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Prospects of E-Commerce in Bangladesh

Prepared by

N.M.Sanwarul Islam
(Id No. # 200630647)

Md. Mizanur Rahman

(Id No. # 200630624)

Md. Nurun Nabi

(Id No. # 200630480)
MBA, 28th Batch
School of Business
Asian University of Bangladesh (AUB)

Prepared for
Mr. Md. Anwarul Islam
BA(Hons.), MA in English, MBA
Faculty Member, School of Business
Asian University of Bangladesh

Date of submission: 2nd December 2006.

2nd December, 2006

Uttara Campus, AUB

Mr. Md. Anwarul Islam

BA (Hons.), MA in English, MBA
Part-time Faculty Member
School of Business, AUB.

Dear Sir,
The report of Prospects of E-Commerce in Bangladesh, prepare this
report I browse http://www.american.edu/carmel/ap1579a/ecom.htm sites
and collect necessary information.
In this report, gathered what believe to be the most complete information
available. During the process of preparation due to various constraints there
may be some mistakes. However, I apologize for all those and expecting your
kind consideration in this regard.
I sincerely hope, this report will give you principles idea and over all
information of the Prospects of E-Commerce in Bangladesh. I truly
appreciate this assignment. Should you need any assistance in interpreting
my report, Please inform me. I will try to my best effort.

N.M.Sanwarul Islam (Id No. # 200630647).
Md. Mizanur Rahman (Id No. # 200630624).
Md. Nurun Nabi (Id No. # 200630480).


Regarding the outcome of this project, I would like to this opportunity of

express my gratitude and respect to my teacher Mr. Md. Anwarul Islam,
School of Business, AUB for his guidance, advice, encouragement and every
possible help.

N.M.Sanwarul Islam (Id No. # 200630647).

Md. Mizanur Rahman (Id No. # 200630624).
Md. Nurun Nabi (Id No. # 200630480).

Table of Contents

SL. No.


Page No.


Executive Summary




Definition of E-commerce


Types of -Commerce



Background and Status of E-Commerce in Bangladesh.



Constraints to E-Commence





Multilateral rules and impact on development of



Prospects of E-commerce in Bangladesh






Executive Summary

The existence of the E-commerce brings us convenience and enables us to keep

pace with this ever-changing world as it provides the most up-to-date business
information. On a personal level, we can go shopping and read news via the ECommerce at home. As a developing country she badly needs to participate in the
worldwide trend and explosion on E-Commerce that means IT. It is a fact that our
country has a very bright prospect for development and export of software, homepage design, data processing, and data entry. Realizing this prospect, the
government has already announced data processing and software export as a thrust

The government should take vigorous promotional activities of its IT talents and IT
industry incentives in overseas markets. Foreign investors should be informed of
the facts like there are no taxes for import of computer hardware, software and
computer-related equipment.
The importance of IT in the context of Bangladesh and the role it can play in the
socio-economic development cannot be over emphasized. The world has witnessed
phenomenal growth in this sector over the last few decades. The countries that
took timely decision, made unprecedented growth. We need to invest in both
physical, institutional and human infrastructures, specialized education and

and provide an appropriate legal framework for conducting commerce electronically.

It should be clearly noted that in the globalize world, personal business
development depends on electronic commerce.

As Dhaka is the capital of Bangladesh; so, to utilize the every facility for the
prospect of E-commerce is very easier here. Most of the Bank in public sector is
initiating the E-Commerce system. One-mall shops day after day are coming
forward providing the facility of E-Commerce system. Near future, we hope that
we could enjoy the complete facility of E-Commerce in the sector, which is related,
with our daily life especially at Dhaka.

Technology is evolving faster than people's ability to absorb it. The dramatic rise
of the Internet has transformed the way business has traditionally been run.
Thanks to the Internet no longer is business restricted to limited geographical
regions. Satellite communication and the Internet have made it possible for people
to communicate almost instantly across continents accurately, efficiently and
speedily." Today's industrial economy is evolving into a new business, environment in
which money, goods, services and information are exchanged electronically. The
compete with global conglomerates. While giving the bigger companies the
possibility of reaching out further to its customers. Internet's greatest strength
is its standard protocol; which enables communication from anywhere to anywhere,
from any computer to any computer, completely transparent to those who are
sending and receiving messages. It is the aspect of the Internet that allows
companies to link their suppliers, buyers, reduce cycle time of time to market, thus
enabling them to give competitive prices and operate profitably what seemed
impossible has now become more than possible. Today, companies are discovering
that using the Internet for e-commerce has immense benefit. Today, several
business applications are being developed on/for the Internet. Since the Net has
the capability to bring together, individuals and corporate the geographically apart,
it has opened up an enormous opportunity of doing business transactions between

