ict industry , development of ict industry , government initiatives for promotion , strengths and weakness of ict , number of mobile subscribers , contribution of telecom sector of bd

1. Industrial Sector in Bangladesh

2. Objectives of this Class
 Know about the Industrial sector of Bangladesh.
 Be familiar with the major Industry of Bangladesh (ICT
Industry and Telecommunication Industry).
 Identify the weakness and strengths of the ICT
Industry and Telecommunication Industry.
 Suggest the measures to enlarge the ICT and
Telecommunication Industry.

3. Industrial Sector of Bangladesh
Like other third world
countries, the economy
of Bangladesh depends
firstly on agriculture and
secondly on industry. It is
making significant
contribution in the field of
our export income. The
contribution of the
industry sector to the
economy of Bangladesh
and in GDP has been
increasing day by day.
Year Contribution of Industrial
sector in GDP (%)
1941-1950 4
1951-1960 5
1961-1970 10
1971-1980 11
1981-1990 12
1991-2000 15
2014-2015 30.42
2015-2016 31.28
Source: World Bank Report and
Ministry of Finance, Bangladesh
Industrial Sector in GDP

4. Focused Industry
ICT Industry
Telecommunicati
on
Industry

5. ICT Industry
ICT Industry
Information and communications technology (ICT) is often used as an
extended synonym for information technology (IT). The term ICT is used to
refer to the convergence of audio-visual and telephone networks with
computer networks. It covers the vast area of information technology,
communication technology and the telecommunication technology. ICT
industries are broadly engaged in:
 Producing, selling and supporting computing and
communications equipment, peripherals and components.
 Producing, selling and supporting software for computing and
communications equipment and enterprise and user systems.
 Providing, selling and supporting computing, information,
communications, software and hardware services.
ICT industries are a big and strategically important part of developed as well
as developing economies. It provides meaningful and comfortable livelihoods
for many people, generate good returns for investors, pay lots of taxes, and
generate lots of business for other industries.

6. Development of ICT Industry
 Bangladesh has about five decades of experience in using computers. In
its early days the ICT sector in Bangladesh mainly focused on hardware
operations. The first ‘second generation’, world mainframe, computer
was installed in 1964 at Dhaka University. Soon after this several banks
and industrial concerns started using computers, mainly for accounting.
 The Bangladeshi gas and electricity companies also began using
computer systems for their customer billing. In 1971 the expansion of
computer use was hampered.
 In 1982 a computer center was established at the Bangladesh University
of Engineering and Technology. This center, later renamed the Department
of Computer Science & Engineering, has played a pivotal role in
Bangladeshi IT education since its inception.
 The innovation of software concerning ‘Bangla writing’ on computers
materialized in 1987. Mainul Islam managed to write Bangla in an
Apple-Macintosh computer. With the possibility of using Bangla on
computers, the importance of computer use in offices rapidly grew.

7. Development of ICT Sector (Cont.)
 After the introduction of the internet in 1996, the development of
exportable software and multimedia systems commenced.
 The Bangladesh Computer Society (BCS), association of the IT
professionals, for instance was formed in 1979. BCC, the Bangladesh
Computer Council, is the consequence of the evolution of the National
Computer Committee constituted in 1983.
 In 1997 It is recognized that ICT industry is potential sector and it’s has
impact on the economy. After that in collaboration with industry associations
(BCS, BCC, BASIS and BACCO) and international trade support institutions
the government has taken both short and long term measures to support
and enhance development of the domestic sector and increase the export of
ICT products and services.
 BASIS, established in 1997, promotes the ICT sector through
awareness building, practical education for new graduates and paid
internships, and training programs for mid-career employees.

8. Development of ICT Sector (Cont.)
Now, there are over one thousand registered software and ITES
companies in the country employing over 70,000 ICT professionals.
Out of these companies, around 60% are mainly domestic market
focused while 40% are mainly export focused (BASIS, 2014) The
IT-enabled services (ITES) industry in Bangladesh started
about twenty years ago mostly as a hardware vendor market.
At the moment, this industry is estimated to be worth around
US$400 million where approximately 70,000 professionals,
mostly IT graduates, are employed (Ahmed, 2014). The
industry is now exporting US$250 million IT and IT-enabled
services and products to sixty countries. (Mamun, 2014).
Combining all these efforts, the IT sector of Bangladesh is
expected to reach a target of $1 billion within the next few
years.

