REPORT ON
EXPORT OF COMPUTER SOFTWARE FROM BANGLADESH
Problems and Prospects
Prepared by
THE COMMITTEE FORMED BY THE MINISTRY OF COMMERCE
GOVERNMENT OF THE PEOPLE'S REPUBLIC OF BANGLADESH
SEPTEMBER 1997
Courtesy of: Global Amitech
Letter of Transmittal
Ministry of Commerce
Government of Bangladesh September 14, 1997
The Task Force on Export in its 18th meeting had appointed a Committee to
review the problems and prospects of software export from Bangladesh and
formulate recommendations on promotion of software export. This was communicated
to us in early June, 1997.
In accordance with its terms of reference, the Committee has carried out
inter alia an analysis of the problems of software sector in Bangladesh and
reviewed the recent developments in Bangladesh as well as in the global market.
Some members of the Committee visited India, one of the most successful
countries in software export, and collected relevant information.
Report and study on the auspicious of
Prof. Jamilur Reza Choudhury
Convenor of the Committee
Table of Contents
EXECUTIVE SUMMARY *
A. FISCAL *
B. HUMAN RESOURCE DEVELOPMENT *
C. INFRASTRUCTURE *
D. MARKETING *
1. INTRODUCTION *
1.1 General *
1.2 Methodology *
2. SOFTWARE INDUSTRY AND ITS CURRENT STATUS IN BANGLADESH *
2.1 Background *
2.2 Market Size *
2.3 Past Initiatives *
Export Development And Promotion Project Bgd/91/004 *
Study On Export Potential Of Software Under Unido Project Dg/Bgd/92/004/11-52
*
Ibcs-Primax Software Limited *
North American Computing Dynamics *
Bangladesh Information Technology Group Limited *
2.4 Export Performance *
2.5 Bangladesh's Strength *
3. IDENTIFIED PROBLEMS AND BARRIERS *
Fiscal Human Resource Development Infrastructure Marketing *
3.1 Fiscal *
3.2 Human Resource Development *
3.3 Infrastructure *
3.4 Marketing *
4. RECOMMENDATIONS *
Fiscal Human Resource Development Infrastructure Marketing *
4.1 Short Term *
4.1.1 Fiscal *
4.1.2 Human Resource Development *
4.1.3 Infrastructure *
4.1.4 Marketing *
4.2 Medium Term *
4.2.1 Fiscal *
4.2.2 Human Resource Development *
4.2.3 Infrastructure *
4.2.4 Marketing *
5. CONCLUDING REMARKS *
Bangladesh Computer Council *
Educational Institutions *
Development Partners *
Venture Capital *
Non-Resident Bangladeshis (NRBs) *
Software Industry Association *
Annexure 1 - COMPOSITION OF THE COMMITTEE *
Annexure 2 - EXPORT OF SOFTWARE AND DATA ENTRY SERVICES: THE INDIAN
EXPERIENCE *
I. INTRODUCTION *
II. THE VISIT *
III. THE FINDINGS *
i. On-Site: *
ii. Off-Site: *
A. Fiscal *
B. Human Resource Development *
C. Infrastructure *
D. Marketing *
IV. CONCLUDING REMARKS *
Non-Resident Indians (NRIs) *
Government of India *
Educational Institutions *
World Bank / UNDP *
Venture Capital *
National Association of Software and Service Companies (NASSCOM) *
V. RECOMMENDATIONS *
APPENDIX A - Organisations Visited and Government Officials met by the Team *
A. SOFTWARE EXPORT HOUSES *
B. DATA ENTRY EXPORT HOUSES *
C. EDUCATIONAL INSTITUTIONS *
D. SOFTWARE TECHNOLOGY PARKS *
E. GOVERNMENT OFFICIALS *
APPENDIX B - INDIAN SOFTWARE INDUSTRY *
EXECUTIVE SUMMARY
Information Technology, which has evolved from the
merger of computers, telecommunications and office automation technologies, is
one of the most rapidly growing industries in the world.
Software industry is one of the essential components of IT industry with
global market of US $ 276 billion in 1996. It is still largely dependent on
human resources and some of the developing countries are taking advantage of
this opportunity. India is one of the most successful countries in developing
its software industry and in 1996, it generated revenues totalling US $ 3.20
billion (out of which export was around 40%), with an annual growth rate of
about 70%.
