Entrepreneurs express pessimism
Bangladesh Bank plans to double the government’s equity support for ICT related projects under the initiative of equity and entrepreneurship fund to boost the promising sector of the country. The move of the central bank is aimed at accelerating the potential ICT sector as software export in the just concluded financial year hit a record earning of US$ 120 million, up from US$ 101 million last year, an official at the BB said.
The booming local software industry that employs nearly 50,000 skilled and semi-skilled manpower also contributed to the latest spike in the equity participation from the government, the official added.
BB has amended the existing regulations on utilisation of EEF fund for ICT sector and submitted the amended version to the finance ministry last week for approval, sources said.
However, entrepreneurs in the ICT sector expressed their guarded remarks and said until the approval process for equity participation of the government is not simplified the increase in the threshold could not make any difference.
The EEF fund, which is now managed by Investment Corporation of Bangladesh and offers as high as 49 per cent of the project cost as equity, is interest free.
The proposed regulation said the project cost for ICT related venture could be as high as Tk 10 crore from Tk five crore, land and buildings or flats beyond town areas (including Upazila town) which had been considered as partial equity would no longer be considered as equity of entrepreneurs.
The proposed regulation has excluded the mandatory wealth statement for projects less than Tk 1.0 crore for loans and the expenditure in a project on the head of human resources has been increased from five per cent to 10 per cent.
Habibullah N Karim, former president of Bangladesh Association of Software and Information Services, said the increase in the threshold of project would not boost the ICT sector until the equity processing complication and bureaucratic tangles are not removed.
‘The EEF fund for ICT sector never played a positive role in boosting the promising sector due to the bureau
cratic procedures and unrealistic fund release regulations,’ Habibullah told New Age.
He said the approved equity money from the government is released in phases, which creates complication for the entrepreneurs to kick off any new projects.
‘There are many cases that equities from EEF fund after being approved have not been released even after five to six years,’ the former BASIS president said.
He said it is better to go for high-cost bank loans, instead of EEF fund for ICT related projects.
The country’s industrial policy stressed the importance of the ICT as one of the key drivers of private sector-led growth as a ‘thrust sector’ as it represents potentials for successful reforms, job creation, industry growth and high spillover effects to other sectors.
As of June this year, there are close to 750 software and IT related companies registered in Bangladesh. The size of the ICT market excluding telecom in Bangladesh is estimated to be worth US$ 300 million in total ; the software and IT industries share 39 per cent (US$ 117 million) of the market. More than 100 companies export their products to over 30 countries, the major export market being North America, industry sources said.
Recently, many IT companies started export to the EU countries and East Asian countries, especially to Japan. At least 30 companies have been established through joint-venture with overseas companies or as an offshore development.
-With New Age input
