A recent study has identified the information and communication technology (ICT) as the country's most potential service sector for export diversification, thanks to its growing demand across the globe.
However, entrepreneurs' limited access to financial services, poor country branding, and higher cost of Internet in Bangladesh are some of the challenges for the desired growth of this sector, the study said.
Some other challenges include lack of proper education system, outdated national curriculum and high employee turnover cost, it added.
The Study titled 'Export potentials of trade in services in Bangladesh: Identifying the opportunities and challenges' was conducted by the Bangladesh Foreign Trade Institute (BFTI).
Published recently, the study was prepared for the Strengthening Institutional Capacity and Human Resources Development for Trade Promotion Project, (EIF Tier-1) under WTO Cell, the Ministry of Commerce.
The study focused on four service sectors namely tourism, freight transportation, computer and human health-related services.
About the ICT sector, the study said the domestic market in Bangladesh is estimated to be about $250 million, excluding the telecommunications sector.
The export of software and IT-enabled products and services was about US$100 million in 2013, which increased to US$152 million in fiscal year (FY) 2015-16.
"If we take into consideration informal or unrecorded transactions, the actual amount would be much higher," the study said.
Over the last few decades, the world as a whole has also been witnessing a phenomenal growth in the ICT sector.
Countries like India, Sri Lanka, Thailand, Malaysia and the Philippines made a major stride to take advantage of such growth, the study said.
"Bangladesh has also taken initiative to develop its ICT sector and tap the enormous potential of the sector, both in terms of its impact in enhancing efficiency and effectiveness of different economic sectors domestically as well as export of ICT services," it said.
The software and IT-enabled services (ITES) sector is considered as one of the Highest Priority Sectors in the Export Policy 2015-18, the study said, adding that the 7th FYP also emphasises the development of the ICT sector.
Furthermore, in order to achieve the middle-income status by 2021, the government has promised ICT access to all socio-economic and educational levels, according to the study.
The study hailed various initiatives by the government for the ICT sector, including introduction of PayPal in the country and establishing high-tech parks.
The growth of the sector, however, has not reached where it should have.
"Some areas are still grey, which needs attention in strategies, action and policies if the country wants to achieve the target of US$5.0 billion export by 2021," the study said.
The study underscored the need for developing required facilities, including uninterrupted electricity supplies, lower cost of internet bandwidth, accessibility and internet penetration rate.
"A secure transaction and online payment mechanism is also quite vital," the study said, adding that the government has a key role to play in this regard.
Regarding demand-based education system targeting the foreign currency earnings from the ICT, the study said the national curriculum should be updated in accordance with the changing technology worldwide.
"Curriculum recognised by international institutes would bring about added advantage," the study mentioned.
According to it, financing is a major challenge for many software developers and IT-enabled services (ITES) providers from Bangladesh.
"Despite a huge prospect in the ITES exports from Bangladesh, the aspiring firms find it difficult to get loans on easy terms and enter the industry," the study said.
The study suggested popularising venture capital to develop the ITES sector.
Banks and other non-bank financial institutions also need to come forward to finance industries in this rapidly booming sector, the study added.
Stressing the need for country branding to widen export destinations, the study said Bangladesh may follow examples of some successful countries like Malaysia, India, Singapore, Dubai, Egypt, Costa Rica, New Zealand, and South Africa.
"Foreign missions have to play key roles here to promote and market the ICT industry and its potentials," the study suggested.
The study also recommended creating proper banking channels, simplification of the tax systems and giving priority to domestic IT professionals to help the sectors grow at desired level.