The present size of software industry in Bangladesh is very small. Only a few
firms are involved in export of software and data entry services, and the total
volume of revenue generated is negligible. The Committee has identified the
major problems which are impeding the growth of software industry and has made
recommendations for their solution. These are summarized in the following tables
under four functional areas :
- Fiscal
- Human Resource Development
- Infrastructure
- Marketing
A. FISCAL
|
PROBLEMS |
RECOMMENDATIONS |
|
High rate of Duties & Taxes on Hardware and Software |
Exempt all Duties & Taxes |
|
Absence of export incentive |
Tax Holiday for 10 years |
|
Absence of Domestic software industry |
Provide a 15% Domestic Price Preference for locally developed software. |
|
Complicated banking procedures |
Allow export of Software and Data Processing services through Sales
Contract, instead of Letters of Credit. |
|
Bank borrowing rate is prohibitive |
Reduce interest rate to the level of other export sectors |
|
Difficulties in Customs clearance |
Allow Special Custom Bonded Warehouse facilities |
|
Fund constraints for computer purchase |
Create a Special Fund for giving interest-free loans to teachers and
students |
|
Absence of sources of financing |
Create a Venture Capital Fund of at least Tk.10 Crore at Export
Promotion Bureau |
|
Absence of funds for market promotion |
Create a Market Promotion Fund to be administered by EPB for meeting
the expenses of promoting Bangladesh as a potential source of Software and
Data Processing Services to the overseas markets. |
|
Absence of funds for R&D |
Create a special fund for supporting industry oriented IT research and
development activities, to be administered by BCC. |
B. HUMAN RESOURCE DEVELOPMENT
|
PROBLEMS |
RECOMMENDATIONS |
|
No strong Government agency for promoting growth of IT, particularly
HRD. |
Upgrade the BCC to the level of a Division, to be managed by
professionals |
|
Acute shortage of tutors |
Ask BCC to produce within 1999 at least 1,000 'Trainers'. |
|
Graduates lack computer skills |
Introduce 'Basic Computer Skills' as a Compulsory Subject for all
students at Graduation level. |
|
Number of graduates in computer related subjects is very low |
Increase number of seats for computer related degrees/diplomas in all
Institutions (Universities, Colleges, BITs, Polytechnics) |
|
Course curricula for computer related subjects do not reflect market
needs. |
Review course curricula every two years and update, where necessary |
|
Quality control of computer training courses lacking |
Empower BCC to develop a national examination and certification system. |
|
Low level of computer literacy |
To introduce compulsory education in Computer Studies at School and
College levels. |
|
Facilities for high level training in IT inadequate. |
To strengthen BCC and make it responsible for imparting higher level
special need-based training to the IT Professionals graduating from the
Universities. |
|
Interaction between industry and academic lacking. |
Strengthen linkage between the software firms and educational
institutions |
C. INFRASTRUCTURE
|
PROBLEMS |
RECOMMENDATIONS |
|
No copyright protection for software, which deters foreign firms from
out-sourcing from Bangladesh. |
Enact Copyright Act as required under the WTO Charter. |
|
Facility for high speed data communication is limited. |
Set up low-cost high-speed data and voice communication link with the
USA and the UK. |
|
Internet connection slow. |
Set up an Internet Node in the country. |
|
Internet connection expensive |
Make Internet connectivity available at affordable rate. |
|
No facility for video-conferencing |
Make Video Conferencing facility available through VSAT. |
|
BTTB satellite communication links slow and expensive |
Allow Private Sector to set up own Satellite Communication links. |
|
Customs clearance at ports is time consuming |
Create separate Cells at selected ports so that goods are cleared
within 24 hours. |
|
Lack of latest books, journals and manuals. |
To create a Central Resource Center at BCC. |
|
Association of firms involved in Software Development and Data
Processing Services does not exists. |
Encourage firms involved in software development and data processing
services to form an association in line with e.g. NASSCOM. |
|
Strengthen EPB's role to support software export |
Assign one Assistant Director of EPB for this sector on a full time
basis. |
|
Non-availability of physical facilities with essential IT
infrastructure |
Set up an Information Technology Village (ITV) at a suitable place on
Tongi-Ashulia Road near Dhaka, equipped with all necessary facilities. |
|
Poor National telecom infrastructure |
Ask BTTB to set up ISDN/ HDSN / ADSL Lines all over the country, and a
fibre optic backbone. |
|
No communication hub in the country |
Set up a Communication Hub in Bangladesh. |
|
Lack of mechanism for implementation, monitoring and updating of policy
for software export. |
Form a Standing Committee to formulate and implement policies,
strategies and action plans for promotion of export of Software and Data
Processing Services. |
D. MARKETING
|
PROBLEMS |
RECOMMENDATIONS |
|
Capability of Bangladeshis in software sector is not known
internationally. |
Arrange meetings/seminars in selected locations in USA with a
concentration of IT Professionals of Bangladeshi origin (e.g. Silicon
Valley, California, USA) to inform them about the incentives being
provided by GOB and mobilize their support to help Bangladeshi
entrepreneurs. |
|
Tendency to use pirated software deters foreign firms. |
Ban use of all pirated Software in all organizations, both in the
public and private sectors. |
|
Domestic market is very small. |
Encourage all public sector organisation to replace the manual system
of documentation and records by Computerised system through the use of
locally developed Customized Application Software. |
|
Efforts to market Bangladeshi ability/products lacking. |
Send Marketing Missions to North America / E. U. consisting of Members
from IT Associations and EPB, on a regular basis. |
|
No organized publicity of capabilities of firms involved in software
development. |
To create a Database of all major organizations / institutions engaged
in out-sourcing of Software and Data Processing Services, to be made
jointly by EPB and Bangladesh Computer Samity (or Software Association,
when it is formed), and to maintain a Home Page in the INTERNET. |
|
Difficulties in obtaining direct access to market. |
Explore the possibility of obtaining business on sub-contract basis
from other countries. |
|
No participation in international fairs, which provide opportunities
for marketing |
Empower EPB to ensure regular participation in all major International
Exhibitions / Fairs for IT products and services. |
|
No opportunity for exhibiting local software capabilities. |
Ask the concerned Trade Associations to organize International
Exhibitions / Fairs in Bangladesh. |
|
Marketing efforts in large software markets non-existent. |
Ask EPB to set up permanent Liaison Offices in the USA and the UK. |
|
Information on Bangladesh IT professionals lacking. |
Ask BCC to create a Database of Bangladeshi IT Professionals. |
|
Quality of Bangladeshi software developers unknown. |
Encourage IT industry members to take steps for ISO-9000 and SEI
certifications. |
|
Opportunities for IT manpower not exploited. |
Produce sufficient skilled IT professionals for export. |
1. INTRODUCTION
1.1 General
The 18th meeting of the Task Force On Export Trade identified Computer
Software as a potential thrust sector for export, and decided to carry out a
study on the problems and prospects of this Industry.
