead of buying lands and properties. This will solve the problem of lack of capital and also enable the investors to seize the available opportunities. This will also act as a bridge between the local and international IT industry, as the investors will naturally promote the products they invested in. This will increase the revenue of IT industry both from the local market as well as foreign markets, thereby aiding the growth of the industry.

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The NRBs can invest in various markets of Bangladesh economy and provide more possibilities for the growth of IT sector. For instance, HSBC Bank has a number of investment options for the NRBs in the form of foreign currency current account, foreign currency time deposit account (NFCD), Non-­‐resident taka account and Local Currency Time Deposit Account. AB Bank has foreign currency A/C, NFCD, Wage Earners Development Bond, USD Premium Bond and USD Investment Bond facilities. When investments are made through these channels, more funds are made available which can be mobilized towards IT sector.

Firms face

numerous challenges during their initial stages of business i.e. lack of consumer confidence, high costs, lack of capital etc. There are also many donor agencies that try to provide funds to help them overcome the problem of insufficient capital. In Financial year 2011-­‐2012 Bangladesh received Donor Fund of $580 million. A big proportion of the fund went into developing job opportunities especially in rural Bangladesh. However if the donors had provided 10% of their funds as work to startup IT companies that $58 million can create at least 20,00 new jobs every year. This would benefit the firms by increasing their experience and also by creating a customer base and also bring unique experience of working with big organizations. Moreover, they could have taken the advantage of reasonably priced labor force and raw materials. But this sector still suffers from effective marketing and branding effort. It is not unusual that SME labeled as IT and ITES firms struggle hard to organize robust marketing activities individually. But a collective marketing and branding effort backed up with the right policy may graduate the industry to the next level of success. With this spirit of mission, BASIS has been trying to promote outsourcing its industry brand "BangladeshNEXT". A good directives and branding roadmap may accelerate Bangladesh position even stronger within global outsourcing market. Industry may learn from the other country success stories implementing business friendly ICT policy. The media, NRB communities and educational institutes should play a vital role to promote the brand, for the success of outsourcing to Bangladesh. Bangladesh has improved a lot in the last few years. But there are other countries that have grown much faster, such as India.

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“Provision of jobs by donors instead of financial aid to new IT firms is more beneficial for their growth.”

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Conclusion: We believe that despite the gap between the IT sector of Bangladesh and countries such as India and Sri Lanka, which have formed due to the massive failures and wastage of opportunities, the government following this road map will undoubtedly bridge the fallback. Solid specialized initiatives will have to be adapted by the government to overcome the identified drawbacks and barriers, and not a holistic approach, in which case it will prevail useful to have some pre-­‐ assessment studies done. The facts and statistics will also enable the government to prioritize their steps. The initiatives can also launched in small scale on pilot basis, which is likely to reduce the risk of, sunk costs, and more importantly new barriers or opportunities might be identified. We think it will be helpful to consult with the key partners BASIS, D.net and Periscope for taking forward the recommendations. AEON will be happy to provide assistance through emails if necessary.

Annexures:

Compiled Transcripts:

Name and Organization: 1. Ananya Raihan Executive Director D.NET 2. Sharif Islam (Owner of USA based IT Outsourcing Firm) 3. Mr. Shameem Ahsan Senior Vice President Basis

How to encourage students about IT from Primary School Level?

1. Practical knowledge on IT from primary level, i.e. before grade 5, is not very important. What can be done to raise their interest is to incorporate information about computers into their textbooks using colors and fun exercises. The government should spend on improving the school facilities, i.e. electricity, classroom conditions, teacher’s training etc. Practical knowledge using labs should be provided from class 6 onwards. 2. More computer-­‐aided lessons should be prepared, in all subjects if possible. The lessons should be made interesting, using colors for instance. They can also be given assignments for which they would need to browse the Internet, under supervision. However, availability of computers is a prerequisite. 3. It actually depends on the primary school curriculum. Something related to computers can be introduced into the curriculum that will be appropriate for children and in which they will be interested. Secondly there should be at least one with which an experienced teacher can demonstrate it to the children, similar to what is done in the high schools; this is my opinion

How to ensure Job Market at IT industry?

