Freelancers in Bangladesh are finally getting the incentives they have been seeking for a long time, as they will enjoy a 4% incentive against the export of software or IT-enabled service (ITES) from now on.
The central bank issued a circular in this regard on Sunday.
The government has been providing a 10% cash assistance against the export of ICT products and services since 2018, but only institutions registered under Basis were eligible.
However, under the new instructions, most freelancers irrespective of membership with Basis will come under the 4% incentive package.
A central bank official confirmed the matter to Dhaka Tribune.
Talking to Dhaka Tribune, a freelancer turned entrepreneur who currently exports ITES to the US said: “I was a freelancer but did not have many incentives nor a proper framework to collect my earnings. But as my workforce grew, I opened up a small company to take advantage of the 10% cash incentive offered to businesses on foreign exports. Those who can afford it are taking advantage of such incentives these days.”
Syed Almas Kabir, the former president of Basis said: “This will surely motivate the young to gain skills in ICT and start offering outsourcing services which will add to the total export volume. Currently, the freelancers account for around 30% of the total export of software & ITES.”
“However, many times the freelancers tend to keep the income outside the country, as they face difficulty in bringing in the money. Also, sending money out of the country even for legitimate business reasons is subject to several restrictions as well as taxation. I expect that the 4% cash incentive will encourage them to bring in the money through official banking channels,” added Kabir.
He also said that although the incentive will be given only if the transactions occur through the marketplaces enlisted by the ICT Division, the jobs and income must be verified by industry experts.
As Basis has been successfully and reliably vetting export revenues of the ICT companies since 2018, it can do the necessary verification, according to the former president of the association.
According to the ICT Division of the Bangladesh government, there are 650,000 freelancers in Bangladesh. Of which, 500,000 are actively working. Bangladesh also ranked 8th In the 2019 Global Gig-Economy Index published by Payoneer.
Freelancers in the country are bringing in Tk850 crore annually with most of the clients from the US who mostly prefer Paypal, according to official data which use marketplaces such as Fiverr, Upwork, etc.
Popular marketplaces such as Upwork, Fiverr, Freelancer and Guru were among the selected marketplaces as per the issued circular of the central bank.
“To increase export revenue by the freelancers, a nationwide robust infrastructure with fast and affordable internet connectivity must be ensured. Broadband penetration is needed in the remote areas of the country so that the youths there can start earning by catering to outsourced tasks. To enhance the income, the freelancers have to earn the latest technological skills and start doing high-value jobs,” Syed Almas Kabir further told Dhaka Tribune.
Bangladesh has 6.5 lakh IT service exporters or freelancers, and the number of team-based freelancing companies hovers around 1,600.
Together, they fetch roughly $500 million annually, according to industry insiders.
The government has even set a target to increase export earnings in the IT and IT-enabled services sector from the current about $1.1 billion to $5 billion by 2025.