such physically distant entities. This new using paradigm that is fast emerging is
better known as "E-Commerce". In Bangladesh, e-commerce is just evolving, but the
ball has been set rolling for an Internet revolution E-commerce is no longer a
luxury but a reality. In the year 1990, there were about 1000 pc sold it the country
but it raised more than one lakh. New, it is estimated that more than 60 ISP have
been working in this country and there are more than 2 Lakhs Internet users in the
country. So, there is a vast chance for the expansion of e-commerce in Bangladesh.

Definition of eE means Internet and commerce means business. When we will break e-commerce
into e and business, the definition is clear. E simply means anything done via the
Internet and business means business. In this regard, electronic commerce is the
process of doing business electronically or over the Internet) It involves the
automation of a variety of business-to-business and business to consumer
transactions through reliable and secure connections.
E-commerce can be defined as marketing, buying, selling and supporting goods and
service by using Web based technologies, which allow the commerce though
electronic media. Recently, the definition of e-commerce has broadened to
encompass business conducted over the Internet and includes individuals and
companies not previously known to each other.

E-commerce encompasses the entire online process of developing, marketing,

selling, delivering, servicing and paying for products and services purchased by
Internet worked, global virtual communities of customers, with the support of a
worldwide network of business partners. Electronic commerce systems rely on the
resources of the Internet, intranet, extranet and other computer networks to
support every step of this process, i According to Bajaj and Nag, "E-commerce
refers to the paperless exchange of business information using EDI, Electronics
mail, Electronic mail, Electronic Bulletin, Boards, Electronic Fund Transfer and
other network-based technologies. It is not only automates manual processes and
paper transactions, but also helps organizations move to a fully electronic
environment and change the way they operate". For the concrete conception about
e-commerce the following definition can be put here.
E-commerce is about doing business electronically and encompasses many diverse
activities both in the business-to-business market and in the business-to consumes
market. Activities include electronic trading of goods and service, online delivery of
digital content electronic fund transfer, electronic share trading, commercial
auction, collaborative design and engineering online sourcing, public procurement,
direct consumer marketing and after- sales service. It involves both products (e.g.
consumer goods) and services (e.g. information services, financial and legal

Finally it can be conclude by saying that e-commerce is the preeminent buzzword of

the online business revolution. It captures the excitement and focus of this fast
emerging market. But it is more than a slogan or glib party line. At its core it
embodies a concept for doing business online.

Types of e-commerce

E-commerce is the use of electronic networks to exchange information, products

services and payments for commercial and communication purposes between users
(consumers) and business, business themselves, individuals themselves, within
government or between citizens and government, and business and government. This
encompasses many kinds of activities and is not restricted to purchasing goods and
services electronically. There are two different modes of operation for electronic
commerce, online and offline. Online sales systems check the authenticity of the
transaction at the time sale. Offline transactions on the other hand do not require
a contact to bank in order to make sure that the seller receives the amount of
money promised. Most systems are constructed with online methods that require all
merchants to be connected to the network. Offline systems rely on either
tamperproof intelligent cards that the users carry with them or account numbers
that are given at the time of sale. Account number based methods accomplish

catching illicit use by tracking sales after they happen. Major types of e-commerce
in which products and services can be sold are:
The business-to-business kind of e-commerce refers to a company selling or buying
from other companies. It involves both wholesale purchasing and electronic data
interchange in between the businessman and business partners. In B2B, the parties
are "Trusted Business Partners" who have an established working relationship. As
per the consent and understanding between the to companies, they can mutually do
the business over Internets. B2B ha a significant impact on cost
associated with inventories, sales execution, procurement and distribution.
The business-to-customer kind of e-commerce refers to a company selling its
products or to the customers using the Internet as the communication medium and
payment is done through Internet Technology. This is what most people think ecommerce is about. Without the merchant having to suffer public embarrassment,
it gives the customer what he wants and the price he wants. The transaction will
not be delayed and the sales are done immediately. No question of middlemen will
be involved in this sort of business. With B2B e-commerce, the retailer is often
selling to unknown, un-trusted strangers; therefore, extra effort must be made to

