The newly elected president of Bangladesh Association of Software and Information Services or BASIS Syed Almas Kabir has been one of the key figures in the ICT industry in terms of advocating for the industry and being a respected voice. He stepped into the role of BASIS president after the famous former occupant of the post – Mustafa Jabbar – was called by Prime Minister Sheikh Hasina to take on the responsibilities as the minister for post, telecommunications and information technology.
Fintech Editor-in-chief Md Mizanur Rahman sat down with Mr Kabir to talk about recent development in BASIS and what he has been doing since he became president of BASIS.
FINTECH: Tell us about the challenges you have faced as the president of BASIS so far.
Since I was elected as the president of BASIS after Jabbar bhai, In January, I have been saying that the the member companies of BASIS are mostly small companies. That’s true for Bangladesh in general. We have around 1,100 member companies. Among which, apart from 100 companies, most of them are made of 5 or 6 peoples. They have less than 10 people in their companies. Besides, they are pretty quite too. Most of them were founded one to five years ago. So, these companies make up the industry. From the very beginning, I talked about the need of a ‘growth ecosystem’ within BASIS. BASIS can’t bring business for you, but it can provide the help and support to grow your business. For example, what a new company may be in need of? An office space is the first need invariably and that is often tough for a small company or a startup. If we arrange an office for them, that can work toward a growth ecosystem. Another important matter is access to finance. Whether the company is big or small, everyone needs that. For the IT companies a big obstacle is that no bank will finance them without collateral.
Besides, sometimes the technical expertise is there but capacity building in management is weak. One of our goals is to support this kind of capacity building. A company needs legal assistance as well. Most of the companies don’t know how to write a contract, how to do SLA, the process of writing NBR, etc. If we could assist them with these, that will be great. Other than that, there is the copyright issue, marketing, product branding, portfolio, etc. Most companies – small or big – lack in these. If assistance with these can be provided from BASIS that will help companies grow.
That was my commitment and I have started doing this. I have spoken with the Hi-Tech Park authority and I was assured that a floor will be kept at the Hi-tech Parks to be used by startups free of cost. We have also spoken with private estates to see if we can come to a deal with them. We had been in talks with MIDAS about finance and we have reached an agreement now. Only formal signing needs to be done for that. MIDAS will do the work order financing. We are also in talks with other parties. We are trying to work out how we can get financing from the development funds of the World Bank.
FINTECH: So, how that turned out thus far?
Really great! Many companies are contacting us for the legal service. Many have already agreed to work with MIDAS for the financing. We have done some workshops as well with them. For HR we have done workshops on labour laws. Now we are working with copyright. From the next month (August) we will have lawyers at BASIS on every second Saturday of every month. They will be there from 12 to 4. Companies can come in and talk about copyright issues for software and any other copyright matters. On the first day we started this, we had twelve companies come in. We actually thought there will be no one. And this is completely free by the way.
But that’s not all, we go beyond that. So, for example, we have entered partnerships with two marketing companies. Bangladesh Brand Forum and Unitrend Ltd will conduct workshops for us from time to time. These will focus on teaching how to do promotion work, how to present in international fairs and so on. So, to answer your question what I have been able to achieve, this is my biggest goal: I want to put this system in place in BASIS, so that our 1100 members benefit from it. These will be the direct benefits that companies will get from BASIS. We have received very good response, as I just mentioned. I am very happy and optimistic. We are still to work on three more components. I am very hopeful about this growth ecosystem and where this is going.
FINTECH: What kind of upper hand does it give you that Mustafa Jabbar, who was an integral part of BASIS, is now the minister for Post, telecommunication and information technology?
It certainly adds a lot to the equation in our favour. Before we would go up to the state minister and minister to explain something – why certain things need to be done, what needs to change in policy and so on. And then they can in turn go to the finance minister and the Prime Minister to explain that. We don’t have to go through these steps now. Jabbar bhai knows the situation in the ICT industry, particularly in the software market intimately and in-depth. He knows the next level.
