LIRNEasia » the Daily Star

Population as a growth engine

Chanuka Wattegama — Wed, 10 Mar 2010 06:17:25 +0000

The snap shot age distribution in a population can take three basic shapes. Pyramid is the most common in animal world where reaching the ripe old age is rare. Advances in medicine and economy have changed that in human societies. The pot shape is the best (till is lasts) as the workforce is larger with respect to the number of dependents (old and children). An urn, with a wider top and a bottom is the worst.

Starting in around 2013, points Rohan Samarajiva, Bangladesh will enter the best period for realising the demographic dividend, with the lowest levels of combined child and adult dependency in its history. It will be the closest to the ‘pot’ shape. This golden period will last until around 2033 when the more burdensome adult dependency (ratio of adults over 65 years of age to the working population aged 15-65 years) reaches significant proportions.

What does this mean to Bangladesh? How can that be exploited?

It is here that information and communication technologies can make a difference. In the past, only agricultural and manufacturing goods could be exported. Now, thanks to telecom, even services can be exported. Bangladesh is currently said to have 30,000 persons working in the Business Process Outsourcing (BPO) industry.

In 2005-06, it was estimated that India created 1.3 million direct jobs in the IT and IT enabled services sector, with another 3 million jobs created indirectly, to serve the industry. The proportionate numbers for Bangladesh, which has one-seventh the Indian population will be 182,000 direct jobs and 421,000 indirect jobs.

Read the full article in The Daily Star.

Bangladesh budget retains some barriers to connectivity

Rohan Samarajiva — Thu, 02 Jul 2009 13:02:50 +0000

Talk in the Bangladesh telecom sector has been focused on taxes these days because the government had proposed a 25% tax on handsets and the retention of the controversial TK 800 tax on SIMs. These are counterproductive taxes both in terms of improving government revenues and connecting people electronically; their combined effect is to make it a lot more expensive to get connected. It’s only people who are connected who generate usage-based taxes, they are counter-productive for the government and they absolutely go against plans for a Digital Bangladesh. At the end of all the efforts to change the government’s mind, all that happened is the reduction of the handset tax. Full report in the Daily Star.

The mobile industry partially got some relief. The minister reduced mobile set import tax to 12 percent from the proposed 25 percent.

However, the minister did not mention about SIM tax, which means Tk 800 tax on each new mobile connection would remain unchanged.

“The new budget seems to be fairly progressive, but we are disappointed to see that the SIM tax remains unchanged,” said Oddvar Hesjedal, chief executive officer of Grameenphone.

Bangladesh doesn’t need a universal service tax

Nirmali Sivapragasam — Wed, 15 Oct 2008 05:26:17 +0000

An article written by Rohan Samarajiva on Bangladesh’s proposed universal service taxes has been published in The Daily Star, Bangladesh; an excerpt follows.

Bangladesh currently has the lowest mobile prices in the world and perhaps the world’s highest mobile growth rate. Pretty good, by any measure. A universal service tax can ruin the business model that has given millions of Bangladesh citizens the opportunity to get connected to an electronic network for the first time and to use telecom services at affordable prices. Instead of solving a problem, it will create one.

…the same basket of calls, texts and apportioned connection charges (low-user basket, based on OECD methodology adapted for the region by LIRNEasia) that costs $5.25 in Nepal, costs only $2.46 in Bangladesh.

Yet, the low prices and the resulting low ARPUs [Average Revenues per User] have not bankrupted the mobile operators. They are making enough profits to justify the continued investments that will keep growth going. Low prices and decent profits indicate that a different business model is at work.

…by introducing universal service taxes, the government of Bangladesh will harm the business model that has given the country the highest growth rates, the lowest prices and coverage of the entire national territory. It will not help connect more people (the stated objective of all universal service programs) but will slow down the model that has connected more people than any government program ever has.

Bangladesh takes LIRNEasia advice, belatedly and partially

Rohan Samarajiva — Thu, 02 Oct 2008 06:03:13 +0000

In December 2005 Bangladesh became connected to the SEA-ME-WE 4 undersea cable, but it took much longer for the people of Bangladesh to actually use the connectivity, because the incumbent government-owned monopoly BTTB had not been able to connect the country’s networks to the landing station in Cox’s Bazar in time. I was invited to speak on this subject at a meeting in Dhaka at which the then Minister and other senior decision makers were present (they had little alternative, there was a hartal going on outside).

These comments were written up as an op ed piece and published in the Daily Star that same month. In it I recommended the following:

“Without lessening the urgency of reforming Bangladesh’s regulatory framework, the immediate problem can be addressed by structurally separating the cable segment (the share of the SEA-ME-WE 4 cable, the cable station, the fibre connecting the landing station to major population centers, the redundancy channels and related facilities) from BTTB, vesting its ownership in a fully government owned company.

To ensure that the new company is truly separate from BTTB and that it is efficiently managed, it is necessary to concession out its management to a competent international operator through a transparent bidding process. The management contract must include provisions for avoiding conflict of interest (operator cannot be involved in running downstream businesses within Bangladesh), incentivising greatest use of capacity, and ensuring non-discriminatory pricing to operators (e.g. mandating web-publication of capacity sale terms and prices as well as quality of service indicators).

The implementation of this institutional arrangement will, no doubt, take some time. It should have been done as soon as Bangladesh decided to join the SEA-ME-WE 4 consortium. But that is water under the bridge. Given the current delays in completing the Chittagong-Cox’s Bazar dry segment, the government can expeditiously implement this solution without wasting more time.

The choice before the government today is no different from that facing a home builder who discovers that the foundation of his house is fundamentally flawed. Fixing the foundation will take time and money, but those costs less than those of perpetually repairing the house with the flawed foundation or of being unable to make full use of the house.”

I understand the government has recently created a separate entity to manage the common facilities centered on the undersea cable. However, they have not implemented the proposal of concessioning out its management to a competent international operator. Is something better than nothing? Will the new government-owned company perform better than the do-nothing BTTB (now renamed as BTC)?

From the perspective of LIRNEasia’s tracking of the efficacy of its interventions, this poses a small challenge in that the intervention was made in December 2005 and the results are observed in 2008, almost three years later. But we found out and we’re happy. We just hope the partial implementation will yield at least partially good results.