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SAM

Published:
2018-02-24 12:32:09 BdST

Cash incentives for ICT exporters


FT ONLINE

The government has finally agreed to allow cash incentive to information and communication technology (ICT) exporters for a range of products against export performance. Much to the satisfaction of the sector people, the news came soon after the newly appointed ICT minister, himself an industry insider, took over.

The Bangladesh Association of Software and Information Services (BASIS) has been repeatedly raising the demand for incentives for a few years now. Though the government's nod to allow cash incentive does not entirely fulfil the demands of BASIS, one must not ignore that cash benefit to the tune of 10 per cent is no peanut; it is potentially capable of sharpening competitive edge in exporting and hence enhance profitability. The benefits would be available retrospectively from July 2017.

The decision is no doubt backed by the government's goal of gaining considerably from the ICT sector in terms of export revenue and employment. The government aims to earn $5.0 billion from ICT exports and create two hundred thousand jobs by 2021. Currently, the sector is a beneficiary of tax holiday that is allowed only to select export sectors. Export receipts from the ICT sector last year was $800 million. Now, the leap from less than one billion to five billion in four years appears to be ambitious given the nature and scale of operation of the ICT sector. Comparing the benefits of cash incentive of the woven and knitwear garment sectors with that of the ICT sector may not be appropriate, given that garment export from Bangladesh is essentially buyer-driven which has reasons to grow with government assistance. Sector insiders are, however, hopeful that with the benefits coming their way, the country's ICT industry will receive the encouragement they wanted and will fetch more business in the days ahead.

The scope of the government circular in this respect is quite broad-based. ICT products such as digital content development and management, both 2D and 3D animations, geographic information services, IT support and software maintenance services, website services, graphics design, search engine optimisation and web listing are eligible for 10 per cent cash back on export earnings. Other beneficiaries include exporters of shipping document conversion, imaging and archiving, software or application customisation, website development, website hosting, software test lab services, robotics process outsourcing, and cyber security services. Software, mobile device manufacturers, laptop, and other gadgets assemblers will receive the benefit even if they add only 20 per cent value to their products. For software and other IT-enabled services, the value addition has to be at least 30 per cent. The circular also included digital data analytics, data entry, data processing, call centre service and overseas medical transcription as eligible for the incentive.

In view of the development, the BASIS has now a key role to play in order to ensure that the incentive package really helps the sector grow, benefiting the ICT exporters meaningfully. Equally important is to guard against misuse of the benefit which sadly has been the case in another export sector sometime ago.

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