President of Bangladesh Association of Software and Information Services (BASIS) hardly needs any introduction. He is the CEO of MetroNet Bangladesh Limited, a data-communication and IT solutions company. Last year, he was elected as the President of Bangladesh Association of Software and Information Services (BASIS). Not only he is at the helm of development of Bangladesh’s IT sector, Syed Almas Kabir is engaged in some important positions in different organizations as well.
Although Fintech previously spoke with Syed Almas Kabir, this time around he talks exclusively about MetroNet Bangladesh. He speaks about the optical fiber business from its inception with the Fintech team. The interview was taken by the Managing Editor of Fintech, Tanveer Ahmed and Anonno Razzak. Here is an excerpt of that interview for our readers.
When was MetroNet established? How did you start working with MetroNet?
Let me tell you from the beginning. In the year 2000, I was working as the Registrar of IUB as well as an Assistant Professor of computer science. If you can recall, IUB was spread across five buildings in Baridhara. I installed the optical fiber network in those five buildings and essentially it was the first optical fiber network in Bangladesh. Shortly afterwards, a point-to-point optical fiber was set up from one building to another at Shahjalal University of Science and Technology. Anyway, my friend and I thought that since the network in Baridhara was successful, it could be replicated for the entire Dhaka city as well. For setting up a network for a big metropolitan city like Dhaka,there were several problems; such as, where to install the switches, etc. Those problems were solved with innovations and eventually MetroNet started its journey in 2001.
I didn’t join MetroNet then, I was still working at IUB. MetroNet was gradually moving ahead and it was doing quite well. After five years, on 1st January 2006, I joined MetroNet. From 2006-7, we started to extend our range beyond Dhaka; in fact we managed to extend it to Savar and Narayanganj. MetroNet reached Sylhet and Chittagong in 2008 and then slowly and steadily it covered the whole of Bangladesh. It can be said that till now, MetroNet has the largest optical fiber network in Bangladesh. Although many companies came after us, we are ahead of them since we were the first and we are the market leader in data communication. Our main customers are banks and large corporate houses. Later on, we introduced many other services. We introduced IP-based telephone system, where we are also the market leader. In 2017, we introduced cloud services. We moved into software and are working with Microsoft. Slowly but surely we will be doing more work.
Can you explain the current state and the scope of optical fiber business in Bangladesh?
You see, if we want to build a Digital Bangladesh, the number one condition is infrastructure. And this infrastructure must be based on a fiber optic network. It is because you can spread the internet through this network.
The sad thing is that while it is the time to digitalize Bangladesh by building networks and infrastructure, the government has imposed duty on optical fiber cable. The government may have good intentions to provide protection to the sole government owned fiber optic cable factory in Khulna, but I think there is no reason to impose this duty at this stage, as the local production does not have the capacity to meet the demand. The requirement of optical fiber network is very critical. You cannot build infrastructure without it.
Tell us about your services. What type of services do you provide?
Data communication is our flagship service. Later on, we started providing the internet service. When we started our journey, we only wanted to be the infrastructure provider. Many people don’t know that we were the first data communication company in Bangladesh. In fact, when MetroNet came into being, BTRC had to create a license only for us. That license was meant for MetroNet only and it was called Domestic Data Communication Service Provider (DDCSP). Afterwards when the NTTN license was introduced, the DDCSP was abolished. Since we were working on infrastructure, it was not necessary to grant the DDCSP license to other ISPs as they could work on our network. It means that they could provide their services on top of us. I don’t know if you remember or not, in 2001/2/3, there was only a single cable on the streets and that cable was MetroNet’s. At that time, you didn’t see the tangle of wires and cables like you do now. MetroNet’s was the only cable. We had a contract with DESCO, Telegraph and Telephone Board (T&T) whereby we could use their electric and telephone poles to hang the optical fiber cables of MetroNet. Theirs were copper wires while the MetroNet’s one was fiber optic. We had a written contract with them.
What happened later is that, the ISPs received the DDCSP license and started putting up their own cables. Why would another ISP go on top of ours? This is why we are having to go through the mess of unnecessary cable problems. Then the NTTN license was issued. Everything had to start anew. Anyway, data communication is our main business. We are still the market leader and our internet service is getting a very good response from the corporate houses. Besides that, we have a brand called ‘MetroTel’ which is IP telephony service, having the prefix of 09612. We have nationwide license for it. We are the first to launch cloud computing in Bangladesh with a brand named ‘MetroSky’. You may be aware that we are competing with Amazon Web Services (AWS) and Azure, Microsoft’s cloud service with ‘MetroSky’. It is our local product with local data center. Not only we have customers in Bangladesh for the cloud services, we are getting customers from Europe, Canada and India as well. Moreover, we are the Microsoft Cloud Service Partner as well as the Silver Partner of Microsoft. We are the Premier Partner of Cisco and Gold Partner of Palo Alto Networks.
We have worked a lot on network security. The two largest installations of network security firewall in Bangladesh, one for a bank and another for the government were done by us. And yes, the POS machines you see in banks where you punch in your credit or debit cards, we are the exclusive distributor of those POS machines in Bangladesh and the name of our brand is Neoland. It holds the second position in worldwide ranking. We started providing these machines one and a half years ago, and we have given the machines to two banks till now, UCB and Islami Bank. Only our machine has the NFC function. You don’t have to swipe the card, you just have to tap it on the POS machine. The market response is pretty good, but since it is absolutely new in our country, we cannot really say how well it will do.