capture customer and payment information. Besides these, there are another two
types of electronic commerce as follows:
1. Consumer-to-Consumer:
It has also emerged that allows unknown, un-trusted parties to sell goods and
services to one-another. Examples of consumer-to-consumer e-commerce are
auction sites. If a person wants something to sale, than he can get it listed at an
auction site, and others can bid for it.
2. Government and e-commerce:
Government can use this kind of technology for the transmission or receipt of
information (G2b, G2C) to improve the convenience and lower the convenience and
lower the cost of payment systems and tax compliance (C2G), and by business to
manage after sales service and to develop direct consumer marketing. Government
can also service and to develop direct consumer marketing. Government can also use
e-commerce by issues certificates and licenses, driving licenses renewal, income tax
return, bill payments etc.

Electronic Payment System:

Electronic payment system is like the Electronic Fund Transfer (EFT) which is
defined as any transfer of funds initiated through an electronic terminal,
telephonic instrument, or computer or magnetic tape so as order, instruct, or
authorize a financial institution to debit or credit an account. EFT utilizes

computer & telecommunication components both to supply & to transfer money or

financial assets. Transfer is information based & intangible. Thus EFT stands in
marked contrast to conventional money & payment modes that rely on physical
delivery of cash or checks by truck, train, or airplane. Work on EFT can be segment
into three broad categories:
1. Banking and financial payments
a) Large-scale or wholesale payments (e.g.,bank-to-bank transfer)
b) Small-scale or retail payments (e.g., automated teller machines & cash
c) Home banking (e.g., bill payment)
2. Retailing payments
a) Credit cards
b) Private label credit/ debit cards (e.g.,j.c. Penney Card)
c) Charge cards (e.g., American Express)
3. On-line electronic commerce payments
a) Token-based payment systems

Electronic cash
Electronic checks
Smart cards or debit cards

b) Credit card-based payment system

Encrypted credit cards

Third-party authorization numbers

Electronic Cash:
a) Properties

E-cash must have a monetary value. It must be backed by either cash

(currency), bank-authorized credit, or a bank-certified cashiers check.

E-cash must be interoperable is, exchangeable as payment for other e-cash,

paper cash, goods or services, lines of credit, deposits in banking accounts,
bank notes or obligations, electronic benefits transfers, and the like. Most
e-cash proposals use a single bank.

E-cash should not be easy to copy to tamper with while being exchanged as
well as strict security should be maintained.

Electronic cash is based on cryptographic systems called "digital signatures". This

method involves a pair of numeric keys (very large integers or numbers) that work
in tandem: one for locking (or encoding) and the other for unlocking (or decoding).
Messages encoded with one numeric key can only be decoded with the numeric key
and none other. The encoding key is kept private and the decoding key is made
public. By supplying all customers (buyers and sellers) with its public key, a bank
enables customers to decode any message (or currency) encoded with the bank's
private key.

Bank Digital Currency Server

Electronic check

Electronic ch2cks are another form of electronic tokens. In the model buyers must
register with a third-party account server before they are able to write electronic
checks. The account server also acts as a billing service. The registration
procedure can vary depending on the particular account server and may require a
credit card or a bank account to back the checks. Once registered, a buyer can
then contact sellers of goods and services.
To complete a transaction, the buyer sends a check to the seller for a certain
amount of money. These checks may be sent using e-mail or other transport
methods. When deposited, the check authorizes the transfer of account balances
from the account against which the check was drawn to the account to which the
check was deposited.



