Local ICT products to be pricier: Stakeholders

The proposed budget for FY24 contradicts the government’s latest goal of building ‘Smart Bangladesh’ by 2041, said stakeholders of the ICT sector.

They said that the local ICT products will become more expensive if the proposed budget is implemented and the country will lose the momentum it has gained over the years.

Leaders of various national trade organisations said that this could compel the small or new entrepreneurs to opt for pirated versions of the software which will ultimately damage the market, especially at a time when India and Vietnam are advancing with long-term plans to grab the global market.

The stakeholders made the remarks in a press conference jointly organised by the Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity (BCS), Bangladesh Association of Contact Center & Outsourcing (BACCO), Internet Service Provider Association of Bangladesh (ISPAB) and E-Commerce Association of Bangladesh (E-CAB) at BASIS office at Karwanbazar in Dhaka.

Replying to a question, BASIS President Russell T Ahmed said, “The term ‘Smart Bangladesh’ means a Bangladesh where every administration, department, directorate and service is digital. ICT will be the backbone of these initiatives. But the proposed budget feels like even though the government is planning to build ‘Smart Bangladesh’, its officials did not understand the process.”

“Imposing taxes on software and other products is not new. The tax exemption was given because we asked the government to ensure the development of this sector. The exemption was given on Operating Systems (OS), databases, security tools and development tools, most of which are not produced in the country,” he explained.

Russell T Ahmed also said, “In the budget speech, the reason behind imposing taxes on the ICT products was said to be for the protection of local software manufacturers. But the reality is, software and other tools are backward linkages for our productions and the taxes will increase our production cost. The government is also imposing a new five per cent VAT on our products which will also increase the production cost.”

If the proposed budget is implemented then the local manufacturers will be burdened with a minimum of 20 per cent extra production cost, he said.

BACCO President Wahid Sharif said, “International buyers generally take BPO services from us at a relatively low price. As the product prices go up, we believe that the cost of services in this industry will also increase and hurt the international market.”

He also feared that new and small entrepreneurs might opt for pirated versions of software as the prices inch up. This will turn away most of the international clients who want Bangladeshi nationals to work with original rights software.

ISPAB President Imdadul Hoque said, “ISPAB has been working for 25 years and has been urging to be enlisted in IETS. Despite the directives of the prime minister, ISPs have not been included in the ITES in the proposed budget.

“We request the finance minister and NBR chairman to advance the ISP sector by including them in ITES. Because the internet penetration currently at 15 per cent needs to reach at least 50 to 60 per cent in order to achieve the vision of Smart Bangladesh,” he added.

The BASIS president said, “The NBR might increase 0.01 per cent VAT by imposing the tax on this sector. But we have offered the NBR to develop a system so that they can trace imported products which will double its VAT collection. But they never paid any attention to it.”

He said, “It seems like the NBR does not properly understand ICT issues and the vision of Smart Bangladesh which is creating a misunderstanding. Every investor wants to learn about the long-term facilities that the government is providing but if the policies are changing each year, they feel hesitant. It is also blocking foreign investment in the country. We demanded the current tax exemptions be continued till 2030, VAT withdrawal on the products and incentives on backward linkages as much as possible.”