To make the country a global hub for information and communication technology (ICT), the government established the Bangladesh Hi-Tech Park Authority (BHTPA) in 2010. Five years later, in 2015, Bangladesh inaugurated its first tech park, Bangabandhu Hi-Tech City, now called Hi-Tech City, Kaliakair, Gazipur. Few more parks were established later in different parts of the country. 

However, the results yielded by these tech parks have fallen short of expectations, especially compared to the achievements of neighboring countries and the government’s ambitious vision.   

Also known as technology parks, innovation hubs, or science parks, these centers have proven instrumental in boosting export earnings and attracting substantial foreign direct investment (FDI). 

Nevertheless, despite over a decade of efforts, Bangladesh has yet to fully realize the potential of these parks and achieve the level of success envisioned by the government.  

Experts say that although the government has invested significant money in the country’s IT industry, these funds have been misallocated. Numerous high-tech and software parks have been established but have failed to support the industry’s growth adequately. 

Critics contend these projects were often initiated through arbitrary decision-making, sometimes tainted by corrupt practices. Extensive training programs took place among millions to cultivate a skilled IT workforce; however, their impact on the sector has been marginal. 

On the other hand, the nation continues to grapple with subpar internet infrastructure, which poses significant challenges for domestic IT companies in securing substantial bank loans and hinders the growth of high-tech parks. As a result, the country remains heavily reliant on software imports and lacks indigenous tech giants, while FDI in the IT sector remains notably low. 

Current investment scenario 

Over the past 15 years, the Bangladesh Hi-Tech Park Authority (BHTPA), the government agency responsible for overseeing tech parks, has approved the establishment of 92 hi-tech and software technology parks and incubation centers, comprising 16 Hi-Tech Parks, four Software Parks, 71 Incubation Centers, and one Frontier Technology Park. 

While 18 parks have been completed and 39 are currently under construction, many face investment and operational activity challenges. To date, 218 organizations have been allocated space and plots within various parks across the country, and 151 local startups have been provided free space and co-working facilities.

The Kaliakair Hi-Tech Park, overseen by the Hi-Tech Park Authority, is considered a significant foreign investment hub. Japanese conglomerate Hyundai established automobile assembly operations there. Various companies within the park are producing a diverse range of products, including IoT devices, ATMs, CRM, POS, CDM machines, optical fibers, and medical equipment. 

On the other hand, despite the readiness of hi-tech parks in Sylhet, Rajshahi, and Jessore, a limited number of organizations have established operations within these facilities. As a result, foreign investment, the primary objective of these parks, remains elusive, and even domestic investment falls short of expectations. 

Also, the geographical distance from major urban centers, particularly Dhaka, and the absence of civic amenities has led to a workforce primarily engaged in low-skilled tasks, such as assembly line operations and data entry.

According to A K M Amirul Islam, the Managing Director of the Bangladesh Hi-Tech Park Authority (BHTPA), several foreign companies have already invested in the high-tech parks. Some local institutions have relocated their operations to these parks after their establishment. Yet, many domestic device assembly companies operate outside these designated zones. 

“We are actively working to attract more companies to the high-tech parks by offering a range of incentives and facilities,” stated Mr. Amirul. “The authorities have recognized several institutions as private high-tech and software parks, thereby stimulating increased investment in these sectors,” he added. 

Reasons for underperformance 

There is no example of a successful high-tech park in the country yet. Despite this, the previous Awami League government kept approving new hi-tech parks. Sector stakeholders argue that these projects, like many others, were taken to fabricate a narrative of progress rather than a genuine commitment to fostering a thriving IT sector. 

Fahim Mashroor, former president of the Bangladesh Association of Software and Information Services (BASIS) and CEO of bdjobs.com, said to the Industry Insider, “While the government has made significant investments in the IT industry over the past ten years, these investments have been misplaced. This is the most critical issue. There are hi-tech and software parks in different places in the country, but none of them could benefit the industry. Those trained in this sector haven’t seen any real advantages. In many cases, these are done to extort money.” 

The digital economy is poised to become the primary value driver of global economies due to its potential in services and manufacturing. Establishing technology parks or IT parks could significantly boost sectors like software development, business process outsourcing, and digital device manufacturing within the digital economy. 

Such concentrated hubs have proven successful worldwide, like Silicon Valley in the US or Internet City in Dubai. Bangladesh initiated similar efforts in 2008, but these endeavors have yet to fully realize their potential due to a lack of sustained government support. 

Dr. Masrur Reaz, the founder and Chairman of Policy Exchange of Bangladesh, a private sector think tank, believes that Bangladesh’s high-tech parks are underperforming because the government lacks a strategic focus on the digital economy. 