1.More entrepreneurs should be discovered. If there are 50 jobs and 150 computer engineers, where will the other 100 works? Thus the government should promote new entrepreneurs; this will reduce extra workers and create more jobs. 2.The job market will eventually grow. The IT industry in Bangladesh is still in an infancy stage which needs time to grow, along with which the job market will also grow. However firms from both private and public sectors can encourage the involvement of people in the industry. Also the local companies should be made aware about not exploiting its workers. The government can play a role by fixing range of salaries according to qualifications. A healthy wage rate will attract more workers. The government can also determine standard working shifts, in which case, more number of people will get employed for different shifts. 3.There is still a huge job market available for programmers in the market. What are not available are quality programmers. University graduates are incapable of directly joining in the industry. What is taught in the universities is traditional syllabus, which has been conducted for many years. It does not take into consideration the changes in the platforms and developments in the industry, our new programs and many other things. Thus it will be very hard to create jobs for them if the education does not adapt these changes. There is still a huge job market; we will have to train them to enable them to work. There is still a huge opportunity of work

How to encourage Banks to invest in IT companies specially Start-­‐ups

1.This is a very important question. Banks do not want to invest in IT companies because they want instant profit. They do not have a clear conception about how profitable an IT firm can be ultimately. Thus the government should take up projects so that banks can develop a clear conception about IT firms. Courses can be provided to bankers. In 1996, a policy of providing loans to SME had been made, to finance the small enterprises at low interests. But the IT firms are not being able to utilize the facility due to the conditions. So the conditions should me made easier so that start-­‐up IT firms can get finance. If you want to buy a rickshaw, you buy a rickshaw, and if you want to buy a car, then you buy a car. You should not be forced to buy a rickshaw. Thus the banks should also have a choice whether they would provide finance for greater profit in the long term or invest in businesses more profitable in the short run.

2.There are many other types of financing institutions sector such as angel investors, private equity fund providers, ventures and then comes banks. In foreign countries, angel investor’s work at different levels, initially they finance only for pre-­‐ pilot rounds of startups. Success in the initial round means further funding for pilot rounds and then tests, thereby the risk is minimized and also the level of trust on the startups is also increasing. The banks should be encouraged to provide EEA funds to startup companies on easier terms; on the other hand, the startups should also maintain their ability to themselves worthy of the funds during the assessment of banks. 3.Banks in Bangladesh are different; we are also facing this problem. BASIS is trying to solve this problem in many ways. Actually the banks’ mentality will have to change first. They have a perception; they do not consider IT as an asset. Since IT is not tangible, they do not consider it as collateral, they are not capable of evaluating the value of IT. Recently Bangladesh Bank is stepping up to solve this problem, but if Bangladesh Bank becomes a bit more serious about it, by encouraging the banks to invest in IT by helping the productive capability of the industry, such as providing manpower or operational assistance, then the perceptions of the banks will change. Thus it is important for both commercial banks and also the central bank to work together to change this scenario.

How to develop and employ a software quality measurement system?

1.Terms and conditions can be implemented by the BSTI. Benchmarks that the software must meet to be released in the market. 2.Some quality measurement system already exists, such as ISO and CMMI. However it might seem unaffordable for startups to obtain. Thus they should be made less expensive. There are some startups that might not bother to get one; awareness should be spread among them about its importance. However these certifications are mainly for exporting products, new ones targeted to the local market can be implemented. 3.Banks in Bangladesh are different; we are also facing this problem. BASIS is trying to solve this problem in many ways. Actually the banks’ mentality will have to change first. They have a perception; they do not consider IT as an asset. Since IT is not tangible, they do not consider it as collateral, they are not capable of evaluating the value of IT. Recently Bangladesh Bank is stepping up to solve this problem, but if Bangladesh Bank becomes a bit more serious about it, by encouraging the banks to invest in IT by helping the productive capability of the industry, such as providing manpower or operational assistance, then the perceptions of the banks will change.