Accordingly, Secretary, Ministry of Commerce, Government of the Peoples'
Republic of Bangladesh, vide his notification No. BR/R-2/PANNYA-2(11)/97(L-1-9)
dated 28 May 1997, formed a Committee to make effective recommendations for
promoting export of Computer Software.
The Committee, as constituted by the Government and expanded by the committee
itself through co-option, is shown in Annexure 1.
Although the Committee was given two months to submit its report, an
extension of another six weeks was granted at the request of the Committee.
1.2 Methodology
In the first meeting, the Committee decided to co-opt some members from
private sector software houses involved in exports, so as to draw benefits from
their experiences. The President of Bangladesh Computer Society, which consists
of the computer professionals of the country, was also co-opted as a member.
The Committee held a series of meetings and analyzed data and information
collected from various published sources.
The Committee decided to send delegations selected countries in the region
which have been successful in rapidly developing their software industry (viz.
India, the Philippines, Singapore and Malaysia). However, due to paucity of
time, only a visit to India could be made.
A team visited the BSCIC Electronic Complex Building at Mirpur and had
discussions with BSCIC officials. The team also visited the newly constructed
Tongi-Ashulia Road to carry out a reconnaissance of possible site for
Information Technology Village.
A Team visited the Indian cities of Mumbai, Bangalore and Calcutta to acquire
first-hand knowledge from the leading members of the software Industry of India.
The Report prepared by the Team is attached hereto as Annexure 2.
Export Promotion Bureau provided the necessary secretarial support, and
collected the required information as and when needed. The Committee wishes to
thank Export Promotion Bureau in general and the following EPB officials in
particular :
Major (Red.) A.K.M.Nizamul Alam, Director
Mr. Md. Abdur Rouf, Assistant Director
2. SOFTWARE INDUSTRY AND ITS CURRENT STATUS IN
BANGLADESH
2.1 Background
The importance of Information Technology and the role it can play in the
socio-economic development of a nation cannot be over-emphasized. The World has
witnessed phenomenal growth in the Information Technology over the last two
decades, and the countries which made a conscious decision to take advantage of
such growth, have made unprecedented progress. Examples are in abundance; India,
Sri Lanka, Thailand, Malaysia, the Philippines are source of the successful
countries in our region.
Information Technology is the combination of all activities relating to
collecting, processing, storing, using and transmitting data and information
through the use of computers and communication networks.
The computer services are of the following major types:
Systems software
Application software
Data communication
Data processing
Multimedia products
The present Committee, as formed by the Ministry of Commerce, has been
entrusted with the responsibility of making effective recommendations for export
of Software. Whilst the Committee has limited its deliberations to the specific
task of Software export, it was felt that Data Processing Services, which
require a much lower skill level, do have a potential export market. Hence some
of the recommendations made in this report would refer to Data Processing
Service, in addition to Software.
2.2 Market Size
The Committee was seriously handicapped in assessing the size of the
international market, due to non-availability of primary data, and hence it had
to depend heavily on the secondary sources. Some of the relevant information,
collected from published documents, are given below:
- The total world revenue generated through activities relating to Software
during 1996 is estimated at US$ 275 billion, out of which the USA alone
contributed US$ 103 billion. The US market is growing at the rate of 12.5 %
per annum. (Source : Study by Nathan Associates of USA, as published in The
New York Times, 3 June 97)
- The world-wide budget for jobs relating to 'Year 2000 Compliance' (Y2K
problem) is US$ 600 to 650 billion. (Source : Estimates by independent
consultants)
- Over 2 million people were employed in the Software Industry
internationally in 1996, of which the USA alone employed 619,400 persons.
(Source : Study by Nathan Associates of U.S.A, as published in The New York
Times, 3 June 1997)
- USA needs an additional 600,000 Programmers by the year 2000. Only about
270,000 are expected to be available from within the country. (Source :
Internet News, May 1997)
The following chart shows the phenomenal growth India has witnessed in the
recent past.
(In Billion US $)
|
Market |
1995 |
1996 |
Growth |
|
Domestic |
1.18 |
2.00 |
69 % |
|
Export |
0.72 |
1.20 |
67 % |
|
Total |
1.90 |
3.20 |
68 % |
(Source : NASSCOM of India)
One can get a fairly good idea, from the above figures, about the size of the
opportunities that exist for Bangladesh to explore.
2.3 Past Initiatives
Government of the People's Republic of Bangladesh has taken some measures in
the past with a view to encouraging private sectors to enter into the world
market. Following were the major activities undertaken during the '90s:
Export Development And Promotion Project Bgd/91/004
Having felt the need for exploring the opportunities that exist in this
sector, Export Promotion Bureau took initiatives way back in 1991, and launched
the above project for the following objectives :
Product Development Market Identification
Through a series of meetings and seminars, the problem areas were identified
and corrective measures were suggested. As part of market identification
objective, marketing missions consisting of some potential private sector
exporters were sent to:
Softworld 93 in Canada, followed by Buyer-Seller Meetings in Canada and the
USA CeBit95 in Hanover, Germany.
In addition, some ITC Consultants visited Bangladesh to study the potential
resources.
Study On Export Potential Of Software Under Unido
Project Dg/Bgd/92/004/11-52
A Consultant from the USA, Mr. John S. Morrison, was hired by UNIDO for the
above project. Mr. Morrison visited Bangladesh three times and submitted three
separate reports. The recommendations, which were very generalized in nature,
were discussed in a National Workshop organised by Ministry of Science and
Technology in 1995. However, no follow-up action appears to have been taken.
Ibcs-Primax Software Limited
This Company was recognized as an export-oriented Software House and BSB
financed this organization at a concessional rate of interest.
North American Computing Dynamics
This Company was recognized as a 100 % export-oriented Data Processing
Service House. Bonded warehouse facility was made available and duty-free
imports of a substantial number of computers and peripherals were allowed.
