Bangladesh Bank has made it easier for firms virtually shipping information technology integrated services (ITES), to access export incentives for virtual shipments up to $5,000, subject to regulatory compliance.
From now on, import-related references will not be required in the tele-transfer (TT) message, according to a circular issued by the central bank on Sunday.
However, businesses must have proper documentation and must carry out export activities through an international marketplace recognized by the ICT ministry.
In case of agreements with digital marketplaces, exporters will have to provide the relevant weblink to the bank branch that will have to ensure the collection and verification of information on the software and ITES export activities through the marketplace, along with the web link.
Additionally, the applicant organization will also have to provide the required audit trailer web link for verification along with the submission of the documents of the automatically prepared invoice confirmation, along with the application form that declares money received from export income.
“The new instruction of the central bank actually reduces business procedures for ITES exporters like me as it will take even fewer steps in accessing the earnings, which previously took more time,” said Armaan Saaqif, a freelance entrepreneur who exports ITES to North America.
According to the Bangladesh Association of Software and Information Services (BASIS), the country currently has over 1,800 IT firms that are active and can be categorized into software and application, ITES/BPO, and those having multi-functions.
More than 400 IT firms currently export products to over 60 countries, with the US and UK being the major destinations.
Bangladesh’s ICT export is estimated to be $1.3 billion which is expected to reach $5 billion by the year 2025, contributed by software, ITES, and digital devices, while creating job opportunities because of the export.
The government has even set targets for transitioning into a knowledge-based economy by 2041 and to earn $5 billion in export revenue from the software and IT sector by 2025, acknowledging the importance of the IT sector in bringing socio-economic change, specifically during the pandemic.
However, there have been barriers to getting payments for outsourced work by the IT freelancers as there is a cap on the number of funds that can be transferred through existing channels as the country lacks international payment systems, explained Syed Almas Kabir, president of BASIS.
According to him, payment systems such as PayPal could remove such barriers and increase income from outsourcing could increase, however, PayPal does not work in Bangladesh.
“Payoneer or the BASIS Shadhin-branded credit card can receive the money. But, that cannot prove that it was a software or ITES or hardware export. I believe this directive is for freelancers. As freelancing jobs usually do not have proper work orders, a marketplace order will validate the contract. On the other hand, ICT companies can get the necessary vetting from BASIS. If given the mandate, BASIS is fully equipped to validate the freelancing jobs,” the BASIS president told Dhaka Tribune.