Thus it is important for both commercial banks and also the central bank to work together to change this scenario.

How to stop the migration of white-­‐collar workers from ICT sector?

1.First of all, it is not a bad thing, they are seeking out opportunities of income; they will have to earn their living. The government can make forecasts on the number of graduates that will come out each year and match it with the number of jobs in the market per year. This will take a lot of time and research. Job opportunities will also have to be created in the market by forming new firms. 2.Increasing incentives in the sector should work such as increasing average level of wage. The employers as well as the employees should also be made aware about the wage rates. The government can assign ranges of wage for specified qualifications. Promotion of flexibility of working conditions can also attract a lot of workers, such as permitting them to work a certain days from home through internet. 3.There are many different companies for measuring and assuring quality of IT products. However such companies still remain in the private sector, the government has taken no such initiative so far. But in foreign countries, there are separate sectors for measuring the quality of IT products; this can be learnt from foreign countries.

What are the ways ICT can play a role on social development?

1.This is a very vague question. ICT can be used for social development in numerous ways. Such as, stopping crimes from transactions. Not carrying money eliminates the possibility of theft or hijacking as there is no physical involvement. Mobile banking would reduce the opportunity of taking bribes thereby reduce corruptions. Mobile healthcare services are also important. Job sites reduce unemployment and promote competition among startup businesses, which help them grow. 2.There is no doubt ICT will play an important role in the social development, Shahbagh is a live example, where people were called through facebook and blogs. People should be encouraged to read more blogs and thus learn to write themselves, thus a platform of knowledge sharing will be formed. People will be made aware about problems and take necessary steps. To aid this facility, the Internet should be made available at minimum cost, and free if possible. Wifi Internet zones should be made available for free at every corners and pubs, not just in one or two ‘Coffee World’ and ‘Pizza Hut’.

3.Possibility of such occurrence is very rare in Bangladesh. Like I said before, we do not have enough manpower to meet the demand in the IT market. Moreover, you will see that many individuals, having good skills in IT, are going abroad and working in foreign companies; world class companies such as IBM, Samsung etc. What you have said about white-­‐collar officers leaving IT industry to join some other sector, it is very rare. In fact it is seen that people who have studied accounting and management, are doing courses on computer so that they can outsource their services.

Why most of the govt. institutions especially financial institutions are not taking full advantage of recent development in IT sector?

1.I do not agree with this statement at all. All the banks in the city both private and public use core-­‐banking software. Yes every one of them. Even Sonali bank has installed ATM system. There might be some banks outside Dhaka which does not use core banking software, but they are installing, gradually along with increasing their needs. 2.Non-­‐financial institutions should be made more aware about development in our IT sector. Their labor force should be trained if necessary, making them capable of using locally produced products. However it is applicable for financial institutions as their first priority is to maintain security of their clients so it becomes essential for them to purchase foreign products. What they can do is create PCI compliant services, in which case the products other than core banking might be local. A major development can be brought by the integration of local and foreign companies to produce quality products. Joint ventures will provide the local producers with sufficient knowledge and experience required to produce good products. Some might think that this will promote unhealthy competition, but it will actually help the industry grow larger as it will be a learning process. Another thing the buyers of foreign products can do is that they can put conditions for buying a product, conditions such as training one of the local companies how to produce and/or maintain the product. 3.Using IT means using computers, which in other words mean digital Bangladesh. When people will be able to provide and get services through computer while sitting at home, only then it will be ensured and it is very necessary. If you look at the surrounding countries, take Dubai for example, you will see that most people are living a digital life. For instance, you do not have to go to the airport to buy an airline ticket or go to the rail station to buy a train ticket; you can purchase them online while sitting at home. This is possible in almost every sectors. You are paying your

electricity bills online; this is also an IT service. It is possible to receive all sorts of services online. This is how our society will develop.

