Let reforms begin with goal to set up local holding

What was the epic failure in the telecommunication sector in the last 16 years? In a word, the answer to the question is the inability of establishing domestic proprietorship. As a result, despite opportunities, reducing dependency on foreign companies and investment couldn’t be possible. Moreover, allegations of laundering funds from the sector were raised. Furthermore, some officials and individuals related to foreign operators pointed their fingers to the local investors in the telecom sector.

They (foreign investors) alleged that these two or three local companies are laundering a large amount of borrowed money in the name of investing those to different projects related to telecommunications and information technology sectors. On the other hand, there are claims that foreign mobile operators and equipment suppliers have siphoned hundreds of crores from the country through large-scale "over-invoicing" practices related to equipment and software imports.

While specific information regarding these allegations are unavailable, the government has the means to investigate both the claims effectively. In the first place, the government can launch probe into how many Letters of Credit (LCs) were opened by the domestic companies over the past 15 years and how much were sent to abroad against it in which programme. It could analyze assess the funds sent abroad, and examine discrepancies between actual costs and declared project expenditures.

Secondly, the government could investigate the allegations against the foreign mobile phone operators and equipment suppliers. Bangladesh Investment Development Authority (BIDA) and Bangladesh Bank have all information related to approval of export-import, expenditure of foreign currency and use of it.

It should be scrutinize that how many times in a year the three mobile operators run by foreign investors have actually sought permission to remit foreign currency for imports abroad, how much they have priced against what kind of products, what is the actual value of these products in the global market and how much foreign currency has gone out of the country against those. In particular, it should be checked whether the company in the name of the foreign company that is opening the LC and paying the price is the pseudonym of the original investing company of the three foreign investment mobile operators in Bangladesh.

Through this investigation, the actual reason behind the long unstable situation of the foreign exchange market in the country might also be revealed!

Many experts argue that foreign mobile operators and equipment suppliers execute "over-invoicing" schemes so effectively that local authorities in Bangladesh may struggle to detect them. There's a valid concern that whether the experienced local probe body would be outsmarted by the highly skilled executives of these foreign companies.

To illustrate my main point, consider this: while the car you drive might be manufactured by a foreign company, you own it and employ a trusted local driver. The fuel expenses support the Bangladesh Petroleum Corporation, and your driver's salary circulates within the local economy. In contrast, when you pay for mobile services, a significant portion of that money goes to a foreign parent company, with the Bangladesh government receiving only a small tax as this fall under business rule. A foreign company is investing in the country calculating its profit. So, none can call it illegal. But, sending the money made by investing in the country to the parent company in an unethical means could must be labelled as illegal.

The real issue is not that foreign companies are taking the country's money to their parent country. Rather, in today's world, it is important that mobile operators, market places, ride sharing, mobile financial services, data centers and cloud services, and even social media platforms should be domestically owned for the protection of their own data and information in cyber space. Many countries, such as India, have developed robust domestic telecommunications without foreign operators, while others like Thailand and Malaysia have successfully cultivated popular local marketplaces and services, gradually pushing foreign companies out.

Examples of why domestic companies are needed in cybersecurity are right in front of our sights. The recent explosions of hundreds of devices in Lebanon is undoubtedly a matter of grave concern to the world. After the events in Lebanon, the issue of cybersecurity is no longer limited to cyberspace. Rather, it has become more important to control the production and supply chain of digital devices that comprise cyberspace in terms of cybersecurity.

A crucial question may arise: Can domestic investors establish mobile operating services, cloud services, marketplaces, and mobile financial services (MFS) like foreign companies? The answer is yes, and there are successful examples.

For example, Teletalk, the state-owned mobile operator in Bangladesh. Unfortunately, it has suffered from poor management and a bureaucratic board that lacks professionalism, hindering its growth. Similarly, BTCL, the largest telecommunications company in the country, has faced numerous corruption allegations, largely attributed to its own officials.

Investigating the actions of past secretaries from the Ministry of Post and Telecommunications—who serve as board chairmen for these companies—could be eye-opening. My journalistic experience suggests that an inquiry into the irregularities surrounding BTCL’s "5G Readiness" project could uncover a deeper history of corruption over the past 16 years.

