The budget proposals to impose more tariffs on key ICT products and Internet data would hurt the progress of Digital Bangladesh, technology entrepreneurs said in a post-budget webinar hosted by The Business Standard.
"Computer hardware is the capital machineries for the IT and IT-enabled services (ITES) sectors, while Internet data is their raw material," said AKM Fahim Mashroor, former president of the Bangladesh Association of Software and Information Services (BASIS) and the co-founder of Bdjobs, Ajkerdeal and Delivery Tiger.
Like in other industries, price hike of equipment and raw material would hurt technology sectors, he added.
BASIS President Russel T Ahmed said it was unfortunate that the tariff blow came in a year when the prime minister had announced ICT products and services as the Product of the Year for 2022.
Noting the positives in the government's fiscal instance, the ICT entrepreneurs urged for greater interaction between industry and revenue officials to better understand the industry dynamics.
Terming "Made in Bangladesh" everyone's emotion, the speakers said it was understandable that the government thought of market protection for local hardware manufacturers and slapped additional tax on imported devices. They, however, said the government might have missed how much of the market demand the local manufacturers could meet.
The hardware and data tariffs would widen the digital divide which was apparent during the lockdowns, said Fahim Mashroor.
He pointed out that the tech industry is helping solve a huge problem for Bangladesh - graduate unemployment - alongside saving and even earning foreign currencies in the IT and ITES sectors.
The government offered some fiscal benefits to the startup industry, including extending the loss carryforward period to up to nine years, reducing topline tax and easier options for tax returns, but again missed the industry dynamics.
Giving an example, speakers said the government meant to offer benefits to the younger homegrown startups instead of global giants and made the startups older than five years or a subsidiary of any company ineligible for the benefits.
But, no one considered the industry reality that even local startups need a foreign holding company in Singapore or other major global centres to avail venture capital funding.
Neither homegrown startups like Chaldal, Pathao, Sohoz, nor international ones like Foodpanda would be benefitted by the budget, said the speakers.
E-commerce, despite having a huge potential, is still suffering from a lack of a supportive ecosystem where last-mile delivery is an important part.
Rural online orders are facing the hurdle of high delivery cost – as high as Tk150 for a small parcel.
Fahim Mashroor said the industry requested reducing the 15% value added tax (VAT) on delivery charges, but it was ignored in the proposed budget for 2022-23.
Russel T Ahmed said the industry was looking forward to more supportive measures in the budget, but were left shocked by the tariff hike.
He reiterated that the National Board of Revenue should hear from the industry in depth over the year instead of the formal meetings before the budget.
Foodpanda Managing Director and e-Commerce Association of Bangladesh Director Syeda Ambareen Reza said devices and data are the most essential things for the consumers, entrepreneurs and workers of the technology-enabled sectors and these should be made affordable first, before talking about the other problems.