Bangladesh needs data localisation: Unctad official

Bangladesh needs to develop a national digital transformation policy to help digital services improve across the sector down to micro-level, says an Unctad official.

Joining a virtual dialogue on digital trade in services, Dr Rashmi Banga, Senior Economic Affairs Officer, United Nations Conference on Trade and Development (Uuctad), said Bangladesh may have a data localisation policy like the one put in place in Indonesia.

She cited how Indonesia's step to ensure data security is driving global giants like Google, Amazon, Facebook to move from Singapore and process data locally in Indonesia.

Dr Rashmi was speaking at a dialogue on Monday on the findings of a research of the Centre for Policy Dialogue (CPD), titled "Digital Trade in Services: How can Bangladesh seize opportunities?"

"Data centres are factories in the new digital world," she said, underscoring the need for processing consumer data and developing small, low-cost, environment-friendly data centres everywhere. She mentioned how Ethiopia is incentivising digital innovation hubs to promote small businesses.

Dr Ratnakar Adhikari, executive director, Enhanced Integrated Framework (EIF), World Trade Organization (WTO), who was also among the international guests in the discussion, said Bangladesh is doing much better than global LDCs in digital trade.

But the cost of the Internet is relatively high in Bangladesh, which might affect inclusivity and accessibility in the digital era.

In term of potentials, sky is the limit for entrepreneurs in digital trade, but there are challenges in terms of cost-effective access to quality services in digital technologies. Issues of accessibility to technology, electricity, internet are important for delivering digital services, he added.

Dr Ratnakar also referred to inequality in the digital era too, as urban people, youths and males are more privileged, while others are left out like rural students missed out on online classes.

He also touched upon the issues of financing to SMEs and collaboration among education institutions, businesses and government to generate the right skills for the digital market.

Bangladesh produces between 10,000 and 30,000 information and communication technology (ICT) graduates every year, insufficient knowledge and mismatch of skills leave most of them out of job at a time when digital services are booming, finds a research, done by CPD in collaboration with Friedrich Ebert Stiftung (FES), Bangladesh.

Poor business environment, little access to finance, weak infrastructure and complex financial regulations also stand in the way of the country's digital transformation, much needed for reaping benefits from the global market for digital services, it reveals.

In his keynote paper, CPD's former senior research associate Md Kamruzzaman showed why more investment is needed in digital infrastructures and why policy barriers need to be removed to reduce trade costs in services, which are nearly twice those in trade in goods.

Executive Director of local think tank Sanem Dr Selim Raihan referred to regulatory weakness that led to the problems in e-commerce platforms. From a too relaxed mode, the regulators turned too restrictive, putting users of e-commerce platforms in trouble and creating confusions among the newcomers in the business, the economist pointed out, calling for a dynamic, broad-based policy regime for digital trade in services.

Mezbaul Haque, General Manager, Payment Systems Department, Bangladesh Bank, referred to developments regarding e-commerce platforms like Evaly and Alesha Mart and felt the need for balancing innovation and regulations for a smooth growth of digital trade in services.

He said e-commerce companies have been barred from taking advance payments for products not produced by them. The regulators now are in talks with stakeholders to develop a long-term e-commerce policy, Mezbaul said.

The central bank's micro-merchant policy, he believed, will help process data of small businesses which can be used by banks and financial institutions to develop loan models for SMEs.

Md Mahbub ur Rahman, Chief Executive Officer, of The Hongkong and Shanghai Banking Corporation Limited Bangladesh, described how enabling technologies helped the bank serve the businesses faster during Covid-19 pandemic when 90% of their staff work from home. He put emphasis on an end-to-end digital payment ecosystem to help Bangladesh sustain the fast-changing global trade scenario in the next three to five years.

Responding to the transaction problems cited in digital businesses, he said digital payments have been made much easier now by allowing interoperability among banks and mobile financial services. Though the end-to-end payment ecosystem has been made functional in the domestic market, people still rely more on cash-on delivery due to limited links with banks, he pointed out.

Mr Syed Almas Kabir, president, Bangladesh Association of Software and Information Services (BASIS), said cloud platforms are getting popular and they are able to provide businesses with low-cost solutions just by subscription or monthly payment. He felt the need for simplification of digital transactions and guidelines for data security and data privacy.

CPD Executive Director Dr Fahmida Khatun moderated the event also joined by India's G20 Digest Managing Editor Dr Priyadarshi Dash, Institute of Policy Studies (IPS) of Sri Lanka Executive Director Dr Dushni Weerakoon, Nepal-based South Asia Watch on Trade, Economics and Environment (SAWTEE) Executive Director Dr Puspa Sharma and FES Bangladesh Resident Representative Felix Kolbitz.