Bangladesh Information Technology Group Limited
At the behest of EPB / ITC / UNDP Project BGD/91/004 a Virtual Company
consisting of 23 IT Vendors of the country, was formed under the name and style
'Bangladesh Information Technology Group Limited (BITGL)'. This Company was
expected to promote export of Software and Data Processing Services with the
help of combined resources available with the share-holding companies.
2.4 Export Performance
A few organizations and some individuals have been exporting Software and
Data Processing services. However, the total volume of such export is negligible
and complete records of such performance are not available. Computer Solutions
Limited, ANIRBAN, IBCS-Primax, BRAC, NACD and Machine-Dialogue, are among the
firms/organisations which have made some exports about which the Export
Promotion Bureau could collect some information. Despite their best efforts, EPB
is still unable to procure documented evidence of actual exports Bangladesh has
made. The Committee understands the reasons for the exporters' unwillingness to
divulge such information.
Whilst all exporters received government patronage in some form or other, the
performances of NACD and BITGL remain unsatisfactory.
2.5 Bangladesh's Strength
Although not properly exploited yet, Bangladesh does have quite a few
inherent strengths which can be used as the launching pad for making this
country a potential offshore source of Software and Data Processing Services.
Some of these advantages are :
a) A substantial number of educated unemployed youth force, with ability to
read and write English, exists in the country. They can be trained in the
required skill (particularly in Data Processing Services) within a short time.
b) Quite a few Bangladeshi skilled professionals have been working abroad.
They can be encouraged to return back to the country and/or collaborate with
Bangladeshi entrepreneurs, provided proper environment is created.
c) Universities in Bangladesh are turning out an increasing number of
graduates in Computer related subjects every year, although the number is much
less than the requirement.
d) A large number of Bangladeshi students are studying overseas in Computer
related subjects.
e) A wide range of Hardware platforms, from Mainframe to PC, with a large
number of Macs, are available.
f) Reasonable skills exist in the following areas:
- Operating System - Windows, Windows 95, MAC/OS, Novell Netware, Windows
NT, UNIX, OS/400.
- Programming Language - C++, Visual Basic, Visual FoxPro, COBOL, RPG, OOP,
J++
- RDBMS - Oracle, Informix, DB/2
g) Bangladesh offers a very attractive low wage level, viz.
|
|
Bangladesh |
India |
U.S.A. |
|
Programmers Average Salary per month (per month) |
US$ 400 to 800 |
US$ 1,200 |
US$ 4,500 |
|
Data Entry (Per 10,000 key strokes) |
US$ 3 to 5 |
US$ 10 |
US$ 30 to 50 |
3. IDENTIFIED PROBLEMS AND BARRIERS
The Committee identified the following problems and barriers hindering the
growth of export-oriented Software and Data Processing Services Industry, and
classified those under the following major functional areas:
Fiscal Human Resource Development Infrastructure
Marketing
3.1 Fiscal
- The user base of computer is extremely low because of high cost of
computers and peripherals, due mainly to high incidence of import duty and
VAT.
- In the absence of any incentive scheme, the exporters do not feel
encouraged to explore potential markets.
- Interest rates on loans, charged by the Commercial Banks (currently
between 15% to 17% p.a.) are too prohibitive for entrepreneurs to investment
in IT field.
- The existing banking procedures are too complicated to induce exporters to
bring their export remittances through banking channel.
3.2 Human Resource Development
- Course curricula for computer-related education followed in the
Universities do not fully reflect the requirements of the IT industry.
- The number of graduates in computer-related subjects produced by the
Universities each year is far less than the actual requirement.
- Substantial number of such graduates leave the country for overseas
employment.
- Private IT training institutions lack the required quality of trainers.
- Private IT training institutions do not follow any standard course
curricula and examination system.
- There is no planned scheme to increase computer literacy.
3.3 Infrastructure
- Absence of necessary laws protecting the Intellectual Property Rights,
discourages prospective overseas customers from using Bangladesh as a source
of supply.
- The facility of high speed data (both nationally and internationally) is
very limited.
- Present cost of data communication is very high.
- High Speed Video Conferencing facility is not available.
- ISDN Telecommunication line with Fibre Optic backbone does not exist.
- Resource materials on Information Technology, such as books, magazines,
software etc. are scanty and scattered.
- Whatever little hardware, software and communication resources are
available, cannot be found under 'one roof.
- Custom formalities for handling equipment / documents for export purpose
are too time consuming to encourage export.
3.4 Marketing
- Bangladesh is not known to be a potential off-shore source of software and
Data Processing Services.
- Information on prospective overseas customers is not available.
- Not all software in use are Licensed.
- The use of Customized Application Software is virtually non-existent;
therefore, domestic Software market has not developed at all.
- It is not possible to enter into the export market without having a strong
domestic market base.
4. RECOMMENDATIONS
The Committee recognizes that it is not possible to implement all the
recommendations at once, and that all the suggested measures are not needed at
the same time. Therefore, recommended actions have been classified under 'Short
Term' and 'Medium Term', depending on the priority and importance. (The time
frame for Short Term should be a year and for Medium Term 3 to 4 years). The
Committee feels that in the very rapidly changing scenario of IT Industry
growth, it is very difficult to go for a longer time horizon.
The recommendations have been grouped under the following areas , the same
way that the problems have been identified :
Fiscal Human Resource Development Infrastructure
Marketing
4.1 Short Term
4.1.1 Fiscal
- To exempt Computer Hardware, Software, Peripherals, Communication
Equipment, related components, and spare parts thereof, from Import Duty,
VAT, Infrastructure Development Surcharge, Import License Fee, Advance
Income-Tax etc.