Do you think creating special export zones (specially for Outsourcing) will help the industry and our economy in the long run?

1. Yes it is very important for the growth of IT industry. It will be a very profitable sector. The government should create special zones similar to ones in India. It should have available space (for firms), schools (for the children of the workers), banks and it should have persuasive incentives that will attract entrepreneurs such as low rent, low interest financing, high speed internet connections etc. 2.A special zone such as EPZ’s main purpose is to prevent disturbances such as strikes from affecting business. Such zones should be setup for IT sector too, in which case they will be called STPs. It should have features such as free Internet, subsidized bills, shared peripherals, shared conference area etc, which will reduce the headaches of startups which could have hampered their business. STPs and HTPs need to happen, the government should ensure the infrastructure. Moreover these facilities and infrastructures should be outside the capital, maybe in Cox’s Bazaar. Decentralization of power is also essential for efficient and prioritized allocation of resources. Bringing in more technocrats in the ICT ministry would also be helpful for the development. 3.The main reason behind it is political. Another reason is lack in trust building. The government or any other individual thinks that local companies are not capable of producing world class products; they are not capable of competing in the foreign market. Thus when the procurement of software is required, they buy the software from America or some other country. They will pay 10crore taka for a foreign software which they could have obtained for only 10 lacs from a local producer. But they do not consider that they could receive better after-­‐sales service from the local producer than the American producer. So there is the political matter, that many mediums will obtain money if software is bought from abroad. Then there is the matter of not having perfection of locally produced software. In Bangladesh, you will see that none of the large organizations can be located funded by the private sector. The government will have to develop the basic infrastructure for you. The government can provide facilities at a subsidized rate, there are many such companies, they are not capable of establishing such a building at first, its too risky. Moreover, all the IT firms in our country are in the SME size. They are not capable of buying lands. Mostly companies comprise of 4, 5, 10 workers, thus they need it.

Should we make our University Courses i.e. B.Sc. Eng. in Computer Science more practical or should we keep the technical streams like certified course on Oracle separated

1.No, it’s better as separated. Everyone does not need to know everything; people who need to learn will learn it voluntarily. 2.Yes we should make the courses more practical. More lab activities can be incorporated into the course outlines. The universities can seek contracts with actual companies to give projects to the students. So both the companies are gaining their works, and the students are also getting real experiences, so both sides are being winners. Cooperative programs can be initiated. Some foreign universities make their students study in their first semester and then make them do jobs in their next semester so as to learn how to apply what they have studied. Then again study in the next semester and work in the following semester. Our universities can follow the same idea; seek out contracts with actual companies in our country and foreign ones if possible. This will also enable the universities to attract foreign aid. The computer labs should also be made available 24hours so that the students never feel the lack of opportunity while doing something productive. 3.Definitely this needs changing. I have said it over and over again; we have also approached universities, trying to bring a change. But these universities have ego problems. They think that they are teachers, students are coming to us for education, so we are the entrepreneurs here, so why will we change our educational curriculum according to the suggestions of students? We have tried to convince them in many ways to follow a curriculum which will be get updated regularly according to changes in the real scenario so as to prepare the students to cope with the current pace. We want this very much because this reduces our hardship because a graduate then would be capable to join work right after coming out of the university. But what is happening now is that they are coming out by attending examinations, then joining internships in companies for six months. Some are coming to BASIS and/or other institutions for advanced courses which prepare them for joining the industry. So they are having to attend a course of 3-­‐6months after their 4years’ graduation, thereby proving that the reformation is essential

Should courses like ‘ Management for Engineers’ be included in University level? How can we promote entrepreneurship among CSC students?