Accounting Server

Smart card

Smart cards are credit and debit cards and other card products enhanced with
microprocessors capable of holding more information than the traditional magnetic
stripe. The smart card technology is widely used in countries such as France,
Germany, Japan, and Singapore to pay for public phone calls, transportation, and
shopper loyalty programs. Smart cards are basically of two types:
i. Relationship-based smart credit cards: A relationship-based smart card is an
enhancement of existing card services and/or the addition of new services that a
financial institution delivers to its customers via a chip-based card or other device.
These new services may include
a) Access to multiple accounts, such as debit, credit, investments or stored value
for e-cash, on

one card or an electronic device.

b) A variety of functions, such as cash access, bill payment, balance inquiry or funds
transfer for selected accounts.
c) Multiple access options at multiple locations using multiple device types, such as
an automated teller machine, a screen phone, a personal computer, a personal digital
assistant (PDA), or interactive TVs.

ii. Electronic purses and debit card. Electronic purses, which replace money, are
also known as debit cards and electronic money. It is a wallet-sized smart cards
embedded with programmable microchips that store sums of money for people to
use instead of cash for everything from buying food, to making photocopies, to
paying subway fares. The electronic purse works in the following manner.
a) The vending machine need only verify that a card is authentic and there is
money available.
b) The value of the purchase is deducted from the balance on the card and added
to an
e-cash box in the vending machine.
c) The remaining balance on the card is displayed by the vending machine or can be
checked at
an ATM or with a balance-reading device.


i. Encrypted credit cards

Encryption is instantiated when credit card information is entered into a browser
or other electronic commerce device and sent securely over the net work from
buyer to seller as an encrypted message. To make a credit card transaction truly
secure, the following sequence of steps must occur before actual goods, services,
or funds flow:
A customer presents his or her credit card information (along with an authenticity
signature or other information such as mother's maiden name) securely to the
a) The merchant validates the customer's identity as the owner of the credit card
b) The merchant relays the credit card charge information and signature to its
bank or
On-line credit card processors.
c) The bank or processing party relays the information to the customer's bank for
authorization approval.
d) The customer's bank returns the credit card data, charge authentication, and
authorization to the merchant.

Third-party authorization

In third-party processing, consumers register with a third party on the Internet to

verify electronic micro transactions. Four interrelated components are working in
the payment system: credit cards, banks, processing agents, and the internet. An
on line third party processor (OTPP) has created a six-step process:

Step 1.

The consumer acquires an OTPP account number by filling out a

registration form.
This will give the OTPP a customer information profile that is backed by a
traditional financial instrument such as a credit card.

Step 2.

Request for purchase item by quoting the OTPP account number. The

purchase can take place in one of two ways: The consumer can automatically
authorize the "merchant" via browser settings to access her OTPP account and bill
her, or she can type in the account information.
Step 3. The merchant contacts the OTPP payment server with the customer's
account number.
Step 4. The OTPP payment server verifies the customer's account number for the
vendor and

checks for sufficient funds.

Step 5. The OTPP payment server sends an electronic message to the buyer. This
message could be an automatic WWW form that is sent by the OTPP server or
could be a simple e-mail. The buyer responds to the form or e mail in one of three
ways: Yes, I agree to pay; No, I will not pay; or Fraud, I never asked for this.

Step 6.

If the OTPP payment server gets a Yes from the customer, the merchant

is informed and the customer is allowed to purchase.

Factors to be considered in designing electronic payment systems

There are several factors that should be addressed before any new payment
method can be successful

Privacy: A user expects to trust in a secure system; just as the telephone is a safe
and private medium free of wiretaps and hackers, electronic communication must
merit equal trust.

Security: A secure system verifies the identity of two-party transactions through

"user authentication" and reserves flexibility to restrict information/services
through access control.
Intuitive interfaces: The payment interface must be as easy to use as a telephone.
Database integration: The challenge before banks is to tie these databases
together and to allow customers access to any of them while keeping the data upto-date and error free.

Brokers: A "network banker" to broker goods and services, settle conflicts, and
facilitate financial transactions electronically.
Pricing: One fundamental issue is how to price payment system services.
Standards: Without standards, the welding of different payment users into
different networks and different systems is impossible.
Banking on the Web:
Though there are 28 banks in Bangladesh, mostly head quartered in Dhaka , only a
select few have web pages. Listed below are the names of the few that do have
sites. However, most of these banks do not offer online or electronic service such
as Direct Deposit. There are some ATM machines, though not nearly as
concentrated as in the United States.

Arab Bangladesh Bank Ltd.

The first private bank of Bangladesh with a long standing experience in domestic
and international banking. Its 53 branches in all the major commercial centers of
the country and 152 correspondents worldwide provide proficient banking services
to its customers.