I want to ask you a question on BASIS, what is the current state of BASIS and can you tell us about the new initiatives of that organization?
BASIS by now has reached a certain stage where the government gives special attention to it. That is why we are trying to be more inclusive. Previously, we used to represent only those who provided services and software. Now we intend to bring all who are working in IT under one umbrella. We are working on this issue and we hope it will be successful. The biggest problem in our IT industry is access to finance. Getting loans is extremely difficult. The reason is, whenever you approach a bank to get a loan, the bank asks for a land or a house as collateral. We understand their problems since we don’t have any guideline for IP valuation in our country. Say, I have made a software but how can I get its intellectual property appraised? A software maybe worth crores but there is no guideline for its valuation. If we had the guideline, say a software of mine is valued at 10 lakh Taka, then a bank would have loaned me that money once I have deposited the source code. We don’t have that, but we are working on it. This will take time. Meanwhile, we are working with IDLC, IPDC and Midas on obtaining collateral-free loan facilities. I can get a loan without any collateral if I can secure a work-order. Suppose I get a work-order of five lakh Taka from a client, I will need money to deliver the project. So, IPDC will give me that five lakh Taka. When I will receive the payment on that work-order, IPDC will get back that money.
Besides that, after I became the president, I wanted to build a Growth Ecosystem for BASIS members. Majority of our 1200 member-companies are either small or new, and we want to build the Growth Ecosystem to support their businesses. As part of this, we are trying to help them with financing thorough Midas, IPDC and IDLC. Furthermore, for office space for our member-companies at a reasonable rate, we are working with the Bangladesh Hi-Tech Park Authority. Then we are providing free legal assistance to the members as many of them do not know how to write an agreement with a client. They don’t have any legal expertise whatsoever. So from BASIS, we are giving them the legal expertise for free. We have signed an agreement with a law firm and any BASIS member can get the necessary legal advice without any cost. A lot of work has already been done and many members have benefited from this service. We are also working for providing tax related advices for them. We are also helping in marketing and promotion, say for example, you have a good product, but you don’t know how to package it, we are also helping the new entrepreneurs in this regard. And we have started a mentoring system that cycles every three months. We gather the seniors in this industry in one place and invite the new entrants to learn from them. Say for example I am an experienced IT businessman; there will be three to four young companies attached with me and I will look after them. They will learn from me in the next three months. Actually three-month time is not a strict restriction; the important thing is once you have built the relationship, you can get the support even after six months or so. We have initiated this mentoring system. The purpose of the Growth Ecosystem is to help the new and small companies in many different ways. We cannot bring them business, but at least we can create the environment where they can thrive.
There is a lot of talk about Chinese investment. You also spoke about this during a seminar few days ago. Can you tell us about this?
We visited the Shenzhen Stock Exchange on May 6. We had a meeting with them. You already know that the consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange has taken 25% of share of Dhaka Stock Exchange last year. A platform called V-Next has been launched. Through this platform, Chinese investors can evaluate and select the Bangladeshi companies for investment. The Chinese investors are becoming more and more interested in the Bangladesh market as you have seen Alibaba acquired the largest e-commerce site in this country, Daraz. Alipay purchased 20% of the shares of bKash. We took some IT companies with us to China and they made their presentations at the meeting. This is actually at the preliminary stage and if it works out, then we will get more Chinese investment. Another thing I want to say, we were not only asking for investment. By means of the Chinese investment, technology and knowledge transfer will take place. The Chinese have really progressed in fintech and this has immense potential in Bangladesh. Through this technology and knowledge transfer, we will be benefited.
What sort of competition exists between the IT sectors in China and India? What will be its impact in Bangladesh?
Many Indian companies are working here. There are many Chinese companies who have started working as well. I don’t see anything wrong in it; foreign investment is good for us. But the real thing is, if there is no transfer of knowledge and technology, then the investment is of no use. They will do business and just take back the money – we don’t want that to happen. We want them to come, do their business but our boys and girls should have the opportunity to learn from them – that is what we need.
Venture capital is developing in our country and slowly it is being organized. What is your opinion on this matter?
There are some VCs in Bangladesh, but I think we need more. The government needs to be more supportive on this issue. Say for example I am a venture capital company and I invest one crore Taka in a company. If I get some tax benefit from the money I invested, then I will be encouraged to invest more in other companies. The exit plan for the VCs should be made easier – this is my expectation. The venture capital companies do not want to hold the equity in a company forever; they want to leave in a few years after making profit, and so, the exit plans need to be smooth. Furthermore, our companies are also changing. Previously the entrepreneurs didn’t want to include any new person in their setup fearing that they would lose their hold and authority. This tendency is changing, although some of it still exists today. In western countries, you will see companies merge or get acquired regularly for strategic reasons. But, we don’t have that culture here. We had the case of Akij, but you will hardly hear about any merger in that scale here. Say for example, we have so many banks; we don’t need such a large number of banks. Two or three banks should merge, but that is not happening. As a nation we are very emotional and that is why we avoid the idea of mergers as we keep emotional attachment to our companies, even they are in loss. Anyway, this culture is changing among the entrepreneurs at present and I am optimistic we will be able to adopt the M&A culture soon. Foreign investors will be more interested in Bangladeshis companies if we can bring innovation. Without innovation, foreign venture capital firms will not be interested in investments.