1.Yes, such courses should be included in university level. Now-­‐ a-­‐days, a diversified and integrated knowledge is essential. Having management ability will enable them to be more practical. They will be able to analyze which sector would be more profitable for him and thus have the urge to compete in the market, which will increase the level of competition as well as promote entrepreneurship. They will also be able to share ideas. 2.Definitely there should be such courses. There should be some common courses, which would be mandatory for all. Management courses would let them know how to start, small if necessary. Promotion of incubation centers would be vital in the promotion of entrepreneurship in IT. The incubators provide certain facilities which would encourage the graduates to become entrepreneurs, in exchange of a percentage of profits. 3.Yes, it can be done. Knowing just how to create software is not enough, they should also be capable of being an entrepreneur. This should be encouraged. According to the perception of BASIS, entrepreneurship among programmers can be promoted through many means. For instance BASIS, for its members, has managed many policies from the government, policies such as tax exemption, which are beneficial for their growth. But when someone is going individually; on their own, they will not get these benefits, but when they form a company they will get these benefits. Thus it is already acting as an incentive.

How can we assure our developers that their intellectual property will not be stolen?

1.We already have individual property rights system. The government should strengthen property rights. Criminals should be strictly punished which will discourage other to do so. They should also be made to compensate a huge amount to the original programmer. 2.This is a big problem in our country. It is mainly because there are no strict laws. There violations of these laws should be more strictly judged, and be severely punished and penalized. But before that, awareness creation is essential. However it actually needs time. New laws for ICT can be implemented. Also the universities about ethics of ICT can design courses.

3.This copyright law, in our country is still not being enforced, but there are attempts to do so. It is still in the awareness creation level. But we do have laws related to IT, such as intellectual property rights. Another problem is our lack in ethics. People resort to unethical activities whenever they find the opportunity. Awareness has to be created among such people thorough seminars and workshops.

What will be the steps to start hardware manufacturing in Bangladesh?

1.Demand base for such hardware is already growing. There are also plans being made by some major companies such as Samsung on how to produce hardware in Bangladesh for the low labor cost. Currently many companies bring in parts from other countries and assemble them here. First, correct market analysis is required to determine where we have comparative advantage. Then the government should provide attractive incentives such as subsidies or tax cuts. This would help the proper growth of hardware manufacturing. Walton import mobile parts from other countries and assemble them in Bangladesh. 2.First of all, more researches, like this one, have to be conducted for assessment of the market. It is definitely doable; we have cheap labour and raw materials, everything necessary. Foreign consultancy is also essential for starting off. Joint ventures would also be very helpful. There are already some IT products which are assembled in Bangladesh. 3.Import of foreign hardware has to be discouraged, by imposing tariff if necessary. When imports become more expensive, demand for cheaper hardware would arise. Demand in the market would create an opportunity for locally produced cheaper hardware. When there is demand, there is supply. Availability of cheap labour in our country would make it easier for startups. However, the lack of training and technical skills has to be overcome first. Training workshops and seminars should be held more often.

Where will you position Bangladesh in worldwide IT industry

1.When you say IT industry, it involves a lot of things. I would say Bangladesh have improved a lot in the last few years. But there are other countries that have grown much faster, such as India. 2.India and Vietnam are way ahead of us in terms of IT, which I could have been better. We are currently in the level of some eastern European countries and Philippines. 3.India, Vietnam, and then Bangladesh. Sri Lanka after the end of their civil war has developed a great deal recently.

At present there are 800+ Enterprises, industry size is around US$ 250 million and employing 30000+ professionals in Bangladesh. And in India this industry stands at US$ 100+ Billon, almost 400 times the size of ours.

What can be done from govt. policy level to bridge this gap in a 5-­‐10 years timeframe?