Standard Chartered Bank

Worldwide bank, with some services available for customers living in Bangladesh:
Current Accounts, Overdrafts, Foreign Currency Term Deposits, Local Currency
Cash Checks, Check Purchase, Drafts, Savings Accounts, Term Deposits,
Telegraphic Transfers, Traveler's Checks, and Personal Loans.
National Bank Ltd
This is the governmentally run bank. It had a site but it was taken off due to non
payment of web development bill.

Hotels that allow for internet booking are worldwide chains, thus the whole
transaction occurs outside of Bangladesh, despite the fact that the service will be
performed in Bangladesh.
At Pacific Hotel, subsidy of Pan Pacific and person can make reservations through a
secure server that is protected by an independently certified Secure Certificate.

So that a browser can verify such certificates, the browser contains details within
its preferences of the various Certifying Authorities. These details are known as
Root Certificates and for security they all have expired dates. The hotel's
Certifying Authority is Thawte Certification, whose Root Certificate in Netscape 3
expired on 27 July 1998. In order for Netscape 3 to connect to the hotels secure
server (and the estimated 20% of all secure servers using Thawte certificates), a
user needs to go through a "rollover" process outlined
at www.thawte.com/certs/server/rollover.html.
When the procedure is complete, the user can then return to the Pan Pacific
reservation page.

Background and Status of E-Commerce in Bangladesh:

In the early days of the Internet, organizations leveraged the easy-to-use

graphical point-and click interface of the web browser to access the enormous

amount of information available on the Internet, While this was happening on the
technology side, one also witnessed corporations grappling with new issues-that of
escalating global competition, shrinking margins demanding customers and a rapidly
changing business environment. All these were forcing companies to
re evaluate the way they did business, the types of products and services offered
and the speed with which they must make these available to customers.

Therefore, in order to find a new competitive edge, companies were forced to look
at newer ways of differentiating themselves. They soon realized that by
strengthening their links with customers, partners, suppliers and distributors in a
seamless networked environment, they could quickly bring to market the precise
products and services the customer demands and, better still, when they wand it. It
is here that Internet (E-commerce) has come to represent the ultimate deliverance
mechanism of the era. The origin of the Internet has been traced to an
experimental networks established first in 1965 with funding from the Advanced
Research Project Agency of the US Department of Defense (DoD), to enable the
scientists engaged on DoD projects to communicate with one another. The National
Science Foundation (NSF) took over the academic community network project in
the mid-1980s and created NSFnet in 1987. In 1991, a set of small commercial
networks created the Commercial Internet Exchange (CLE) or commercial use.
Commercial collaboration, technical support by e-mail, pay-for-use databases, which

were forbidden on the NSFnet became possible on CIX, and gave a big boost to the
growth of the Net.
According to the Computer Industry, Almanac Report from November 1999, there
were 57.5 Internet users per 1000 people on a worldwide average11.
In September 1998, John Gantz, senior vice president at IDC (International Data
Corporation, Framingham, MA.) Announced that the volume of Internet commerce
would approach one trillion dollars by 2002. It is also felt that 80 percent of that
volume is business-to-business transactions with expectations of that growing to
92 percent by 200312. By 2003, International Data estimates that 159 million
people new connected online worldwide will have mushroomed to 510 million.
This community is made up of usual mix of surfers and legitimate suitcases.
Regardless of the projection one cane make, the reality is that a significant
increase of Internet commerce activity is expected within next two or three years.
The growth of the Internet has resulted in critical wars between consumers and
firms that are engaged in commercial activity as part of global online marketplace.
If we want to know the status of e-commerce in Bangladesh, we must have to know
the status of the telecommunication system as well as the IT infrastructure. The
Internet has been launched in Bangladesh in 1996.
The number of Internet users is increasing day by day. In Bangladesh, first
computer was installed in Dhaka Branch of Atomic Energy Commission of our part
of the then Pakistan in 1964. Bangladesh University of Engineering and Technology

(BUET) installed its first computer just after the independence. On June 6, 1996
on-line Internet service was first introduced in Bangladesh. Since the financial
year 1998-99, computer and its accessories have been kept outside all types of
duties and taxes. At the beginning of 2000, private sector entrepreneur were
allowed to act as VSAT (Very small Aperture Terminal) operator. After the
withdrawal of government control on VSAT, now the Internet is being used at much
low cost (Tk. 0.40 per minute). With the recent introduction of the high-speed
Broadband Internet (Which can be used without telephone facility of the user),
the cost of using Internet has been lowered much and a number of cyber cafes
have been established, where anybody can browse the Internet by paying service
charges on the basis of time used. The ISPs were once concentrated in Dhaka, but
now more than 40 cities and towns, Including Chittagong, Rajshahi, Khulna and
Bogra are now connected to the Internet. The number of Internet users and ISPs
has greatly inversed.