9. No. of Registered Software & ITES Companies 1000+
No. of BASIS Member Companies 705 (February 2014)
Approx. Revenue of Local Industry (incl. Export) US $ 400 million
Approx. Revenue from Software Tk. 790 crore
Approx. Revenue from ITES Tk. 1050 crore
Export (2012 -2013) US $ 101.63 Million
No. of Exporting Companies 160 +
No. of Export Destination Countries 60+
Approx. No. of Human Resource Employed in the
Industry
70,000
Source: BASIS, 2014

10. Prospects of ICT
 ICT industry in Bangladesh is still relatively small. Looking at the
characteristics of the market, and the growth of ICT services and products
exported from Bangladesh over recent years ( Figure 1) we can conclude
that the significance of the ICT sector for the Bangladeshi economy will grow in
the near future.
Figure 1: Export trends Software / IT services, source: BASIS.
 According to BASIS estimations within the next five years 1 % of
Bangladesh’s total GDP will come from the software and IT services sector and
over 1,50,000 Software and IT professionals will be working in the Bangladeshi
IT industry.
 In addition, The survey of BASIS 2012 also state that ICT industry has
consistently grown in recent years at 20 to 30 percent per annum. Over 800
registered ICT companies generated a huge amount of revenues.
Fiscal Year ‘06-‘07 ‘07-‘08 ‘08-
‘09
‘09-
‘10
‘10-
‘11
‘11-‘12 ‘12-‘13
Export (million
USD)
26.08 24.09 32.91 35.36 45.31 70.81 101.63
Growth (over
previous year)
-3.44% -4.83% 32.59
%
7.44% 27.25
%
56.28
%
43.53%

11. Government Initiatives for Promotion
 Exemption of Tax/VAT on Computer Hardware and Software;
 Deregulation of Telecom Sector & Establishment of BTRC;
 Installation of Digital Data Network in all Districts and Upazilas;
 Creation of Equity Entrepreneur Fund for the Investors;
 Distribution of computers to School/Colleges;
 Establishment of ICT Business Promotion Council
 Standardization of Bangla for Use in Computing Equipment
 Introduce Post-Graduate Diploma (PGD) Program in public
Universities to produce quality ICT Professionals;
 Internship program to provide on the Job training to new
graduates;
 Establishment of training Laboratories in the educational
institutions at Upazilla level;
 Establishment of Community e-Centers in the rural area
throughout the country by the Government & NGO;

12. Government Initiatives for Promotion
 Hi-Tech Park- A would class Hi Tech Park will be established on 231
acres of land near Dhaka with all modern facilities;
 128 Computer Labs in Schools and Colleges are going to be
established in 64 district headquarter and another 1500 at upazilla
level;
 Establishment of IT Village in Mohakhali is under consideration of
Government;
 Ministry of Science & ICT and Bangladesh Computer Council are
implementing e-government activities in the country.
 National ICT Policy 2009 adopted.
 National Broadband Policy 2008 passed.
 Bangladesh has already entered into the arena of ADSL+2
Broadband, WiMax and 3G technology of the Internet.
Bangladesh is currently connected with only one optical fibre
submarine cable system (SEA-ME-WE-4) has already joined the
SEA-ME-WE-5 submarine cable.

13. ICT Policy 2009: At a Glance
In order to translate the vision for digital Bangladesh into a reality, it
is necessary to have an appropriate ICT policy. ICT Policy 2009 has
been framed to meet this need. The objectives, as set-out in the
policy to ensure the role of ICT in national development, are to:
I. maintain social equity,
II. increase productivity,
III. ensure data integrity,
IV.assist education and research,
V. generate employment,
VI.increase export,
VII.enhance quality of health services,
VIII. ensure access to information for all,
IX.protect environment and strengthen disaster management,
X. support expansion of ICT.

14. Strengths and weakness of ICT
Industry
Strengths
1.One of the biggest strengths of the ICT sector is the young and
educated workforce.
2.The technical knowledge of the Bangladeshi workforce is
considerably high.
3.Costs in Bangladesh are approximately 40 percent lower
than in India and Philippines.
4.Due to the large population the wages are still very competitive.
Bangladesh is even cheaper than competing countries such as
Sri Lanka and Philippines.
5.Employee readiness to work and lower costs are the
ultimate good looks of the Bangladesh market.
6.Bangladeshi services and products are better priced than in other
ICT offshore destinations.
7.Hardware platforms necessary for IT development are available
8.The demand for computers and peripherals is booming at 20
percent.

