President of Bangladesh Association of Software and Information Services (BASIS) Syed Almas Kabir has recently spoken to Fintech in a video interview. The BASIS president discussed the current situation of the industry and the economy that are undergoing the pandemic crisis.
Here’s an excerpt of the interview
Everyone is trying to cope with the unique situation that ensued since the pandemic began. But the startups are probably facing a much harder challenge. What is the thinking in BASIS regarding the situation?
There are about 1400 member companies with BASIS, most of which in fact are startups or small companies. We have developed a growth ecosystem in the last two years. The ecosystem basically enables the companies to grow where they have expertise. So, that means the progress they make will translate into growth.
As support from our side we are providing access to finance. We are helping them lease office space at lower costs, and helping them in capacity building. We are also helping them through training programs. We have trainers coming in from the Netherlands a few times a year. These aren’t technical training, but focus on aspects of capacity building like market policy, branding and so on.
We have a pool of lawyers that provides legal support to these companies. We help them with IP rights, copyrights, and even with tax, VAT and accounting matters. These small components together create the growth ecosystem. The member companies will be able to generate growth by utilizing these facilities.
We are also doing something interesting. We are calling this a mentoring pool. Under this we get very experienced and successful people in the ICT industry to form this pool. We also have another one with newcomers. We match them up and this works like a mentoring program.
What has been the impact of the ongoing pandemic on the ICT industry like?
Businesses across the world are suffering from this. All sectors are facing difficulties, and the ICT industry is not out of this. There have been significant losses. According to one estimate the industry suffered a billion taka loss in the export and local markets combined.
I think this crisis will draw a clear line between the skilled and unskilled. Only the skillful will emerge as winners or survivors.
I will urge everyone to really make use of this time and develop skills, particularly focus on the tech relevant to the fourth industrial revolution such as robotics, VR, AR, big data, etc. This will help you in the future.
Personally, I am very optimistic. There will be many opportunities for work in different areas after the pandemic ends. People will need new systems and new ways of doing things. You have to be ready for that.
Cyber security is very important always, but systems are probably more vulnerable under the current situation. What are the most important things everyone should be aware of?
This is a very crucial time and cyber security is very important right now. Because of the situation you will get more messages, more emails, and essentially more phishing attempts.
There are more clickbaits than usual times. My advice is to verify everything. It’s very important to prevent malware attacks.
The government has launched stimulus packages. But will they solve the capital crisis or potential capital crises?
I thank the government for the stimulus packages. But the problem is that the packages are designed in a way that these will be disbursed through commercial banks and the banks are not getting any risk guarantee from the government.
You have to remember that the stimulus packages are loans and that means they will have to be paid back. So the risk of recovering the loans is completely on the banks. Since that is the case, the banks are very rigid about disbursing this fund. That means they are not stepping out of their conventional credit checking methods, which in turn means that first time borrowers are not benefiting from this because they do not have credit history. So, they cannot rely on the banks to get the benefit of these stimulus packages.
Most of the companies in the ICT industry are first time borrowers because they never took out loans or never needed so. The classic reason for this being the problem of collateral. Their asset often is their skill, not property. There is no mechanism in place to evaluate that. So banks do not have any valuation system for ICT companies.
So, in this case the capital crisis has not been solved through these packages. That is why BASIS has taken the initiative under which we are in the talks with a few banks and even finalized deals with 2 or 3 banks. But this is not under the stimulus package. We are doing it separately and arranging for loans without collateral at 9% interest. Since there is no collateral, the loans will be based on performance and that’s where BASIS comes in. The banks will need recommendation as well as undertakings from BASIS. We are hoping this is going to solve the problem of small companies somewhat. This will also initiate a credit history for these companies, which will help them get future loans.
Bangladesh’s economy has slowed down in the past few months. How long do you think it will take to recover from this?
It will take quite some time. Our GDP was going up and we were hoping this would go up to double digit, at 10%. But this will likely come down to one third of that projection. So, it will take time to recover from this.
We are also facing and will face many new challenges. I think we are a resilient people and we have proved that time and again. We know that we have a target of $5 billion ITES export by 2023. I think that is still possible.