1.Well, the government should focus on certain things. Providing high speed Internet connections which have to be affordable, providing low interest loans and most important of all, focus on Mathematics an d science. Government should provide correct incentives for people to study mathematics and science; everyone wants to learn business since it brings in high paid jobs, which is a major problem. The standards of the curriculum should also be increased, thus there will be more quality graduates. This is one of the main reasons why India could grow so fast, high quality graduates focused on mathematics and science. If you want to make good products, you will need good raw materials. Focusing on these aspects will bridge the gap within a 5-­‐10 year period. 2.Initially we will have to conduct more studies and researches. We might require some foreign consultants such as Mackenzie. Then the government should focus on providing the required infrastructure for the Industry, internet facility and uninterrupted electricity supply etc. Finally more training workshops and programs should be launched in the basic IT centers. 3.First of all, the government should focus on providing faster internet connection at cheaper rates, not only in STPs, but to everyone. This would improve the communication, which is necessary. Uninterrupted power supply should also be ensured to prevent the loss of work in progress. Quality of education from universities has to be improved and updated. Skills and technical knowledge is very much required. Assistance from foreign consultants should also be taken. Focusing on these areas would boost the growth of the IT industry.

Bangladesh’s software export industry is experiencing an exponential growth, in 2011-­‐2012 fiscal year, if we take freelancers into account, our net software export is around $100million USD. But how can we hit the billion-­‐dollar mark within next 5 years? If we see the current trend, in last three years the industry has grown three times, but what else can govt. do to act as a catalyst to achieve this goal.

1. The answer is the same; we need good schools and universities to produce good students and graduates who would produce good quality products. Yes, the

government should bring in NRBs, with high payment as professionals if necessary. Both their investment as well as their knowledge is important for exports. Government should also develop the infrastructure required for IT activities.

How can we diversify our Export destinations? I.e. 68% of the Basis enlisted companies export software to USA, and 32% of them export to United Kingdom. But only 9.2% of the companies export software to Germany and 7.5% does so to Japan, although the demand for software is much higher in later two. Can/Should govt. plays a role in this? And how govt. can do this? What policy reforms can bring about a change?

Our products should be promoted in other countries, countries in Middle East and Africa for example to should how good our products are. Fairs can be arranged, with cooperation from the government. The government can provide the transportation costs. Cash incentives can also be used to encourage IT firms to go there. 2.Diversity in both the products and the export locations are necessary. The government should increase awareness in foreign countries with the help of embassies and NRBs. The government can conduct marketing through embassies. The foreigners would also gain confidence in the products when they will know that the government is also involved. The government can also brand Bangladeshi IT companies in other countries through events such as soft-­‐expo. Having an attractive website can also play an important role in branding. The embassies can also assist the local IT companies by preparing a list of potential customers in their respective countries. First the customers have to be brought, then they will have to be convinced. 3.We need to conduct more events in new countries where there is potential market. The government can arrange such events with the help of the embassies. Demonstrating our products in the events would help diversification of our export market. However, for that we need quality products, otherwise it would not be of any use. Like I said before, we need more quality work force, we have to focus on that. There are also some firms who think they are better off, supplying in the local market, they can be given incentives.

And now about freelancers, in 2011-­‐2012 fiscal year, it is estimated that freelancers earned around US$30 million, but unfortunately this counts as foreign remittance. What steps can govt. take to convert these freelancers into small enterprises?

1.Foreign remittance or income by freelancers, does it make much of a difference when the money is already coming in the country? I do not think free lancers have to become enterprises, as they are comfortable with what they are doing, working in their free time. The government can provide high-­‐speed net connections to help their work. 2.To make them into small enterprises, they will need to be provided the assistance of private equity funds, incubators, angel investors and also the government in the form of subsidies and working places. When you obtain an identity, people will know about your activity and services. They can also be helped with EEA loans for which they will have to pay no interest for 7 years. Elimination of corruption within the system is also essential. 3.They should be given loans on easier terms. The government should convince the commercial banks and other institutions to provide such loans so that they can become SMEs. They should also be made aware of the benefits they would gain from becoming a SME. Govt. can also manage better working condition for them.

Only 37% of the basis members focus on international markets, how to change that? What kind of role/incentive govt. can provide to make the rest 63% of companies competitive in the global market.