15. Weakness
As a developing market Bangladesh has a fair set of weaknesses. Most of
them come from lack of skills. The main weaknesses are:
1. The main weakness of the Bangladeshi market remains infrastructure
and power shortages.
2. Another weakness is the lack of reliable infrastructure.
3. Internet speed, bandwidth and electricity are key problems that regularly
affect daily operations.
4. Bangladeshi ICT sector also suffers from poor international visibility and
lack of brand name as a global off shoring destination.
5. The ICT sector in Bangladesh is comprised of mainly small ICT
companies that currently seem to lack focus and scale to take up large
long-term projects.
6. There is a big lack of soft skills in Bangladesh. If you have 100
candidates for the job, probably just 2 have the right soft skills.
7. There is a gap between the industry needs and the IT graduates. To
solve the problem, companies need to offer trainings and internships for
post graduates.
8. Due to the lack of investments the competition is not tough and the
turnover of employees is lower than in other countries.
9. Political Instability hampers the development of ICT Industry.

16. Telecommunication Industry

17. Development of Telecommunication Sectors
Telecom services in this subcontinent were first introduced by the British in
1853 with the setting up of the Posts and Telecommunications
Department.
After the independence of Bangladesh in 1971, Bangladesh Telegraph
and Telephone Corporation was set-up under the Ministry of Posts and
Telecommunications to run the Telecommunication Services.
This was converted into a corporate body named Bangladesh Telegraph
and Telephone Board after the promulgation of Bangladesh Telegraph and
Telephone Board Ordinance No. XLVII of 1975.
On 24th February, 1979; Telegraph and Telephone Board was converted
to “Bangladesh Telegraph and Telephone Board (BTTB)” as a Government
body with a mandate to provide basic telecommunication services
throughout the country in pursuance of Ordinance No. XII of 1979 and
from 1 July 2008, as per the Telecommunication policy, 1998, BTTB was
converted into a public limited company - Bangladesh Telecommunication
Company Limited through another ordinance.

18. Development trend (Cont.)
The first boom in the telecom sector erupted when Bangladesh
government allowed private sector participation in telecom industries
by granting the permission to operate as a private service provider in
1989.
 Bangladesh Rural Telecom Authority was the first private company
to get license from the government in 1989 to operate and maintain
digital phone exchanges in 200 upazilas.
 Sheba Telecom (Pvt) Ltd. Was also granted license in the same
year to operate in the rural areas of 199 upazilas.
 Bangladesh is pioneer among the LDCs to opening up its mobile
phone sector for private and foreign investment in 1989.
 Pacific Telecom launched the country's first mobile phone service.
Subsequently, three more mobile phone licenses were issued, in
1996, 2004 and 2005.

19. Development trend (Cont.)
Between 1993 and 1996 the mobile phone services were monopolized by
one company; Pacific Bangladesh Telecom Ltd. which did not let the
customer benefitted, however, with the commissioning of mobile phone
service by Grameen Phone Limited and Aktel in 1997, the situation
started to improve in terms of price reduction and quality. Later on the
operation of Grameen phone Ltd. can be considered as the golden
period. The subsequent arrival of Teletalk, a government enterprise in
2004, Banglalink in 2005, and Airtel Bangladesh Ltd. in 2007 brought
immense market competition among the telephone operators.
Currently, six mobile operators and eight PSTN operators are operating in
a competitive market environment. As of now, the tele-density (voice) of
Bangladesh is around 63.74 percent. The total number of mobile phone
subscribers has just gone above 114 million at the end of January 2014.
 Today, more than one million people are involved directly or indirectly in
this sector. Besides, Government of Bangladesh collects huge amount of
revenue including tax, vat from this sector which gives an immense
opportunity for the development of socio-economic condition of BD.

20. Number of Mobile Subscribers
0 10 20 30 40 50
Grmeen Phone
Banglalink
Robi
Airtel
Citycell
Tetetalk
47.642
28.932
25.611
8.263
1.38
2.98
Subscribers in Million
Number of Mobile Subscribers
in Million (January-2014)
There are 6 mobile phone operators in Bangladesh. These are: Airtel,
Grameenphone, Banglalink, Citycell, Robi, Teletalk (Branded as). The
number of mobile phone subscribers in Bangladesh as of January 2014 is
114 million.

