Budgetary measures to hurt software industry |
Star Business Report
Ten percent income tax and discontinuation of tax holiday will hinder the growth of software industry, speakers at a roundtable said yesterday.
The loss for the nation will be much heavier than the insignificant amount of revenue income by imposing tax, they said adding that software sector can be made an 'engine of national growth' if proper steps are taken.
Tax incentive is a must for attracting both local and foreign investments. All the developing countries with growing software industry including India, Malaysia, Vietnam, Pakistan and Sri Lanka are offering tax exemption facility to attract investment, they pointed out.
With FBCCI President Abdul Awal Mintoo in the chair, the discussion on 'Budgetary Policies for Software Industry in the Proposed National Budget 2005-06' was organised at CIRDAP auditorium in Dhaka.
Three national ICT (information and communication technology) associations -- Bangladesh Association of Software and Information Services (Basis), Bangladesh Computer Samity (BCS) and Internet Service Providers Association of Bangladesh (ISPAB) -- jointly organised the roundtable in cooperation with Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
Basis President Sarwar Alam made a presentation on the software industry in Bangladesh and raised some important issues existing in the proposed budget that will be harmful to the development of the industry.
The role of the software industry for increasing the national productivity has been ignored, he observed.
In his speech, FBCCI president said the government can hardly earn two to three crore of taka by imposing the tax on software companies, but it will severely affect a potential sector.
Knowledge and competitiveness have become most important factors in production. Age of around 65 percent of the total population is below 25, he said adding that it would not be possible for them to be IT literate if there is tax on the industry.
According to organisers of the roundtable, more than 350 software companies presently operate in the country and around 6,000 IT professionals work in software firms.
Bangladeshi software is exported to 30 countries including USA, Canada, Japan and EU. In the 2003-04 fiscal, software export was worth US$ 7.2 million, recording a 71 percent growth over the previous year. In the first six months of the current financial year, the export growth has been 122 percent, the organisers said.
Present size of the domestic software market, which is served by local and international software companies, is more than Tk 200 crore and demand is growing at more than 100 percent every year, they added.
President of American Chamber of Commerce in Bangladesh (AmCham) Aftab-ul-Islam said most of the bureaucrats who work in the policy level here do not understand IT, which is one of reasons that hinders the development of the software sector.
It is the private sector that fought against the unfavourable environment for the software industry, he said adding that the progress this sector has made so far was possible as some entrepreneurs overcame various obstacles -- not that the government helped them.
The government should not impede the pace of progress of this sector by imposing tax, he said adding that if government wants to give priority to any sector, it should be IT and software, the AmCham president felt.
Chairman of Unnayan Shamannay Dr Atiur Rahman said transparency within the government can be ensured through the development and widespread use of IT.
The economic future of Bangladesh is directly linked to the IT sector, he noted.
Dr Md Zafar Iqbal of Shahjalal University of Science and Technology said public universities in the country are always blamed for delay in publishing their results but it is due to manual work by paper and pen. It is possible to complete the task within a week instead of a month by using software.
The amount the government will gain by imposing tax on software companies is not significant. However, the privilege the government can provide by withdrawing the tax is significant, he mentioned.
Former chairman of Bangladesh Telecommunications Regulatory Commission Syed Marghub Morshed said the development of the IT sector can help increase competitiveness of the industries and efficiency of human resources and it is important to exempt tax from software firms.