Can Bangladesh challenge Vietnam in Japan’s ICT market?

Starting in the early 90's, Bangladesh's IT industry was reborn in 2009, when Prime Minister Sheikh Hasina declared the Digital Bangladesh programme on December 12 in 2008.

From that day onwards, a country whose economy is heavily dependent on the RMG sector and remittance from non-resident Bangladeshis, started to think of a new sector which could be the main pillar of economy by 2030.

This sector would have to be an industry that consists of innovation and brain work rather than conventional physical labour.

There is no doubt that the fourth industrial revolution (4IR) will bring challenges to the garment sector in the coming days due to the introduction of robotics and AI at the factory level.

This means that Bangladesh will no longer be able to leverage the advantage of low-cost labour.

Considering these factors, the government is now seriously thinking about increasing the IT and ITES exports and developing more skilled human resources in this sector.

The government has already declared a target to export $1 billion IT and ITES products by 2018 and $5 billion by 2024.

To achieve this target, Bangladesh has to be very strategic and focused. Japan could be a very good market for the local IT and ITES industry in the coming decade. The Bangladesh Association of Software and Information Services (BASIS), the apex trade body for the local IT and ITES industry, is considering Japan as the most promising market.

BASIS, in collaboration with the ICT division, started to work in the Japan market in 2015.

Bangladesh participated in the Japan IT week every year since 2015, arranged a number of seminars and B2B sessions both in Bangladesh and Japan and last year, BASIS also celebrated a special day titled 'Japan Day' during the BASIS SoftExpo, with a focus on strengthening the ICT relationship between these two countries.

Aside from all this, this year BASIS launched a special desk called the 'BASIS Japan Desk', which is the first country-based trade focus desk in the country's history.

BASIS also has a plan to establish another desk in Japan that will be called 'Bangladesh Desk', a proposal for which has already been sent to the ministry concerned.

The main reason Bangladesh is considering Japan with special care and importance is the diplomatic relationship and also the demographic dividend of the two countries, from which Bangladesh can leverage the advantage. 

Ever since Bangladesh gained independence, Japan has been the biggest development partner for the country. The Metrorail project, Matarbari coal power plant project, extension of a third terminal at Hazrat Shahjalal International Airport and many other mega projects are being implemented through Japanese investment.

The government has also declared a special economic zone in Araihazar Narayanganj solely for Japanese investors and companies.

But aside from diplomatic relations, the opportunity that is going to be created in the Japan IT market in the coming days is due to demographic dividend and Bangladesh is in a very good position to grab this opportunity using its young population and diplomatic relation.

In Japan, the average age of 70 per cent of the population is 65, whereas it is just the opposite in Bangladesh.

In average, 70 per cent of our population is below 35 while 50 per cent is below 25.

This young, energetic and enthused talent pool can be a game changer for Bangladesh. Statistics from the Japan International Corporation Agency (JICA) suggests that by 2025, there will be a shortage of 425,000 engineers in the Japanese market.

Now the question is can Bangladesh take this opportunity?

The biggest competitor for Bangladesh in Japan is definitely going to be Vietnam. Due to the early moves in Japan market and also due to the language advantage, Vietnam is currently in a better position than Bangladesh in this regard.

To work in Japan, language is the main barrier as Japanese people are often not fluent in English and prefer to deal with companies who have Japanese language speaking skills.

In Vietnam, children learn Japanese language from the school level. With rapid progress in IT development in the past, Vietnam ranks highly in the world map of IT.

It holds the number one spot in the field of global outsourcing software services and also ranks first in the mobile application economy index of ASEAN countries. In fact, most Japanese companies who are doing off-shore development has experience of working with Vietnamese companies in one way or the other.

But when we deal with conventional technology like web application development, mobile application development or customised software development, there is not that much of a difference in quality and skills between a Bangladeshi engineer and a Vietnamese engineer.

But when speaking of advanced technology like artificial intelligence, block chain, big data, IOT or robotics, the skills of a Bangladeshi engineer will definitely be in advantageous position compared to a Vietnamese one.

It has been seen historically proven that children in countries of south east Asia are very skilled in logic and number problems by dint of birth. Technologies of the 4IR like artificial intelligence, block chain or robotics are nothing but a game of logic and numbers.

Besides, the government has also taken several initiatives to increase foreign investment in the country. Bangladesh has a plan to develop 28 hi-tech parks all around the country.

Some of these parks are in the development phase while others are already in operations.

The government also plans to develop one park exclusively for Japanese companies and Japanese investors.

It is well-known that the present government has also provided various facilities to promote and scale up the ICT industry. IT and ITES companies are enjoying full tax exemption facilities for until 2024.

Not only that, but the government has also been providing 10 per cent cash incentive for IT and ITES companies since 2017. The facility is even applicable for the foreign companies invested in Bangladesh.

On top of that, companies can also enjoy 100 per cent repatriation facilities for both profit and capital. Bangladesh is also an attractive destination for foreign investment and as outsourcing destination because of its cheap infrastructure.

According to a report of the A.T Kearney Global Service Index, Bangladesh is the number 1 country in terms of cost competitiveness and 26th best location regarding financial attractiveness.

The costs of developing infrastructure in Bangladesh is approximately 40 per cent lower than in India, Vietnam and the Philippines. Therefore, it is now time to promote these facilities offered by Bangladesh as we always lag behind in branding and promotion.

Bangladesh could also be in a more advantageous position than Vietnam as local companies can acquire additional workers if a project scales up.

To this end, credit goes to both public and private universities as thanks to their combined efforts, Bangladesh now produces 20,000 skilled ICT resources every year.

The government has also introduced several projects and training courses to build up skilled resources for the Japanese market. One of the projects is the Bangladesh-Japan ICT Engineers' Training Programme, where students are taught Japanese language and etiquettes along with technologies.

Some students have already graduated from the course and secured jobs in the Japan market and are doing really well. But the number of students producing per batch is not even close to the demand of our market.

Another point is that Bangladesh needs to produce an adequate number of graduates that are skilled in emerging technologies in order to take a hold of this attractive market.

In summation, it can be said that it's the action of today that will decide what our position will be in the Japanese market in the coming decades.

If the government and private industries can work hand in hand to take the right decisions at the right time, Bangladesh will be the thriving player in this market in coming days and we can achieve our export target way before the deadline.

The author is the managing director of Dream71 Bangladesh and a director of the Bangladesh Association of Software and Information Services.