I think the investigation of corruption in the telecommunication and information technology sector during the previous Awami League government can be started from this '5G Readiness' project. Dissecting this project may reveal an untold history of massive corruption over the past 16 years. Until the state-owned companies are freed from 'bureaucratic black boxes' by changing their articles of association and forming professional management boards, checking corruption in the telecommunications and information technology is not possible and these companies will not be able to stand on their feet. If reform is to be done, start it from changing the articles of association of state-owned telecommunications companies.

Effective management is a hallmark of foreign mobile operators, where leaders prioritize the overall profitability of the company over personal gain. In these organizations, a thriving company translates into better salaries and benefits for managers. In contrast, the chairman of Bangladesh's state-owned companies often operates with a short-term mindset, fully aware that their tenure is limited. He knows that his tenure in the company is not long lasting. His personal salary and other gratuities are also not linked to the company's profits. Therefore, earning some cash in a short period of time with an expensive project becomes the main activity of these 'ex-officio chairman' sirs. This is how it goes year after year. But how long can this continue? Why are companies like BTCL, Teletalk, the Submarine Cable Company, and Khulna Cable Industry ensnared in bureaucratic corruption?

Some might point that Bangladesh Satellite Company operates independently under its own chairman. But is it truly thriving? In reality, Bangladesh-owned satellite companies face significant limitations, and their impact on the telecommunications sector is minimal. They often manipulate financial reports to create an illusion of profitability while concealing losses. Thus, comparing the Bangladesh Satellite Company to BTCL or Teletalk portrays ignorance about the sector.

BTCL and Teletalk have the potential to emerge as the largest digital service providers in the country. With modernization and professional management, they could become the backbone of Bangladesh's telecommunications and IT landscape. Although Bangladesh boasts a Tier 4 data center, mismanagement and irregularities have led to its control being handed over to foreign firms. Despite designated allocations for cloud services within this project, the involvement of foreign companies like Oracle raises concerns about significant irregularities.

Without setting up local data centers and cloud services, establishing robust cybersecurity becomes nearly impossible. When all the government information of the country is stored in the cloud controlled by the foreign company, you have to understand that you do not have any hold over the information. If someone else has the key to your house, will it be safe for you to stay even if you own the house?

Numerous startups have emerged in Bangladesh with ambitious visions, such as 'Ajker Deal,' 'Bagdoom,' 'Kiksa,' and 'Pikaboo.' Ride-sharing services like Pathao and Ovai also entered the market but have struggled to sustain. Investigating the reasons behind these startups' failures is crucial. In contrast, services like "Grab" in Thailand and "Yandex Go" in Uzbekistan have flourished despite launching later. Why, then, are we still vulnerable to exploitation by foreign companies in the marketplace and ride-sharing sectors?

A key factor in ride-sharing is the lack of responsible drivers in our country. While we have many skilled drivers but a few appear to be responsible. No taxi or ride-sharing service can succeed without responsible drivers. Therefore, the government should take an active role in fostering a culture of responsibility among drivers.

With twenty-eight years of experience in professional journalism, I firmly believe that Bangladesh possesses the resources and manpower necessary to thrive independently in the telecommunications and information technology sectors. What is needed now is the right state policy. In Bangladesh, we have seen companies evolve from small investments into major players in the telecommunications field. To further this growth, it’s essential to introduce professional management in state-owned enterprises and actively encourage private investors to enter the sector.

Over the past 16 years, if any company has exploited the system, appropriate action should be taken following thorough investigation and proof. However, we must remain cautious of the narrative pushed by foreign companies suggesting that "all investment companies in the country are corrupt." A closer examination reveals that, over the past 26 years, the biggest beneficiaries in Bangladesh have often been foreign firms.

Weather it be the USA, China, the Netherlands, and Malaysia, where foreign companies operate with a commitment to their home nations. Their primary aim is to maximize profits, often benefiting from substantial state support.

For instance, the U.S. government has consistently backed its tech giants like Google, Facebook, Microsoft, Intel, and IBM. Similarly, China has provided significant state benefits to companies like ZTE and Huawei to aid their global expansion. Malaysia's Axiata has emerged as one of the world’s largest telecommunications firms, thanks in part to state support. In the telecommunications and information technology sectors, private companies worldwide have flourished with the support of state benefits.

Therefore, in our country, private entrepreneurs should be afforded similar opportunities through favorable state policies. This approach is crucial for addressing future cybersecurity challenges and securing a strong and competitive position for Bangladesh in the global IT landscape.

Rased Mehedi, Telecom and IT Sector Analyst