While experts say Bangladesh has a potential of becoming a semiconductor packaging hub, this article takes a look back at the IT exports industry of Bangladesh and the environment that enabled the industry.
For a country like Bangladesh which has historically been oppressed and lost huge capital to their colonizers, it is important to look for business opportunities that are not as capital-intensive. The 4th Industrial Revolution has given this opportunity to Bangladesh to capitalize on and to create a knowledge-based economy. One of the prime goals of Digital Bangladesh was to increase software and IT exports, to grab larger shares of the global market for softwares and IT enabled services.
Bangladesh’s IT Exports Potential
Despite the world economy suffering from a post-COVID slump followed by wars and disrupted supply chain, Bangladesh’s Computer and IT exports reached the benchmark of USD 2 billion export in 2022 and has been rising rapidly. Even when the other exporting industries are seeing significant decline in their growth, Bangladesh’s IT export is showing a ray of hope.
Computer and IT Services Export from July to December
In Million USD (Source: EPB)
No Data Found
Therefore, it is of utmost importance that the Government of Bangladesh facilitates the industry with utmost sincerity and ensures its long-term sustainable growth.
Incentives for Tech Startups
So far, Bangladesh has approved 39 Hi-Tech parks in different locations around the country for tech-related startups. Hi-Tech Park developers are entitled to a 12-year income tax exemption and investors can enjoy 10 years of tax exemption. Even though many hi-tech parks are still under construction, developers can enjoy this exclusive benefit if they relocate to the existing hi-tech parks. So far, more than 100 startups have received one-year in-house incubation facilities from the BHTPA. The incubation centers like Sheikh Kamal IT Training and Incubation Center in Natore under the BHTPA will provide training and all the required facilities to help startups to grow and thrive.
The following bodies and programs have been organized by the ICT Division in order to accelerate investment through new entrepreneurs.
Startup Bangladesh Limited
The first venture capital firm supported by the Bangladeshi government is Startup Bangladesh Limited, which was founded in March 2020 and has a committed fund of taka 500 crores (USD 57.5 million).In order to promote an innovation-led economy, the organisation has invested in over 150 companies, including ShopUp and Moner Bondhu, which focuses on mental health. The fund invests in pre-seed, seed, and growth-stage enterprises in the form of grants, convertible loans, and/or stock. The programme is a component of the government’s attempts to help the country innovate more quickly, provide new employment opportunities, advance technical skills, and achieve the goals of Digital Bangladesh. Additionally, more than $35 million in declared investments were raised by Bangladeshi entrepreneurs in Q1 2023, demonstrating a significant interest and investment in the startup ecosystem in Bangladesh.
Startup Bangladesh Ltd. launched an initiative called “Shotoborshe, Shoto Asha” to invest in 50 startups by 2021. The company has already made 30 investments across the country and disbursed more than USD 7 million to facilitate innovation and entrepreneurship in Bangladesh. The famous show on investment, Shark Tank is coming to Bangladesh which will be powered by Startup Bangladesh to facilitate innovation and entrepreneurship in the country.
Digital Bangladesh Agenda by 2021
Bangladesh exhibits a rising market and digital environment for entrepreneurs, as seen by its ranking of 96th out of 113 economies in the Global Index of Digital Entrepreneurship Systems. With over 500,000 micro-entrepreneurs assisted, 1.2 million employment generated, and more than USD 280 million in foreign direct investments, Bangladesh’s startup ecosystem is maturing. The goal of the government’s premier digital transformation initiative, a2i, is to change how the public and enterprises receive governmental services with assistance from UNDP.
iDEA Project
The Innovation Design and Entrepreneurship Academy (iDEA) project was launched with the goal of developing an innovation ecosystem in Bangladesh. The project provides training and support along with money up to BDT 10 lakh to entrepreneurs in their pre-seed stage.This would put USD 65 million into improving the state of the local startup scene. It aims to foster an environment that encourages innovation and entrepreneurship. Part of Bangladesh’s ICT Division, the project’s main goal is to support and grow enterprises through various initiatives. Since at least 2014, there have been ongoing efforts to create a strong and long-lasting startup ecosystem in Bangladesh through the iDEA programme. The project’s activities include providing funding, training, mentorship, and the development of an innovation ecosystem in order to encourage entrepreneurship and innovation across the country.
The effort was acknowledged when the iDEA project was awarded an ASOCIO award in the ICT Education Category at the “2019 ASOCIO-PIKOM DIGITAL SUMMIT” held on November 12, 2019, in Malaysia. ASOCIO is a major information technology organisation in Asia. In addition, the iDEA Project won second place in the Public-Private Partnership category at the 2020 WITSA Global ICT Excellence Awards, gaining recognition around the globe.
So far the project has mobilized USD 2.57 million in grants to 385 startups through the Bangabandhu Innovation Grant (BIG) and other programs such as iDEAThon, Student 2 Startup, and Startup Compass.
Bangabandhu Innovation Grant (BIG)
In 2019, the iDEA project launched Bangabandhu Innovation Grant (BIG) marking the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman. In order to build a startup ecosystem, the platform offers grant, mentorship, and networking opportunities for startups across various sectors. In BIG 2023, a total of BDT 6 crores were awarded to the most brilliant startups where the champion startup received BDT 1,00,00,000 as BIG Grant and the rest of the 50 startups were awarded with BDT 10,00,000 as a grant from the iDEA Project.
Recommendation
A national startup policy should be developed by GoB to drive and build a sustainable startup ecosystem in the country. Even though such a policy is already in the cards, the formulation process has to be expedited and the policy has to be robust as well as comprehensive.
In the status quo, there are two important issues which hinder the advances made by Bangladesh in developing youth entrepreneurship. First, despite contributing to the rapid growth of startups, the fragmented policies and strategies taken by various ministries and government agencies to approach entrepreneurs cause inconsistency. Policies such as National Youth Policy 2017, ICT Policy, SME Policy 2019, Gender Action Plan 2018-2021, etc. include measures and initiatives to improve the startup ecosystem. However, a comprehensive startup policy and action plan with the coordination of all the relevant ministries can be vital in helping the next gen of entrepreneurs.
The second issue is the lack of formal national definition for startups which often led to difficulties in understanding new, innovative business models and facilitating them. Thus, a national startup policy and action plan will be a timely initiative.
About the Author
A R Tahseen Jahan is a Research Associate at The Confluence and a student of Development Studies at the University of Dhaka. She is also serving as an Editor at Dhaka University Law and Politics Review.