1.It firms should first focus on the local market to create a customer base, and then they should focus on foreign markets. The quality demanded in the foreign market, our IT firms couldn’t provide that. They do not have enough skilled or quality workers who would be able to produce such product or provide the after sales service. Also we do not have any comparative advantage. This is a problem, but we can overcome it by focusing on IT services. Bangladesh have been doing good in this sector and it is still an opportunity. Providing more IT services will help the growth of the industry significantly. The government can carry out researches to determine where we have comparative advantage, and focus there. 2.First of all, the 63% of the firms focused on the local market should be asked what barriers are preventing them from doing business in the global level. Their problems will have to be analyzed and then solved. Suppose if one of the problems is lack of contacts, the government embassies can find out contacts and act as an agent\middleman between the buyer and the seller.

3.A-­‐learning environment has to be developed first. The government should learn what are problems the 63% of the firms are facing. Then the government should take necessary steps to solve them. It is also important that they ensure their share in the local market in order to be sustainable. Cash incentives can also be provided to encourage their participation in the international competition.

69% of the Basis members have yearly turnover below 1.5 crore and 80% of them employ less then 50 employees. What infrastructure/policy reforms can government provides to change that scenario

1.Actually the size is determined by the demand in the market. The size of the firms remains small due to lack of demand. It will grow with the growth in demand. More time is required for gradual development. The government can remove all taxes from IT products to increase the demand. And It depends on how progressive the government is, how efficiently the government takes its actions. 2.It is a natural problem as the industry is still in an infancy stage, actually there is nothing wrong. If the government can ensure a suitable overall political climate, they will take away other problems of startups. The government should develop a platform where the local IT products can be showcased. The govt. of Denmark follows a B2B strategy where the govt. funds companies at different levels, pre-­‐pilot, pilot, tests etc. It’s a large program, our govt. should follow that. The embassies can take responsibility of marketing and the government can act as a middleman between the buyer and seller. 3.What the government can do, I have already said all of it, I think. Taking these steps would eventually overcome the problem you have just mentioned. It is not possible that all five fingers of a hand will be of the same size. It needs time to grow.

What is your opinion on government’s vision on ICT? 1.I would say the government has been much successful in fulfilling the vision. The development from 2011 to 2013 was drastic, may not be in monetary terms, but in creating awareness, excellent. It has not only created awareness in the city, but also in the village levels. Bu t this is only the prospective beginning, much is left to be achieved. 2.The government’s vision on ICT is all right, however it is still in the stage of ensuring prerequisites. The govt. should be more realistic and take steps to face current problems. The budget allocated for the IT industry has to be increased. The sector should be getting more priority of the govt. and holistic approaches of problem solving will not work, specific problems have to be eliminated one by one.

The mentality of the IT crowd will have to be reformed, that integrating with foreign countries will be more of a benefit for us as it will start a learning process. 3.I think the government has been successfully progressing towards their vision. IT services have spread in many areas. However much is left to do.

Do you think this is enough to make us compatible in the global market? If not then what else can govt. sector can do

1.It is not that important how compatible we become in the global market, what is important is that how much we can grow. If the base of tree is weak, no matter how strong the upper portion of the tree is, it is bound to fall. Similarly, creating a strong base in the domestic market is more necessary. Once our base is strong, we will be able to compete in the foreign markets. Like I said before, the government can help this growth by incentives, tax cuts, education etc. 2.The government should also take initiatives to bring back NRBs to the country so that they can share their technical knowledge and expertise. 3.No, I think the mentioned steps will make Bangladesh compatible to compete in the global market.

If we choose to do a full-­‐scale research on this, Suggest 5 individuals

1.You can talk to Fahim Mashroor, and four other members from BASIS, look up the website. Do you suggest anyone other than from BASIS? No, they would have the best idea about ICT. 2.GPIT, Spectra, Tiger IT and NRBs. 3.The member firms of BASIS would be best.4.

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