“The initiative was good,” says Mr. Reaz, adding, “but unfortunately, in the past 10-15 years, we’ve seen these high-tech parks primarily as land acquisition, boundary setting, and some minor land development, with only a few companies operating within them.” 

“These parks have not been able to deliver significant results on a large scale. We still don’t see these parks as vibrant ecosystems. They haven’t been able to attract substantial foreign investment, create jobs, or boost exports. Additionally, they have failed to provide adequate domestic support.”

Masrur Reaz has identified two primary reasons: “Firstly, we lacked a comprehensive national strategy for developing the digital economy sector. Secondly, we also failed to provide this sector the necessary infrastructure, skill development, and funding.” He added that this lag has left the country behind in capturing the growing global and domestic demand for digital services.

Poor policy structure 

“Effective policies that should have been taken for the sector have not been taken in the past regime,” said Mr. Fahim Mashroor. 

“For example, the local market is big in our country. Still, the majority of the software has to be imported from abroad. We still have to import one and a half to two billion dollars worth of foreign software annually. If we could have developed some of these software through our local companies with government policy support, many local companies would have developed,” he added. 

According to Fahim Mashroor, internet infrastructure is one of our biggest problems. Many layers in the Internet system allow businesses to be opened to certain companies, which raises the price of the Internet. The Internet or telecom sector has become the government’s money-making machine. Because of this, people in rural areas still cannot use the Internet for a reasonable price. 

Many digital services industries have developed in other countries, including India, because they can be used by people all over the country. But that is not happening in Bangladesh due to poor internet infrastructure. 

Bank loans pose another significant challenge for the IT sector. According to industry experts, Bangladesh Bank’s stringent policies often preclude banks from extending substantial loans to IT companies, typically exceeding Tk 50 or 100 million. While other countries boast robust capital markets, Bangladesh’s capital market remains underdeveloped. 

Fahim Mashroor explained, “Our policies stipulate that companies must demonstrate profitability before accessing capital market funds. However, global tech giants like Google and Uber, which experienced initial periods of non-profitability, successfully raised capital from the market. This contrast shows the detrimental impact of our government’s policies on IT entrepreneurs, who are barred from bank loans and capital market financing.”

Need reform initiatives 

The task force published a white paper on the previous regime’s corruption. According to the paper, the ICT sector was fourth among the top five sectors in corruption. The new interim government has taken various reform initiatives and has also taken suggestions from stakeholders.  

Experts in the ICT sector recently proposed a comprehensive set of reform proposals, including expanding domestic information technology, enhancing telecommunication service accessibility, and integrating data management systems. Technology entrepreneurs presented a detailed list of twenty proposals. 

The key proposals included rationalizing mobile data rates and call rates, reviewing internet infrastructure, increasing smartphone usage, making government and emergency services toll-free and data-free, reviewing and ensuring cybersecurity, and forming a task force and taking measures to address freelancer issues. 

They also proposed coordinating to prevent the spread of online gambling and other cybercrimes, increasing institutional ICT service exports, reducing the use and dependence on foreign software, and developing a national Artificial Intelligence (AI), Blockchain, and IoT strategy and roadmap.

Reforming the government’s technology-related tendering system, significantly revising the ICT Division’s skill development program, promoting digital or cashless payments and transfers in all sectors, facilitating app monetization, and ensuring support for establishing the domestic hardware industry are also recommended.   

Regarding the reform initiative, the High-Tech Park Authority is actively analyzing the requirements of various projects and rationalizing associated costs. Ten non-viable sites and superfluous project components have already been identified and subsequently excluded, resulting in more efficient and focused initiatives. 

The authority has implemented strict measures to address the issue of companies occupying space within high-tech parks without fulfilling their financial obligations. The BHTPA is optimistic that these reforms will yield tangible results within the next few months. 

Mr. Amirul Islam believes significant potential exists to increase FDI in the ICT sector. Certain policy supports are needed for that. 

“For instance, obtaining various incentives announced by the National Board of Revenue (NBR) could be simplified. More incentives could be offered in line with what those neighboring or competing countries provide. It is essential to intensify promotional activities, including roadshows.” 

Apart from some unnecessary ones, the hi-tech park initiative is a fine step toward taking the country’s digital economy to the next level. However, a lack of proper planning and vision, along with rampant corruption, has spoiled the efforts. Only sincere government efforts can get the derailed train back on track.

Shafiqul Islam is a Bangladeshi business journalist who specializes in small business enterprises, startups, investment, credit, sustainability, recycling businesses, and trade bodies.
shafiqjujms@gmail.com