- To allow Tax Holiday for the export-oriented Software and Data Processing
Services Industry, for 10 (ten) years (a unit will be considered
export-oriented, if at least 70 % of its revenue comes from export).
- To give a 15 % price advantage (i.e. "domestic preference") to
local Software developers over import of the same products.
- To allow export of Software and Data Processing services through Sales
Contract, instead of Letters of Credit.
- To bring the Bank interest rate on loans / advances / overdraft down to
the level applicable to other export-oriented thrust sectors.
- To allow Special Custom Bonded Warehouse facilities for all export
-oriented software houses.
- To create a Special Fund to be administered by the Ministry of Science
& Technology for giving interest-free loans to teachers and students for
purchase of computers and related equipment, through financial institutions
who should be reimbursed with the interest lost.
- To create a Venture Capital Fund of at least Tk.10 Crore at Export
Promotion Bureau for equity participation in export-oriented Software and
Data Processing Services Companies.
4.1.2 Human Resource Development
- To upgrade the Bangladesh Computer Council to the level of a Division and
to give it the necessary authority to function as the primary facilitator to
help growth of private sector IT Industry (such as National Computer Board
of Singapore and Department of Electronics of India).
- To ask Bangladesh Computer Council to produce within 1999 at least 1,000
(one thousand) 'Trainers' capable of imparting basic computer education in
the latest programming languages.
- To introduce 'Basic Computer Skills' as a Compulsory Subject for all
students in all Universities of the country at Graduation level, starting
from 1998.
- To introduce 'Computer Science Department' in all Polytechnics, BITs,
Universities and selected Colleges, with at least 50 seats per class per
year per institute.
- To ask Bangladesh Computer Council to review 'Computer Science' course
curricula currently being used in various Universities after discussions
with the Universities, IT Professionals and IT Associations, keeping in view
the requirements of the 21st Century, and to request the concerned
Institutions to consider changes in their curricula in line with the
suggested recommendations. Such review may be undertaken every two years.
- To empower Bangladesh Computer Council to develop a national examination
and certification system for the private IT Training institutions, to give
Certificates to those passing such examinations, and to encourage employers
of both Government and Private Sectors to give preference to such
Certificate holders for jobs.
4.1.3 Infrastructure
- To enact appropriate laws for the protection of Intellectual Property
Rights, as required under the WTO Charter.
- To set up low-cost high-speed data and voice communication link with the
USA and the UK, with a minimum speed of 2 Mbps. Private Sector should be
allowed to provide such service along with BTTB.
- To set up an Internet Node in the country.
- To make Internet connectivity available at affordable rate, not exceeding
Tk.0.50 (fifty paisa) per minute of use.
- To make Video Conferencing facility available through VSAT.
- To allow Private Sector to set up their own Satellite Communication links
in order to obtain competitive price advantage and greater availability of
Communication facilities.
- To create separate Cells at Chittagong, Dhaka, Kamalapur and Benapole
Customs Houses to handle all incoming and outgoing equipment / documents
/data media of export-oriented IT Industry, so as to ensure clearance of
such equipment / documents within 24 hours.
- To create a Central Resource Center at Bangladesh Computer Council with
current Books, Magazines, Periodicals, Software, Manuals etc. on IT related
subjects.
- To encourage software firms to form an association primarily to protect
the interest of the Software and Data Processing Services Sectors, in line
with NASSCOM, ASOCIO, WITSA, JISA etc.
- To assign one Assistant Director of Export Promotion Bureau for this
sector on a full time basis.
4.1.4 Marketing
- To arrange meetings/seminars in selected locations in USA with a
concentration of IT Professionals of Bangladeshi origin (e.g. Silicon
Valley, California, USA) to inform them about the incentives being provided
by GOB and mobilize their support to help Bangladeshi entrepreneurs. These
meetings should be addressed by policy makers/high officials/IT
professionals representing GOB.
- To ban use of all pirated Software in all organizations, both in the
public and private sectors.
- To encourage all Government, Semi-Government, Autonomous organizations,
Sector Corporations, Banks, Insurance Companies etc. to replace the manual
system of documentation and records by Computerised system through the use
of locally developed Customized Application Software.
- To send Marketing Missions to North America / E. U. consisting of Members
from IT Associations and EPB, on a regular basis, with a view to publicizing
Bangladesh Software and Data Processing Services capabilities as well as
establishing personal contacts with the prospective customers.
- To create a Database of all major organizations / institutions engaged in
out-sourcing of Software and Data Processing Services, to be made jointly by
EPB and Bangladesh Computer Samity (or Software Association, when it is
formed), and to maintain a special Home Page in the INTERNET.
- To explore the possibility of obtaining business on sub-contract basis
from the suppliers of Software and Data Processing Services in India, Sri
Lanka and the Philippines etc.
- To empower Export Promotion Bureau to ensure regular participation in all
major International Exhibitions / Fairs for IT products and services.
- To ask the concerned Trade Associations to organize International
Exhibitions / Fairs in Bangladesh for IT products and services, in
collaboration with Export Promotion Bureau.
4.2 Medium Term
4.2.1 Fiscal
- To create a Market Promotion Fund to be administered by Export Promotion
Bureau for meeting the expenses of promoting Bangladesh as a potential
source of Software and Data Processing Services to the overseas markets.
- To create a special fund for supporting industry oriented IT research and
development activities, to be administered by Bangladesh Computer Council.
4.2.2 Human Resource Development
- To introduce compulsory education in Computer Studies at School and
College levels.
- To strengthen Bangladesh Computer Council and make it responsible for
imparting higher level special need-based training to the IT Professionals
graduating from the Universities. Such training programmes should be
gradually extended to District Headquarters where facilities are available.