Constraints to E-Commerce:

Out of 64 districts, Internet services are available only in 6 major district

headquarters; BTTB is planning to gradually roll out an IP network up to the 64
District headquarters. In January 2002, the Internet facilities were extended to
12 districts. The Project is running on very fast and today almost 40 plus districts

are getting Internet facilities, Followings are the barriers of e-commerce in


Very minimum number of users of web sites;

Poor telecommunication infrastructure with limited fixed-line access, unreliable

connectivity and low bandwidth (9K)'

High price of computer and hardware; the per capital income of our people is
less than US$300. But in order to buy a computer it is needed US$500 and for
this reason,

it is beyond the capacity for a villager to buy it. > Lack of technically efficient
personnel; > Lack of technically efficient personnel;

The banking infrastructure in terms of electronic payments cards and very few
companies accept credit card payments. As Such the customers of 5770
branches of the local banks are unable to operate their account with the other
branches of the same bank. Inter bank transaction is more cumbersome as the
clearing-house of the central bank is not online. An inter-Bank transaction may
take even 2 weeks if the branches are different cities. Only 27 branches of the
eight foreign banks are interconnected with their respective head officers.
They are also satisfactorily computerized. This represents only 4.47% of the
entire banking sector.

Small number of Credit Card users;

Limitations of supportive legal system. Such as, exchange controls, protection of

telecommunication monopolies, restrictive trade practices and prohibitions;

Absence of cyber law;

People's mindset and very slow and expensive Internet services; > Enterprise
manager's lack of initiative and leadership in taking advantage of commerce;

Bureaucratic complexities; and

Lack of awareness at government level of e-commerce issues. Due to these

problems, not sufficient on-line users are available until the club of Internet
users in the country reaches a critical mass, cyber banking and thus commerce
is unlikely to take of among customers.

Multilateral rules and impact on development of E-Commerce:

In the Second Ministerial Meeting of the World Trade Organization (WTO), ECommerce was identified as an area of duty free access, which would continue until
a decision is taken other wise. The increasing use of internet and other electronic
means in international trade in goods
and services led WTO members, at the Geneva Ministerial Conference (held in
May,1998) to adopt a Declaration on Global Electronic Commerce directing the
General Council to establish a ' comprehensive work programmed to examine all
trade-related issues relating to global electronic commerce'. In accordance with
this mandate, work on examining whether any modification or improvement are

necessary in the rules on trade in goods, trade in services and in the area of
intellectual property is going on in the relevant WTO forums. In addition, the
General Council has asked the Committee on Trade and Development to examine,
inter alia, the effects of
E-Commerce on the trade of developing countries and particularly that of small and
medium-sized enterprises in these countries, and the means of maximizing their
benefits. The General Council is to submit its report on the work done along with
recommendations for action. A decision was also taken to produce a progress
report on E-Commerce with recommendations for action in the Third Ministerial
Meeting of WTO. As a founding member of the WTO, Bangladesh has got to put
the domestic front in order to reap the benefits from E-Commerce including
enactment of cyber laws, development of infrastructure, both physical and
institutional, and duty-free export of software electronically.

Bangladesh is a country of villagers. All the priority regarding the development of
IT infrastructure as well as e-commerce should be given to the village. To

the barriers


the way


the development

infrastructure in Bangladesh, we should take the following steps:



Proper infrastructure development of telephone industry;

Development consciousness about the benefits of e-commerce to

the manufacturer/vendor's and customers;

Ensure proper security about customer's information (e.g. Credit card

number of cyber cafe through private entrepreneurs;

Encourage nonresident Bangladeshis to purchase country product through


Development of proper educational institution to create efficient IT

professional and develop require knowledge and skill by giving computer
training and basic education to the villagers;

Infrastructure development of port customs and courier service facilities

for e-commerce;

To increase the use of computer and Internet facility Government must

withdraw all taxes from computers and its accessories;

Proper banking infrastructure development for issue Credit/Debit card and

online money transaction facilities;

Proper government support for the development of IT sectors and Internet


Government should create an image of e-commerce awareness and leadership

and demonstrate to the business community the importance of e-commerce.