I’m not sure if you know this, but we had to put up a fight during the pre-budget period. There was a problem. We put forth a number of proposals, informing what is needed. We met with the NBR and the finance minister. When the budget was announced we found out that nothing was considered or certainly not incorporated. We were really disappointed. Even more so, because it’s one thing to not incorporate the proposals, but the opposite was done. There used to be a total of about 59 percent tax effectively from foreign software, including duties and all taxes. They reduced it to 5 percent. So I told them that if this is done then foreign software will take over the country. This can’t happen because the local software companies will just fall apart. Already banks purchase their software from overseas paying hundred times more.
As it turned out, the NBR chairman told me that this was done to help us. I thanked him for thinking about software. I explained to him and told him about the four-types of software that are not produced locally. I told him that we need them. So, I said that the 5 percent can be applied here – for these four types, which are operating system, database, developmental tools and security. But for the rest make it like before. There was a closed-door meeting with the finance minister, Jabber bhai, NBR chairman and me. I tried to explain these things to them. It became so much easier because of Jabber bhai and they were finally convinced.
In the previous budget for instance, there was problem with relating to the Internet. We had been saying for the past eight years that 15 percent VAT on Internet doesn’t make sense. So, how a 25 percent VAT can be imposed? This happened. I went to the finance minister and he gave me separate time, asked me to go to his home and explain it to him. I spoke with him for two hours and he understood. Two days later the decision was changed. But now, because we have Jabber bhai, everything is easier.
FINTECH: Talk about IT export. What is going on and will we see better export?
We talk about export a lot. But what has been really done? What ends up happening is that the ICT Ministry provides funds for export promotion. And then we attend a fair with some companies. What happens after that? Nothing. But there has to be a concerted effort.
What we want to do now is identify five countries andmake Bangladesh desks in those five countries. One of these is definitely going to be Japan. There will be the US, UK, another country from Europe and one African country. We want to set up Bangladesh offices there. We will not take people from here, but will hire locally. They will market Bangladesh’s IT industry. We want to create these five case studies. We have had meeting with the finance ministry and the ICT ministry. I am hopeful about this, particularly about Japan.
FINTECH: Some work have been going on independently from different quarters about venture capital investment. What are your thoughts on the whole situation?
There are two main problems regarding venture capital. One is that there is no guideline for the companies. We can think about an incentive here. You can offer, just theoretically speaking, tax exemption for investing in VC. This can work, particularly because there is idle money that can be invested.
But what is more important is IT evaluation. There is no evaluation mechanism in place for the software I’m developing. These are intellectual properties. There has to be evaluation of source code. This can then allow people to mortgage against this and acquire service from the banks. We don’t have land and properties in the IT sector, we have the source code. That is our asset. We have to create the system for evaluation. And there needs to be guideline for this from the central bank. Without such evaluation people are reluctant to invest.
If these two things are addressed then we can build a VC culture. The acute problem of access to finance can also be addressed this way.
FINTECH: Do you have any plans for working on this?
I want to. I have talked with a number of people about VC guideline. I don’t have expert knowledge on this, to be honest. We have spoken with a few chartered accountant firms. So, we are thinking about this.
FINTECH: A few ISPs started NTTN service together. What is your thought on this?
I don’t have much to say on that. We need more NTTN licenses, there is no doubt. NTTN transmission cost did not come down even by one paisa in the last 9 years. When NTTN started in Bangladesh the price was Tk2 per minute. For the last six months there has been pressure to make this Tk5. So, that’s a problem. So, we need more licenses immediately. Many have applied for the license but haven’t got it thus far.
FINTECH: What needs to be done in ITES?
We need focus on this. We don’t talk about the local market. We have a one-million-dollar market here. We don’t have hard data, but it’s at least a million dollars. I just talked about branding Bangladesh in five targeted countries. But the same needs to be done locally as well. The lack of trust on the local products and services is preventing us from growing. Without developing the local market, we can’t really develop export.