- To incorporate industrial attachment program in final year of Computer
Science course at Degree level.
4.2.3 Infrastructure
- To set up an Information Technology Village (ITV) at a suitable place on
Tongi-Ashulia Road near Dhaka, (e.g. the intersection of Tongi-Ashulia Road
and the kutcha road leading to Mirpur) and to equip the same with all
necessary facilities, such as high speed communication, Special Custom
Bonded Warehouse, Resource Centre (hardware, software, manuals, book), Power
and Water Supplies, Telecom facilities etc.
- To ask BTTB to set up ISDN/ HDSN / ADSL Lines all over the country, and a
fibre optic backbone.
- To set up a Communication Hub in Bangladesh.
- To form a Standing Committee, with the following members, to formulate and
implement policies, strategies and action plans for promotion of export of
Software and Data Processing Services :
- Vice Chairman, Export Promotion Bureau - Convenor
- President, FBCCI - Member
- Executive Director, BCC - Member
- Member (Customs), NBR - Member
- Member, BTTB - Member
- A senior Academic from the IT field - Member
- President, Bangladesh Computer Society - Member
- President, Software Association - Member (Till a separate Association is
formed, President, Bangladesh Computer Samity)
4.2.4 Marketing
- To ask Export Promotion Bureau to set up permanent Liaison Offices in the
USA and the UK to be manned by professional marketers of IT field, who
should perform and achieve definite quantified business objectives.
- To ask Bangladesh Computer Council to create a Database of Bangladesh IT
Professionals working at home and abroad, in order to obtain their help when
needed.
- To encourage IT industry members to take steps for ISO-9000 certifications
and eventually ratings from Software Engineering Institute (SEI) of
Carnegie-Mellon University of USA.
- To produce sufficient skilled IT professionals for export.
5. CONCLUDING REMARKS
The necessary ingredients to become a potential exporter of Computer Software
and Data Processing Services do not currently exist in the required quantum in
Bangladesh. If we want to enter into this market, we need to cross a number of
hurdles within a very short time span. Concerted efforts from everybody
concerned have to be put in on a war-footing basis, as this sector has the
potential to generate the highest revenue for the country.
A coordinated action plan involving the following Agencies will produce the
desired results:-
Bangladesh Computer Council
This organization needs to be upgraded to a Division in the Ministry and
headed by a professional with the necessary authority to act as the focal point
of providing required input for the Industry.
Educational Institutions
Universities, BITs, Colleges and Polytechnics both in Public and Private
sectors, need to be sufficiently geared up to produce right kind of
professionals in the required numbers.
Development Partners
World Bank, ADB, UNDP, EC, OECF, JICA and other development partners should
be approached to provide funds to set up necessary infrastructure, particularly
for developing human resources.
Venture Capital
Venture Capital Fund should be placed at the disposal of EPB for investment
in this sector.
Non-Resident Bangladeshis (NRBs)
NRBs should be encouraged to project Bangladesh through their professional
excellence, and eventually to return to the country to set up export houses.
Software Industry Association
A separate Association of firms involved in Software Development and Data
Processing Services Industry should be established to protect the interest of
this industry through maintenance of constant liaison with Government and other
agencies.
Annexure 1 - COMPOSITION
OF THE COMMITTEE
1. Professor Jamilur Reza Choudhury -Convener
Bangladesh University of Engineering & Technology
2. Mr. A. K. M. Nurul Amin Khan
General Manager, Planning, BTTB
(Representative of Ministry of Posts & Telegraph) - Member
3. Mr. Shah Mohammad Najmul Alam - Member
Joint Secretary, Ministry of Science and Technology
4. Mr. Faisal Ahmed Choudhury
Vice Chairman, Export Promotion Bureau - Member
5. Prof. M. A. Sobhan
Executive Director, Bangladesh Computer Council - Member
6. Mr. A. S. M. Quasem,
President, Dhaka Chamber of Commerce and Industry - Member
7. Mr. Mustafa Jabber
President, Bangladesh Computer Samity - Member
8. Mr. S. M. Kamal,
Director (HRD), BEXIMCO - Member
9. Mr. Shaikh Abdul Aziz,
Managing Director, LEADS Corporation Ltd. - Member
10. Mr. Jamil Azhar, ANIRBAN - Member
11. Dr. Abdul Matin Patwary
President, Bangladesh Computer Society - Member
(in some of the meetings Dr. Aminul Haque, Vice-President, represented the
President, BCS)
12. Mr. Moin Khan,
Computer Solutions Limited - Member
13. Mr. M. Sabir Ahmed
Computer Services Ltd. - Member
14. Mr. B. M. M. Mozharul Huque
Director General, Export Promotion Bureau - Member Secretary
Annexure 2 - EXPORT
OF SOFTWARE AND DATA ENTRY SERVICES: THE INDIAN EXPERIENCE
(Report of the Team which visited India)
I. INTRODUCTION
In pursuance of Resolution Number 5 of the meeting of the Committee For
Recommendations On Export of Computer Software, held on 4 August 1997, a team
comprising the following members of the Committee visited Indian cities of
Mumbai, Bangalore and Calcutta from 16 to 23 August 1997
- Professor Jamilur Reza Choudhury - Team Leader
- Mr. Shaikh Abdul Aziz - Member
- Mr. Momluk Sabir Ahmed - Member
- Mr. S. M. Kamal - Member (joined the Team only during the Calcutta visit)
II. THE VISIT
The delegation visited the following establishments and had in-depth
discussions with the senior officials of these organizations (Appendix - A) :
- Software Export Houses - 14
- Data Entry Export Houses - 02
- Educational Institutes - 02
- Software Technology Parks - 02
- Government Officials - 02
The Team was able to visit different types of organizations involved in a
wide spectrum of activities, the size of such establishments ranging from 10
(ten) to 9,000 (nine thousand) professionals per unit.