Lastly it can be concluded by saying that the banking infrastructure needed at the
local, consumer side of e-commerce may be considerably more difficult to achieve.
Just as the majority of the population does not have access to telecommunications
services, they also typically lack access to even basic banking services, such as,
savings and chaqueing accounts, credit cards and loans, even simple cash currency in
many places. It will require creative and cooperative efforts on the part of banks,
governments, business, and community leaders to develop innovative means for
reaching these unnerved with services that are both appropriate and affordable.
Village Computer and Internet Program (VCIP) started on July 1999. The program is
operating at Madhupur in Tangail District, which is about 160 kilometers away from
Dhaka. The main objectives of this Program are:
a) Familiarize the village people, particularly the young generation, with the use of
computers and the Internet;
b) Provide them computer training at a minimal price, and thus facilitate building up
a computer literate generation in the country;
c) Provide free e-mail services to teachers and students for educational
purposes and to doctors and journalists for emergency Purposes;
d) Provide e-mail facilities for families having relatives staying abroad and local;
Facilitate easier access to relevant market information, e.g. prevalent market
prices of specific products in different location. This would help the village people
to have better bargaining capacity in selling their produce;

a) Provide computer compose and printing facilities at a low cost in rural areas;

b) Enable student contact with educational/research institutions and libraries

c) Organize IT workshop, seminars and exhibition in rural areas;
d) Create IT related job opportunities.
The benefits of the program:
VCIP is providing important benefits to rural society in Bangladesh. The aspects of
these benefits are:
A) Access to the Information:
VCIP is providing all sorts of IT facilities to the villagers. The villagers can have
access to information will get benefits by using computers.
B) Availability of Information:
Village people, government and also the local NGO or institution are getting
information on education, health, agriculture, environment etc.
C) Job creation:
VCIP is creating jobs in rural areas. At present Grameen Communications has
recruited two staffs for operating the center.
D) Reducing the migration from village to city:
The lack of job opportunities in villages creates mass migration from villages to
cities. Access to the Internet will open many Possibilities for employment. From
data entry to web marketing. E) International and local correspondence:

Three is a large and growing Bangladeshi expatriate population in Southeast Asia,

Middle East, Europe and North America. Through e-mail services instantly and at
very low cost.
F) Reducing the impact of the middlemen:
Village residents (both producers and consumers) will be able to check current
market. But these types of initiatives are very few in the country. Because of
bureaucratic constraints, the speed of reform of the telecommunication sector is
also slow. The electric power supply is not as the IT sector demands and policies
instability further hinders the growth of the sector.

Prospects of E-Commerce in Bangladesh

Situation of E-Commerce in Bangladesh: As a developing country she badly needs to
participate in the worldwide trend and explosion on E-Commerce that means IT. It
is a fact that our country has a very bright prospect for development and export
of software, home-page design, data processing, and data entry. Realizing this
prospect, the government has already announced data processing and software
export as a thrust sector.
The government has deregulated the telecommunication sector and internet
services in a major policy decision to remove obstacles in the way of boosting

software business and opening up the options of high speed data transfer. An
inter-ministerial meeting recently decided that Bangladesh Telegraph and
Telephone Board (BTTB) would select vendors for supplying V-SAT ( Very Small
Aperture Terminal) immediately for connection to the local ISP (Internet

Provider).The BTTB would now get only a license fee amounting to US$

3,500 per year which means the ISP would have to spend less than US$ 300 as
license fee per month. Therefore the cost would come down to about one-tenth of
the present price for data transfer if the decision is properly implemented. But
still the user base of computer is extremely low because of high cost of computers
and peripherals. The existing banking procedure, absence of domestic industry,
absence of source of fund, lack of market promotion and absence of R&D are the
main factors for slow growth. But things are expected to move fast towards
growth in the years ahead.
To enable the developing countries to face the global challenges and to cope up
with the latest situation of E-Commerce, Bangladesh as an LDC member seriously








