1. Importance of ICT in Developing Economies
The spread of ICT technologies over the world has been dramatic in the past years, spearheading development all over the world. Increasing the pace of globalization, this trend opened new opportunities not only for developed nations but also for improving ones as the costs of ICT technologies decrease. Mansell & Wehn (1998) note that “the increasing spread of ICTs opens up new opportunities for developing countries to harness these technologies and services to serve their development goals.” India is the most frequently cited case of explosive growth in ICT sector.
However, other developing nations have also developed sizeable industries that contribute to their development, and Bangladesh is one of the successful examples.
ICT sector is predicted to be at the forefront of development in South Asia that will promote its rise up to 2036 (Espiritu, 2006). The development of this sector is expected to support growth, replacing the production of raw materials with high technologies that allow rapid progress and advancement to the role of one of the world’s leading areas. In Bangladesh, building a dominant ICT sector recently became a priority in the government policies as this area was defined as “Thrust Sector” exhibiting “desire to turn Bangladesh into an ICT driven country” (INS, Asian Tribune, 2006). Possessing many advantages that can drive the development of the sector, the nation can reap benefits of advancement in a relatively short term.
2. History of ICT Sector in Bangladesh
The beginning of the national industry can be defined in 1964 when the Bangladesh Atomic Commission was the first establishment to use computers. In later decades, mainframe computers spread to the financial sector to facilitate processing of data. In the 1980s, the printing and publishing industry began to use information technology.
It was not until the 1990s that reduced price on personal computers made the use of ICT more accessible to the wide public. Given Bangladesh’s low-income level, it required several more years until the government’s decision to remove taxes on hardware and accessories and a general decline in global PC prices triggered an explosion in their proliferation. In consequence, the growth rate of computer usage averaged 40% in the past years (CentOS, n.d.).
Computer technology received additional impetus from “the introduction of the direct Internet connection using VSAT in June 1996” (CentOS, n.d.). Initially, this connection was monopolized by the BTTB, a fact that allowed the agency to maintain high prices that effectively blocked access for the majority of the population. This monopoly was abolished in 2000 when Internet access soon became more affordable, reaching vast masses of people around the country (Razib, 1996).
3. Current Status of the Industry
The size of ICT industry including software and IT-dependent services is estimated by the Bangladesh Association of Software & Information Services (BASIS) to exceed Tk. 300 crore/year (BASIS, n.d.). The inclusion of other branches such as hardware production, Internet, and network services would bring this number to Tk. 1,000 crore/year (BASIS, n.d.). Explosive expansion demonstrated by the sector in the past six years is illustrated by the number of newly formed companies and increase in the number of IT professionals. According to CentOS, the number of hardware companies grew from 1,200 to 2,500 in the period 2000-2006, the number of software companies increased from 100 to 350, and ISP businesses from 30 to 150. Accompanying these numbers is the growth in the number of ICT professionals that reached 25,200 in 2006, up from 11,400 in 2000 (CentOS, n.d.).
Growth is explained by a combination of factors that make Bangladesh well positioned for constructing a fully-fledged information technology sector. The nation’s advantages are “the unleashed English speaking youth force, skilled professionals working abroad, universities and other educational institutions turning out huge numbers of ICT graduates, a substantial number of ICT graduates studying abroad, and skilled workforce available at most competitive wages” (CentOS, n.d.). Although the BASIS notes some constraints in the current supply of IT graduates for the local industry, the association also notes that the remarkable increase in enrollment in IT-oriented university programs promises great improvements in the availability of qualified workforce.
The relatively small number of software companies shows that this branch of the market has not yet fully exploited its potential, being a “late entrant to the ICT sector” (CentOS, n.d.). The demand for software development comes predominantly from the corporate market, and therefore, the most developed output is database related. The BASIS (n.d.) reports that software is at the moment propelled by the need to automate office processes including “Accounting/Finance, HR, Inventory, Billing”. At the same time, other sectors including Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and SCM (Supply Chain Management) are also developing at a quick pace. Speaking of the segments that represent the greatest users of software services, the most extensive demand comes from pharmaceutical and textile industries that account for a significant portion of the GDP and bulk of employment in Bangladesh. At the moment, more and more companies choose to specialize in the banking sector, competing in this area with inexpensive Indian software market. Businesses like Flora Limited, Beximco Computers, Techno Heaven have become the leaders in this area (Razib, 1996). The achievements of Bangladeshi software developers are represented in the annual Soft Expo exhibition.
The hardware market is mostly represented by vendors importing PCs and accessories from Singapore for distribution in the local market. The annual market of over 100,000 units is largely represented by clone computers that dominate over brand computers because of their lower prices. Apple is not well represented in the Bangladeshi market because of its high pricing, and Intel dominates the processor market (Razib, 1996).
Bangladesh can become an important destination for outsourcing, with its Dhaka City turning into another Bangalore. At this point, Bangladeshi software companies have signed contracts with Danish corporations for the provision of software development services. At the moment, the export of software from Bangladesh totaled $7.2 million and showed annual growth of 70% in 2003-04 and 2004-05 (BASIS, n.d.).