III. THE FINDINGS
India entered into the international software market from mid 80's through
sporadic efforts of a few Indian nationals working abroad in the Computer field.
Those individuals, mostly Non-Resident Indians (NRIs), through their personal
contributions made towards the operations of their overseas employers, managed
to create an impact about Indian's ability to offer Data Processing and Software
Services to the international market place.
Some of those NRIs decided to come back to India to set up Software Export
Houses, while maintaining their overseas liaison.
This was quickly followed by Indian Government's active support in nurturing
this nascent Industry. Computer Software Policy was formulated in 1986 and
action plan was drawn up to provide necessary infrastructure facilities.
The educational and training institutions did not fail to read the signals,
and through rapid expansion, have been producing a large number of graduates in
the appropriate vocation.
The private sector, in their own interest, set up their own training
programmes to suit the market needs.
Meanwhile, as the domestic software market in India continued to grow, the
professionals were getting ample opportunity to improve upon their expertise and
the overseas customers could assess India's performance standard.
The services provided by India for export market are primarily of two types:
i. On-Site:
Technical personnel are posted at the overseas customer sites to complete the
contracted job. This is basically 'body-shopping'. About 60 % of India's total
export comes out of this sector. But it is reducing drastically.
ii. Off-Site:
Contracted jobs are completed in India, and the implementation is done at the
customers' site. Roughly 40 % of current export revenue is generated through
this operation. This ratio of off-site to on-site work is increasing at a fast
rate.
The Team records its findings in the following heads:
A. Fiscal
- All exporters are allowed to import Hardware and Software free of Duties and
Taxes.
- Duties and Taxes on Computer Hardware and Software for domestic market have
been reduced from 300 % in 1978 to about 38% for hardware and 0% for software
in 1997.
- There is no Duty or Taxes on import of Computer Systems for non-commercial R
& D units.
- Income-tax Holiday for any 5 (five) consecutive years during the first 8
years of operation is allowed for all exporters.
- Banks are required to offer Pre-shipment and Post-shipment financing to the
exporters at 4 percent point below the normal rate of interest.
- Special Import License is available to the exporters at the rate of 15% of
the net foreign exchange earning, which can be used for import of any item
that the exporters may require in connection with their export activities.
This License can also be transferred to another importer and a premium of
about 10 % can be collected in cash.
- Depreciation at the rate of 33 % of the written-down value is allowed for
all equipment.
B. Human Resource Development
- Computers were made available in schools and colleges from early 80s.
- Educational Institutes made conscious decision, as early as mid 80s, to
produce large number of Computer Scientists and Engineers.
- Course curricula for computer related education are updated at regular
intervals to cater to the requirements of the market.
- Universities and R&D Institutions both in public and private sectors
undertake high level R&D projects on Software, System Integration etc.
- Big exporters, in collaboration with multinational computer companies, offer
research facilities to persons desirous of undertaking such work.
- Department of Electronics, Government of India has established, in
collaboration with UNDP, a National Centre for Software Technology (NCST) at
Mumbai for R&D, education and software development activities.
- Department of Electronics, Government of India has accredited a number of
Institutes who are authorized to award Degrees titled Master of Computer
Applications (MCA).
- Private sector organizations such as NIIT, APTEC etc. turn out a large
number of professionals every year.
- Indians working abroad in computer fields were motivated to return home.
C. Infrastructure
- Department of Electronics, Government of India, has set up 7 (seven)
Software Development Parks (STP), with all necessary buildings and
telecommunication facilities. The first such Park was established in Bangalore
in 1992 at a cost of 5 crore Indian Rupees. 'One-Stop' service is provided
from these STPs. All Government approvals are accorded through this window.
Any such approvals are given within a maximum of 2 (two) months from the date
of filing the applications. Permission for Special Custom Bonded Warehouse
needs a maximum of 15 (fifteen) more days.
- Other such institutions (SEEPZ, Electronics Park, Export Processing Zones
etc.) have also been set up in strategic locations.
- A separate Company, called VSNL, was set up to provide telecommunication
facilities through Satellite with T-1 as the protocol, through which exporters
can achieve a speed of 64 kbps. This will shortly be increased to 128 kbps. A
dedicated leased line cost Indian Rs.1.25 lac per month for guaranteed 64
kbps.
- ISDN Cabling has been provided to most large cities.
- Special Custom Bonded Warehouse facilities have been provided to all
exporters, regardless of their location.
- The rent charged for space allotted to exporters in STPs and other Zones is
1/20th the normal market rate.
- Uninterrupted Power Supply is guaranteed to the STPs and Zones.
- The enactment of the Copyright Protection Act, 1994 and its enforcement have
been recognised as major contributors to the phenomenal growth of software
industry.
D. Marketing
- Large domestic market helped India in creating a dependable source of
Software supply.
- NRIs engaged in Computer field were the most effective promotional tool in
the 80s.
- Government identified 'Software' as thrust sector in mid-80s.
- Exporters participate in international exhibitions / fairs every year. The
same participants visit the same venue each year. The Government sponsors some
of these activities.
- All exporters have some business contact point in the overseas markets,
either through their own office, or by way of marketing arrangement with
another company.
- The Indian Software Companies have managed to get a lot of work related to
Y2K ("the Millennium Bug") problem.
- The Indian Data Processing companies, in collaboration with NRIs, are
successfully exploiting the Health Transcription business in USA.
