Ifs and buts cloud service sector export growth

Despite a global increase in the demand for software and data processing in post-pandemic times, a lack of skilled manpower has seen the Ministry of Commerce setting an export target of only $470 million from the sector in the current fiscal 2022-23, which is 13.31% more than the previous financial year.

The ICT Division set a target of increasing the export income to $5 billion by 2025, but sector stakeholders say that even $1 billion exports isn't possible without trained manpower.

The government is also unable to expect additional export income from tourism either although the sector is booming around the world following the lifting of Covid-induced travel restrictions.

The Ministry of Commerce pegged tourism sector export growth at around 9% mainly due to a lack of branding and weakness in systems and services.

The Export Promotion Bureau (EPB) has set item-wise export targets for goods and services after setting an export target of $58 billion in goods and $9 billion in services this fiscal year.

Out of the $1 billion export target which was increased for the service sector, about $300 million will come from the value of various goods and services provided by the government to diplomatic and international missions, and organisations of various countries located in Bangladesh.

The EPB has set an income target of $2.8 billion in the current financial year for the value of various goods and services provided by the government to diplomatic and international missions, and organisations of various countries located in Bangladesh. Of this, $1.3 billion will be generated from office management and $1.2 billion from the cost of setting up offices.

Exports from these generated $2.5 billion last fiscal year.

Besides, there is a target of additional export income of $200 million from sea and air transport in the form of various service and charter fees.

Bangladesh earned $904 million in export earnings from air transport last year, which is expected to exceed $1 billion this year. Export revenue target from sea transport has been increased by 10.30% to $830 million.

If the service quality of Bangladesh's airports and seaports can be improved, stakeholders feel that there is an opportunity to earn a lot of income from it due to the country's geographical location.

According to EPB data, the revenue from ICT exports or computer services – software, data processing, hosting services and computer consultancy services – was estimated at $414 million last fiscal year. The revenue from the sector in the previous financial year was $303 million.

AKM Fahim Masroor, president of Bangladesh Association of Software and Information Services (BASIS), told The Business Standard that there is an increasing opportunity and huge demand for exporting ICT services to the global market after Covid. But due to the lack of skilled manpower we are not able to utilise it.

He said the growth expected by the commerce ministry may be possible to achieve, but it will not be possible to earn even $1 billion by 2025 through it.

"In the last few years, the government has organised a lot of training and spent a lot of money to create skilled manpower in the ICT sector. But it was of no use, rather a waste of money. If skilled manpower can be ensured through appropriate training, export income of $5 billion is possible from here within the next three years," he said.

In terms of tourism, Bangladesh's income from travellers and foreign students is $321 million while this year the target has been set at $350 million.

Shiblul Azam Koreshi, president of the Tour Operators Association of Bangladesh, told TBS that the money that foreigners spend in Bangladesh on various activities, including travel and accommodation, is considered as export income.

He said there is an opportunity to earn more foreign currency from the tourism sector by branding Bangladesh abroad. 

Besides, e-Visa should be introduced for citizens of 41 countries with visa on arrival facility, he said, adding it was often seen that foreigners are not given visas after landing at the Dhaka airport. 

He said this created a negative impression and such a situation would persist unless e-Visas were introduced.

In order to earn more foreign currency from tourism, the quality of various services in the country should be raised, he stressed, adding, "Foreigners will lose interest in travelling if they do not get proper service."

For research and development services, professional and management services and exports of technical, trade related and other business services, the target has been set at $1.16 billion for the current financial year, which is 10.53% higher than the previous year.

Senior Fellow of the Policy Research Institute Dr Mostafa Abid Khan told TBS that professionals and freelancers earn from these sectors, adding that the fee received by a Bangladeshi researcher doing consultancy work abroad is paid in dollars and shown as export. 

He said there were many avenues for freelancers to earn this way, but emphasis should be put on increasing professional quality. 

Of Bangladesh's service sector export earnings, some $1 billion comes from the construction services sector, the majority of which is exported within the country. 

For example, various companies including Abdul Monem Limited, BSRM and Bashundhara Group have provided various products and services to foreign contractors in projects like the Padma Bridge, Rooppur Nuclear Power Plant or Karnaphuli Tunnel. 

Foreign contractors pay the price of these goods and services in dollars, which the government considers as export earnings.

The EPB has further set a revenue target of $1.16 billion from this fiscal year, which is 15% higher than the previous year. 

As the capacity of the domestic companies increases, the amount of income will also increase.

Those concerned say that due to the weakness in Bangladesh's service sector, the desired level of export income is not possible from this area. 

As a result, Bangladesh has to depend mainly on the export of goods. But even there the picture isn't exactly rosy.

Despite the diversification of export products for many years, out of the export target of $58 billion in the commodity sector, $46.8 billion will be exported from the readymade garment industry, which is about 81% of the total exports and it is 9.83% more than the previous fiscal year.

Although the pharmaceutical sector has been identified as the most promising export sector after ready-made garments, the export target from this sector is only $230 million, which is about 22% more than the previous financial year.

Furthermore, glossing over the negative growth in the export of jute and jute products in the last fiscal year, the EPB has estimated a 13.51% growth in exports from this fiscal year. The agency feels India's existing anti-dumping duty on jute products may be withdrawn, pushing jute products towards a positive trend from the prevailing negative one.

In the last financial year, there was a negative growth of 12.67% in the export of jute yarn, but this year, a positive growth of 14.65% is expected this year, and in the export of jute bags and sacks, a negative growth of 14% was seen last year, but a growth of 9% has been estimated this year.

The EPB also expects export earnings of the home textile sector to grow by 22% this year to about $2 billion. The target of earning $410 million dollars this year from cap exports alone, was 364 million dollars last year.

Whether these targets will be met remains to be seen.