21. Problems of Telecom Sector
a) High Competition: High competition in mobile or telecom sector in our
country is one of the main problems. If we have a look in the primary stage of
our telecom sector, we had only city cell and Grameen phone and they were
operating their business in own way. They took the first mover advantages but
when Banglalink, Robi, Teletalk, Airtel come to compete in the market then the
market became more competitive and still there exist a high competition.
b) Poor Economic Background: As a developing country Bangladesh has a
poor economic background where a portion of people are living under the
poverty line. So it is difficult to operate such type of business in Bangladesh
with making a good profit.
c) Instable Political Situation: Our previous history tells that Bangladesh is
not a politically stable country. Different types of political violence, corruption
and problems make our country instable and also has made this sector
insecure. Sp for we don’t have more foreign direct investment (FDI) in any of
the sector.
d) High Rate of Corporate Tax: As the economic condition is not good of
Bangladesh, the telecommunication sector is not able to make profit. Moreover
they are to pay high corporate tax which is 40%-45%. It is another major
problem or challenge to operate challenging day by day.

22. Problems (cont):
e) SIM Tax: In Bangladesh the mobile operator is to pay Tk. 800-
1200 as tax in each SIM from fiscal year 2005-06. Firstly it was Tk
1200 and later it is fixed as tk 800. Though tax is to paid by the
subscribers directly but the company give incentive to continue the
sell the SIM in the competitive market to hold their position. As the
growth rate of the subscriber has been declined, the companies are
in challenging position.
f) Import Tax: In case of technological perspective, Bangladesh is
not good enough. So mobile phone operators is to transfer or import
technologies, hand sets and other equipments related to the
telecommunication and for this they are to pay 35% import tax on it.
Other Problems:
 Lack of optical fiber cables
Less monitoring
 Foreign suppliers often supply low quality materials, which
result in low quality product
 Uncertainly of electricity

23. Contribution of Telecom Sector of BD
According to a report of world famous Auditing Institution Deloitto, “In developing
country, if using of mobile phone increased by 10%, govt. revenue will increase
by 1.2% in a year.” Moreover it plays:
1. Job Creation and Reduced Unemployment: A study show that till 2008, 6
lakh 75 thousand people of BD are directly or indirectly involve in this sector for
job and among them 15% are women.
2. Sources of Government Income and Revenue: It is one of the largest
sectors for government to get revenue. The contribution of telecom sector in our
country’s total GDP is around 1.46%.
3. Listed in Stock Market : Though telecom started its business in private sector
but currently Grameen P hone has been listed in stock market.
4. Dramatic Changes in Communication System: Cellular phone has brought
a dramatic change in the communication system in our society. Life has become
fast, easy and comfortable.
5. Develop Corporate Culture : Telecom sector specially phone company is the
pioneer to establish the corporate culture in Bangladesh.
6. CSR and Telecommunication: The telecommunication sector plays
important role by contributing to health, education, environment sports and
all other social sector as corporate social responsibility (CSR).

24. Thing to do for development
 Imparting training to make skilled workers.
 Reducing of VAT and taxes.
 Stabling the Political Situation.
 Reducing tax on SIM and sacrifice more to operate their
business.
 Developing ICT Capacity.
 High Rate of Corporate Tax.
 ICT access opportunity for the citizen
 Reducing tax on technologies, hand sets and other
equipments related to the telecommunication
 Conducting more research works for developing telecom
sector
 Use of cost reduction strategy of internet

25. 1. Information Technology in Bangladesh, Sustainable Development
Networking Programme By Dr. Jamilur Reza Choudhury, 2013.
2. Bangladesh Computer Council By Mahbubul Alam, 2013.
3. Information technology to contribute 7.28 percent to GDP by 2021, in
Bangladesh Sangbad Sangstha. 20 July 2013.
4. The Bangladesh Telecoms Sector: Challenges And Opportunities By
Ifty Islam, Asian Tiger Capital Partners.
5. Problems and Prospects of Telecommunication Sector of Bangladesh:
A Critical Review By Ms. Farhana Zamil and Md. Miraj Hossen
6. Banglapedia
7. Wikipedia
Reference