IV. CONCLUDING REMARKS
India has been successful in establishing itself as a major source of
Computer Software Services largely due to the timely contributions from the
following groups / agencies :
Non-Resident Indians (NRIs)
Through their professional excellence and competence, NRIs created a positive
impact in the international market place. Their patriotism and business acumen
brought them back 'home', and got them involved in this Industry.
Government of India
Department of Electronics, under the Ministry of Science and Technology, and
headed by a senior Permanent Secretary, was given the required authority and
freedom to create the appropriate environment for the Industry to grow. The
enactment of Software Copyright Protection Act, 1994 and its enforcement (in
collaboration with NASSCOM) have been major contributors to the growth of
software industry.
Educational Institutions
Universities, Colleges, Technical Institutions etc., both in Public and
Private Sectors, offered their total support in producing the right types of
computer professionals in large numbers.
World Bank / UNDP
These international organizations helped the Industry through periodic
funding for strategic studies and investments. World Bank funded a number of
studies on the Industry, while UNDP was the main financial contributor for
setting up NCST.
Venture Capital
When India was gradually establishing itself as a reliable source of supply
of Software Services, the Government of India as well as the State Governments
provided venture capital fund to augment the growth. Private venture capital was
also available in abundance.
National Association of Software and Service
Companies (NASSCOM)
This is the national forum representing the Computer Software and Service
Industry, dedicated to the cause of protecting the interest of its members. Of
all the agencies, NASSCOM probably made the most contribution in taking the
Industry to where it is today, through continuous dialogues and consultations
with relevant Government Departments and other organizations.
V. RECOMMENDATIONS
Bangladesh can learn from the Indian experience and should adopt the
following measures which have helped India achieve the fast rate of growth :
- Mobilize Non-Resident Bangladeshis (NRBs) involved in I.T. activities
abroad. This can be done by arranging meeting/seminars in selected locations
(e.g. in the Silicon Valley of California, USA) where the incentives being
provided by GOB may be highlighted. These meetings should be addressed by
policy makers/high officials/IT personnel representing GOB.
- Set up Software Technology Villages with all necessary infrastructure
facilities in line with STP, SEEPZ etc.
- Re-design course curricula of Computer related studies in the
Universities, Colleges etc.
- Expand facilities in Universities, Colleges etc. to produce a much larger
number of Computer professionals.
- Enact appropriate laws to protect Intellectual Property Rights of Computer
Software.
- Take advantage of the immediate opportunities available in the following
areas:
- Year 2000 conversion - a market of US$ 650 billion
- Euro-Currency Conversion - to be required as soon as the E.U. agrees on
Single Currency. Market size still unknown.
- Health Transcription Data Entry Services.
- Focus on Multimedia market which is experiencing the fastest growth.
- Participate in 'Gateway 97', a Multimedia Exhibition to be held at the
Science City of Calcutta from 5 to 9 November 1997.
- Influence Microsoft Corporation of USA to involve Bangladesh in their plan
to introduce Bangla as a language for Windows NT 5.0.
- If necessary draw from educational resources available in Calcutta to
train our prospective professionals.
- Take steps for ISO 9000 Certifications, and, eventually, rating from
Software Engineering Institute of Carnegie - Mellon, U.S.A. (SEI).
- Form NASSCOM type organization of the firms involved in Software
development and Data Processing Services.
Prof. Jamilur Reza Choudhury
Team Leader
APPENDIX A - Organisations Visited and Government
Officials met by the Team
A. SOFTWARE EXPORT HOUSES
- Citicorp Overseas Software Limited - Mumbai
- Tata Consultancy Services - Mumbai
- Tata IBM Limited - Bangalore
- Icode - Bangalore
- Microsoft Corporation India Pvt Limited - Bangalore
- Wipro Limited - Bangalore
- Intellect Data Systems & Software Pvt Limited - Bangalore
- Ampersand Software Applications Limited - Bangalore
- VeriFone India Private Limited - Bangalore
- Price Waterhouse Associates - Calcutta
- Phoenix Software Limited - Calcutta
- Techna International Corporation - Calcutta
- Worldware, India - Calcutta
- Globsyn Technologies - Calcutta
B. DATA ENTRY EXPORT HOUSES
- Health Scribe India Pvt Ltd - Bangalore
- Optimal Computing (P) Limited - Calcutta
C. EDUCATIONAL INSTITUTIONS
- National Centre for Software Technology - Mumbai
- Indian Institute of Science - Bangalore
D. SOFTWARE TECHNOLOGY PARKS
1. Bangalore
2. Calcutta (Salt Lake City)
E. GOVERNMENT OFFICIALS
1. Mr. Amiya Baran Saha
Director (Technical)
Department of Industries
Government of India, (New Delhi) - Mumbai
2. Mr. Nandan Bhattacharya
Managing Director
West Bengal Electronics Industry Development
Corporation Limited - Calcutta
APPENDIX B - INDIAN SOFTWARE INDUSTRY
[Figures in Million US Dollars]
| |
95-96 |
96-97 |
99-00 |
| |
(Actual) |
(Forecast) |
(Forecast) |
|
I. Domestic |
|
Turnkey |
141 |
189 |
563 |
|
Products & Packages |
211 |
423 |
1,549 |
|
Consultancy |
42 |
70 |
338 |
|
Data Processing |
51 |
85 |
282 |
|
Others |
20 |
23 |
85 |
|
Sub-Total |
465 |
790 |
2,817 |
|
II. Export |
|
On-Site Services |
394 |
535 |
1,070 |
|
Off-Shore Services |
197 |
324 |
901 |
|
Off-Shore Packages |
73 |
113 |
704 |
|
Others |
25 |
42 |
142 |
|
Sub-Total |
689 |
1,014 |
2,817 |
|
TOTAL MARKET |
1,154 |
1,804 |
5,634 |
|