Bangladesh's digital services export is outpacing traditional goods shipment although the country's overall digitally generated services sector still stays nascent and needs policy push to unlock potential.
The World Trade Report 2023, themed 'Reglobalisation for a Secure, Inclusive and Sustainable Future', released Tuesday in Geneva carries these observations on the trade transition apace with tech uptick on ever-rising highs.
Quoting World Trade Organisation (WTO) estimates, the trade report mentions that Bangladesh's total exports of digitally delivered services have been growing by 15 per cent annually since 2005, compared to a lower rate of 11 per cent for goods.
And global exports of digitally delivered services have more than tripled since 2005, far outpacing trade in goods and other services.
The country stands out among the Least Developed Countries (LDCs) as an economy that saw a rapid growth in exports of digitally delivered services, with professional services exports almost tripling in value between 2016 and 2021.
The report points out that 'digital revolution' is enabling specialisation in business-service activities and services offshoring.
"Bangladesh, Cambodia, Romania and Vietnam, which previously specialized in low-value-added supply chains such as textiles and apparel, have entered the international hightech production networks," says the global trade report.
Moreover, it says, as around 14 per cent of the online freelance global workforce originates and resides in Bangladesh, the county becomes top supplier of the online workforce in creative and multimedia services.
It also says business-to-customer e-commerce is expected to grow by 18 per cent annually thanks to better internet access and growing consumer demand.
In 2021, around 11 million users already had access to high-speed internet in the country and the establishment of 8,280 digital centres has enabled ICT services to reach the most remote and vulnerable sections of the economy, notes the report using the statistics provided by Bangladesh Association of Software and Information Services (BASIS).
The trade report briefly sketches the export situation of digital services, saying that in the fiscal year 2020-21, some 400 companies exported services worth US$ 1.3 billion through digital means to 80 economies. Exports increased to serve 137 destinations, for a value of US$ 1.4 billion in FY 2021-22, it says quoting BASIS data.
The contribution of domestic companies to information and communications technology (ICT) exports rose from 75 per cent to 90 per cent, meaning that the ICT sector now contributes 1.28 per cent to Bangladesh's Gross Domestic Product (GDP), added the report.
It mentions that ICT has directly created 300,000 jobs and the number is predicted to rise to 500,000 jobs by 2025.
Contacted over the telephone, Nesar Ahmed, a retired joint secretary of the commerce ministry, told FE that the WTO trade report rightly presented the status of the digital services in Bangladesh.
He said the country has already developed a strong digital infrastructure and its usefulness was proved during Covid-19 when different works like office, business and education were reasonably active online.
"It is a rapid growing sector-there is a big domestic market and people have already got used to," adds Mr Nesar.
"There is a big opportunity to gain from the trade in digital services provided Bangladesh can devise appropriate legal framework and implement it."
The former bureaucrat argues that strong and coordinated rules and regulations are a must to make the sector vibrant and also predicable for investment.
"International payment-related security issue also needs to be addressed," he suggests.
Using the statistics available with Bangladesh Bank, the trade report further says computer services, which include data processing and hosting services and software services, as well as installation, maintenance and consultancy services, increased from US$182 million in the fiscal year 2017-18 to US$303.7 million in the fiscal year 2020-21.
"Data processing and hosting services accounted for more than 70 per cent of computer services exports in the fiscal year 2020-21, and grew by 19 per cent per year between the fiscal years 2017-18 and 2020-21."
It also mentions that as part of the national development agenda, the 'Digital Bangladesh' initiative has strengthened digital infrastructure with the establishment of nine high-tech parks promoting knowledge-intensive business and 19 data centres.
"The bulk of Bangladesh's exports of other business services are digitally delivered," says the world trade report about all-encompassing digitisation in the present-day socioeconomic spectrum.
Exports of professional services such as legal, accounting, management consulting and public-relations services expanded on average by 30 per cent annually from US$ 60 million to US$ 171 million between FY17 and FY21.
"Other sectors also saw rapid expansion...Exports of other trade-related services rose 62 per cent in fiscal year 2020-21. During the Covid-19 pandemic, exports to China of advertising and market research services more than tripled, while those of architectural and technical services almost doubled."
Although the amounts are not large, US$ 8 million and US$ 13 million respectively, there is significant potential for growth, observes the world trade report.
Mr Nesar also opines that without having adequate legal framework, Bangladesh will not be able to join any plurilateral or multilateral trade agreement on ICT or digital services under the WTO.
"Moreover, to join any such deal, Bangladesh along with other developing nations need to seek some waiver or longer period for implementation as now available in the trade-facilitation agreement," he adds.
The WTO E-commerce Joint Statement Initiative (JSI) aims to agree common rules in enabling electronic commerce, promoting openness and trust in e-commerce, and telecommunications and market access for e-commerce firms. The JSI was launched at the WTO Ministerial Conference in 2017.
In 2019 under this initiative, e-commerce negotiations began. Currently, 86 WTO members are negotiating the text. The process is also known as plurilateral negotiation.
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