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In the global economy, Bangladesh's transformation from a struggling nation to an emerging economic powerhouse has been nothing short of magical. We used to be called the "bottomless basket", and the country's journey to becoming a major name in the global marketplace is a testament to its courage and determination. As we prepare to take the lead in the knowledge economy, we must learn to meet the significant challenges that lie ahead while moving forward to realise the dream of an intelligent Bangladesh.
The industrial sector capable of realising this vision is the information and communication technology (ICT) sector, which has already been identified as one of the key drivers of Bangladesh's prosperity. The IT sector represents a $3.4 billion market, with an export market of $1.8 billion. Bangladesh's ICT sector employs around three thousand people, who earn an annual salary of around Tk 9,000 billion. The industrial sector has become an essential foundation of our economy. Its direct contribution to national GDP is around 1.25% and indirectly, around 13%. These figures are taken from the official report. The importance of the ICT industry as a strategic sector for export growth and job creation continues to grow. ICT is a fast-growing sector, with a high average annual growth rate, employing more than 20,000 people every year.
As we celebrate the success of the ICT industry, we must remember that proper planning is necessary to successfully meet the challenges of the future. The corporation tax exemption for IT and IT-enabled services will expire in June 2024. Without these incentives, small and medium-sized ICT businesses, which form the backbone of the sector, are at risk of commercial loss. The livelihoods of thousands of ICT-dependent professionals will be threatened, hampering our progress towards building a smart Bangladesh.
Depriving the ICT industry of tax benefits will have a negative impact on the Bangladeshi industrial sector ecosystem. The industry will continue to lag behind the competition, leading to a decline in employment. Even the share of income tax payable on the salaries of ICT professionals will fall. Bangladesh has achieved several key strategic milestones in its development trajectory. In 2015, it achieved the Millennium Development Goals (MDGs), followed by the realisation of a digital Bangladesh by 2021. Looking ahead, Bangladesh aims to achieve upper-middle income status by 2030, with the goal of establishing a SMART Bangladesh by 2041. In addition, the Delta's plans and goals aim to leverage the blue economy to make Bangladesh a major player in global trade by 2100. These milestones not only demonstrate Bangladesh's achievements but also lay the foundation for the country's future in the post-LDC scenario.
Overall, the health of the economy from an ICT perspective will hinder Bangladesh's progress towards becoming a global IT hub. International branding and collaboration: To compete globally, Bangladeshi ICT companies need to forge alliances with international partners. This not only helps build a brand but also reduces commercial and production costs through economies of scale, thereby improving market competitiveness. The Bangladeshi ICT market is expected to grow at a compound annual growth rate (CAGR) of 1.83% over the next five years. Bangladesh's increasing focus on digital technologies, cybersecurity, artificial intelligence, robotics, healthcare and IT is significantly driving market growth. According to the IMF (International Monetary Fund), Bangladesh's GDP is expected to grow to USD 4171.06 by 2027.
The country's GDP is growing significantly with increasing IT investments, creating new growth opportunities for the Bangladesh ICT market. Bangladesh has made great strides in accelerating growth in recent decades. However, the country needs annual growth of around 8% to achieve middle-income status. Innovation and the use of information and communication technologies (ICTs) can help end poverty and stimulate shared prosperity.
The vision of Smart Bangladesh is based on technologies such as AI, IoT, blockchain, robotics and machine learning. These are cutting-edge technologies in every field, and their proper use requires a great deal of experimentation. The vision of Smart Bangladesh by 2041 will never be achieved if the right areas of technology use are not created at the policy-making stage. It should be noted that the proposed changes in export incentives for Bangladesh's transition from Least Developed Country (LDC) status may further hamper the growth of our ICT exports. A nominal 2% incentive on projected exports in the post-transition period will undoubtedly hurt our competitive position in IT exports, leaving us with only the dream of becoming a destination for ICT services on the global web.
To meet these challenges effectively, central bank regulators and policymakers at the national level need to adopt a bold and strategic stance. We need to recognise the important role that the ICT sector plays in economic growth and innovation. We need to take proactive steps to keep the sector moving forward. Tax incentives for the ICT sector should be maintained beyond 2024, export incentive policies should be designed with greater benefits in mind that would be acceptable to participants, and an environment conducive to the growth of companies and SMEs that have developed in this sector.
The government's increasing investment in promoting the development of numerous technologies, such as 5G, AI, IoT, machine learning, Big Data, etc., is expected to drive growth in the ICT market. In addition, the emergence of digital transformation is expected to drive growth in the ICT market.
Globalisation in this region and the increasing need to adopt cutting-edge technologies such as cloud, IoT and AI are driving market growth. According to the IMF, Bangladesh's GDP will rise to USD 4,171.06 by 2027. This indicates that GDP is growing, and Bangladesh's ICT market is also expected to grow over the next five years.
Bangladesh is now on the path to a knowledge-based economy, and the ICT industry will undoubtedly play a major role in shaping its future. But to ensure that this vision is realised and to meet the challenges of the future in this sector, we need to take a bold and strategic approach. Now is the time to realise the full potential of Bangladesh's ICT industry.
The writer is a Geneva-based private banking compliance security expert, columnist and poet.
Messenger/Fameema
