One of the worst sufferers during the July unrest is the ICT sector as the nation witnessed an unprecedented nationwide internet blackout. How big a loss did the industry suffer? And can it earn back its lost reputation and trust? Let’s hear from Mr. M Rashidul Hasan, former president of the Bangladesh Association of Software and Information Services (BASIS).
Give us a picture of the ICT entrepreneurs’ loss during the blackout.
The internet blackout and total disruption lasted from July 18 to July 28, 2024, was unprecedented and catastrophic for the ICT sector.
Businesses faced operational paralysis, as they could not communicate with clients or meet critical deadlines. This led to an immediate loss of BDT 33.02 billion for the sector. Many software and IT-enabled service companies, especially exporters, lost trust and confidence among international clients.
Around 30-40% of clients either paused or canceled contracts, and there is now talk of some companies relocating their operations abroad to avoid such disruptions in the future. The ICT sector is interconnected with other domestic industries, which were also severely impacted.
What are the current challenges for the ICT sector?
The challenges are multi-dimensional. First, rebuilding trust among global clients is crucial but will take time. Financially, many companies are on shaky ground, with liquidity issues and risks of layoffs for 40,000 to 60,000 employees.
Locally, the domestic ICT market also suffered, with reduced order placements and growing concerns about a potential brain drain among skilled professionals.
Without significant government intervention and support, the road to recovery will be long and difficult. The sector immediately requires stimulus packages, enhanced cash incentives for exporters, and VAT exemptions to recover.
In this situation, how can Bangladesh revive and overcome its image crisis worldwide?
To revive and rebuild, we need a comprehensive approach. The government must ensure that such an incident never happens again, and we believe that with the changed regime, this will be ensured. A public commitment to uninterrupted internet services is essential. Internet service should be declared as a basic human right.
We also need strong financial measures. BASIS has proposed a stimulus package that includes collateral-free loans at a 2% interest rate, enhanced cash incentives of 20% for exporters, and VAT exemptions for the next two fiscal years.
We all need to work together to reduce operational costs. Simultaneously, the government should start working on ensuring easy access to the capital market for the Software and ITES sector. This would require introducing a set of very different parameters, especially for the ICT sector, which emphasizes the valuation of intellectual properties, which are essentially not similar to the product manufacturing or other service sectors.
Meanwhile, I believe encouraging ICT innovation by introducing startup funds mobilized by the private sector but not the government would make a difference. We must also remember that no government agency should ever appear as a potential competitor to the private sector as it distorts the market heavily and breeds monopolies, countering the free, fair, and competitive market forces. The strength to compete in the global market has to be built within first.
On the global front, we must launch PR campaigns reflecting the thoughts of the ICT private sector to rebuild trust with international clients and promote Bangladesh as a stable and reliable ICT outsourcing destination. Our ICT sector should be present at all the major global exhibitions subsidized by the government with bigger and more attractive country pavilions, not designed with the very old-fashioned thought of government agencies, but must include the ICT private sector to provide branding and design thoughts. The government’s involvement in fostering these efforts is vital.
Do you have any particular expectations from the interim government?
The interim government has a unique opportunity to make a lasting impact. First, the ICT sector must be stabilized by implementing the proposed stimulus measures. Allocating more budget for Software and ITES-related projects and engaging local companies in those initiatives will bolster the sector. We would seek the interim government to ensure procurement of government Software and ITES, giving preference to the local ICT firms as they create employment opportunities here.
Preventing job losses should also be a priority. To help businesses maintain operations and retain their workforce, we have recommended credit-line incentives equivalent to three months of employee salaries and office rent.
The government should ensure that such outages do not recur. I recommend a VAT exemption for local businesses for the next two years. This would reduce the financial burden on businesses and foster a more favorable environment for recovery.
The ‘Cashless Transaction’ provision for obtaining tax exemption should be withdrawn immediately, at least for the next five years.
Also, I propose waiving fees for trade licenses and the Registrar of Joint Stock Companies (RJSC) for the next three years. This initiative would alleviate the financial strain on businesses and promote entrepreneurship. These initiatives will support the ICT sector and restore Bangladesh’s reputation as a reliable global technology player.