responsibilities for key areas of rules formation and economic development in this
field should take necessary action to train and develop required IT professionals.
In this connection institutional chain both in the public and private sector should
be developed. Bangladesh also needs fund for R&D and diversification of areas and
creation of awareness about security of E-Commerce. Bangladesh Parliament in its

recent session has passed the Copy Right Act, 2000. But this alone cannot protect
the cyber crimes.
Our neighboring countries including India have made significant progress in this
respect. A comprehensive cyber law is very important for the Internet Service
Providers and upcoming phenomenon in Bangladesh of E-Commerce (Electronic
Commerce) and M-Commerce (Mobile Commerce).It is heartening to note that the
Internet accessibility in Bangladesh has been growing very rapidly since the last
few years but it is far below the desired level. An increasing competition is being
observed among the ISPs.
The rate of different Internet services is in rapid declining trend after
deregulation of V-SAT by BTTB. All these positive indicators entail that there
remains a huge potential in this sector. At this stage the serious need, among
others, is the development of human resource (HR) capacities in educational
institutions. There is alarming inclination towards migration of IT specialists and
students from Bangladesh. It has been mentioned in the study of TechBangla IT
Research Cell (ITRC) that about 81% of teachers and IT professionals are planning
to migrate from Bangladesh and 85.2% of students have plans to move to a foreign
The government should announce suitable remuneration package for those who have
potentials to contribute in this sector and create congenial educational environment
to stop brain drain. Considerable awareness for e-commerce can be observed in

Bangladesh and few companies are trying to apply e-commerce for conducting
business. Three important requirements for e-commerce are adequate information
infrastructure, appropriate legal framework and skilled manpower. Unfortunately
the first and third of these are not sufficient and the second is nonexistent in the
country. But currently the government controls almost the whole telecommunication
sector. Already the government is trying to prepare the communication technology
The first draft of a sort of communication technology policy was prepared and
presented in July 2000. The Bangladesh Computer Council prepared the draft under
the auspices of the Ministry of Science and technology. It details clear policy
instructions regarding infrastructure, the development of technology, creating an
environment for e-commerce and governance. The draft proves that the policy is
going to be well planned and well-designed 21. Now the short term (FY 2001-2005)
IT Policy has been adopted by the government. Besides this, The National
Telecommunication Policy was also formulated in 1998. In addition, Bangladesh is
soon to have a new Telecommunication Act. According to the proposed Act. a new
telecommunication regime would be created whereby private sector investment
would be encouraged. The government's role as a regulatory body would be
transferred to a new independent Telecommunication Regulatory Commission23.
The Government of Bangladesh has taken steps to boost up the IT industry for the
development of e-commerce. The steps are as follows:

a) Waiving all taxes and duties from importing the hardware and software;
b) Ending BTTB's role for the use of VSATs by ISPs who now directly negotiate
with foreign carriers;
c) Tax free export of software with 40% foreign;
d) 100% remittance of profit and capital gains without any approval for the foreign
e) Special funds have been allocated for collateral-free loan;
f) Intellectual Property Rights Law has been approved by the parliament.
g) About 130 licenses have been issued by the govt. for ISP. 40 to 50 of them are
producing Services Usage Charge and that is below Tk. 1.00 per minutes. Already
the government has formed a Telecommunication Regulatory Commission for the
development of IT infrastructure as well as e-commerce infrastructure in


The importance of IT in the context of Dhaka, Bangladesh and the role it can play
in the socio-economic development cannot be over emphasized. The world has
witnessed phenomenal growth in this sector over the last few decades. The
countries that took timely decision, made unprecedented growth. We need to invest
in both physical, institutional and human infrastructures, specialized education and
training, and provide an appropriate legal framework for conducting commerce
electronically. It should be clearly noted that in the globalize world, personal
business development depends on electronic commerce. E-commerce, as a vehicle to
boost up trade, especially international trade, has already been recognized by
international business community, especially in European Union, North American
Markets and some of the other developed nations like Japan, Singapore, Hong Kong
(now a part of China) etc. However e-commerce and its related technologies are
still in its infancy stage in Bangladesh. Despite existence of a lot of barriers in the
development of e-commerce is an option, since the world is moving towards eeverything, so we should try to overcome all the barriers and also try to develop
such environment that is favorable for the development of e-commerce in Dhaka,