4. The Government’s Role in the Development of ICT Sector
The administration of Bangladesh has committed itself to pursuing a focused policy that will make the nation’s ICT sector competitive with most of the world’s developments in this industry. Until 1996, however, the government paid little attention to the burgeoning industry. The situation changed when “the caretaker government of Justice Habibur Rahman opened Internet Technology for Bangladesh in June 1996” (Razib, 1996). In 1998, their successors, the government headed by Sheikh Hasina eliminated taxation on computer accessories. The efforts of the current government led by Begum Khaleda Zia resulted in increasing rate of Internet connections and spread of broadband access (Razib, 1996). On May 22, 2006, Begum Khaleda Zia, the Prime Minister of Bangladesh, “inaugurated the long-awaited fibre optic submarine cable system at the landing station at Cox’s Bazar and thus connected Bangladesh to the global information superhighway”, another landmark event that will bring the nation closer to the global communication networks (INS, Asian Tribune, 2006).
The tax-free status of ICT companies was preserved despite the nation’s general poverty and reliance on the budget. Serious attention to the development of the promising sector of the economy is displayed in the National ICT policy adopted in 2002 with the purpose of forming a knowledge-based society. This policy presented by the Ministry of Science and Information & Communication Technology (2002) “aims at building an ICT-driven nation comprising of knowledge-based society by the year 2006”. In addition to the creation of skilled human resources through the increased introduction of ICT technologies at educational establishments, the program targets development of software, hardware, and services sectors within ICT industry. The creation of a government-sponsored ICT Incubator and encouragement of Non-Resident Bangladeshis to set up companies in the nation are ways to promote industry growth. The government also established an ICT Task Force headed by Prime Minister Begum Khaleda Zia to elaborate further details of the sector’s development.
The government contributes to the development of ICT industry by initiating a series of projects related to e-Government, the aim to introduce ICT into government proceedings to increase their intensity. These projects initiated by the to ICT Task Force (SICT) account for a budget more than Tk. 60 crore. To this date, “SICT has so far floated 17 e-Governance projects out of which eight projects have been already awarded to a same number of companies” (Razib, 1996). However, growth and development of the industry remain largely driven by efforts of the private entrepreneurs and their corporate clients (Hasan, 2003, p. 111).
5. Prospects and Challenges of ICT industry
Extensive government support for the industry demonstrates the recognition that the sector holds great promise for the economy that currently ranks among the least developed countries of the world. At present, Bangladesh’s “two main exports are jute and tea; both faced a price-inelastic world market demand” (Cypher, Dietz, 2004, p. 198). Unable to attract significant FDI flows and to lack population’s capacity to save given the poverty level, Bangladesh is left with its resources to overcome dependence on agricultural exports. In this light, the development of science and technology represented by the ICT sector appears most promising (Wignaraja, 2002, p.95).
There are still serious obstacles to the development of the sector in Bangladesh. First, many residents cannot properly take advantage of its progress since “computers cost as much as half a year’s salary, and a modem costs more than a cow” (Mansell & Wehn, 1998, p.250). However, electronic communication spreads slowly but continuously, often aided by the efforts of NGOs like Drik, located in Dhaka, Bangladesh, an organization engaged in the provision of unofficial e-mail services, connecting wide layers of the population to the Internet. In general, “lack of IT awareness in the public sector and lack of capital investment are the two major hurdles”, combined with lack of confidence in the sector’s prospects on the part of foreign investors, including non-resident Bangladeshis (BASIS, 2004).
Lack of adequate infrastructure also remains a serious obstacle. The development of Internet access is mostly blocked by the low teledensity in the nation. In 1999, Bangladesh compared unfavorably against most nations in Asia Pacific, with its teledensity rate of just 0.5% against the regional average of 8.5% (Sobhan, Khaleque, & Rahman, S., 2002, p. 9). The Public Switched Telecommunications Network (PSTN), the backbone for Internet connections, is available in a limited area encompassing Dhaka and major cities. The penetration in rural areas is only marginal. Internet access is characterized by low bandwidth capacity ranging between 100 and 150 Mbps, and connection speed averaging 64 kbps-2 Mbps (Sobhan, Khaleque, & Rahman, S., 2002, p. 9). These technical limitations restrict the development of Internet networks, in addition to the high cost of hardware compared to local incomes and poor acquaintance with Internet usage.
The development of the ICT sector in Bangladesh holds promise for many key areas that can propel the nation’s development including higher education. Recently, Bangladesh saw a surge in the number of distance education programs that permit democratization of education. The leader in this area, Bangladesh Open University (BOU) now relies on a combination of “print, correspondence tuition, audio-visual materials, broadcasting, and face-to-face tuition” (Harry, 1999, p. 173-174). Information technology can be another option helping the university and similar establishments deliver educational materials to prospective students and in this way broadening its reach.
The ICT sector in Bangladesh is crucial to the development of this developing nation and has the potential to dramatically affect living standards and the nation’s position in the global economy.
Increased affordability of computer and communication technologies help reach vast masses of population, and the presence of a qualified workforce with competitive wages is an essential prerequisite for the successful development of the sector. With extensive government support and proclaimed orientation toward e-Government, the situation in the ICT industry is being taken seriously by politicians. Bangladesh can aspire to create its hardware industry as well as establish a high position in the software market. At the same time, there is still a lot to be done to overcome obstacles posed by poverty, lack of required investment, and inadequate infrastructure.
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