Bangladesh should develop and upgrade ICT infrastructures before implementing restrictions of Cross Border Data Flows (CBDF) as restricting data flow could be a hindrance in taking full advantage of the rapidly evolving data analytics and techniques, said economists and experts, reports BSS.

They also suggested for policy in favour of data localisation and its restrictiveness which needs a comprehensive cost benefit analysis.

They also recommended for a research-based pragmatic policy towards data regulation for Bangladesh.

The observations and recommendations came from a webinar held today on 'digital exports of Bangladesh: impact of cross-border data flow restriction' jointly organized by Research and Policy Integration for Development (RAPID) and CUTS International.

Member (secretary) of Planning Commission Md Kawser Ahmed was the present as chief guest while RAPID chairman Mohammad Abdur Razzaque presented the keynote paper on a study in this regard.

M Abu Eusuf executive director of RAPID and Professor of Dhaka University moderated the webinar.

The country's digital services exports (DSEs) might decline by 29 per cent to 44 per cent depending on the severity of cross-border data flow (CBDF) restrictions and retaliatory measures, according to the study.

"As a result, Bangladesh's gross domestic products (GDP) would shrink by 0.6 to o.9 per cent," read the report titled 'Impact of Cross-border Data Flow Restrictions on Bangladesh Economy' jointly done by Research and Policy Integration for Development (RAPID) and CUTS International.

If digital services exports increase by 1.0 per cent, the GDP of the country would increase by 0.02 per cent, it said suggesting that Bangladesh should develop and upgrade information and communication technology (ICT) infrastructure before implementing restrictions of CBDF.

Any policy in favour of data localisation and its restrictiveness needs a comprehensive cost benefit analysis as restricting data flow could be a hindrance in taking full advantage of the rapidly evolving data analytics and techniques, it noted.

Abdur Razzaque said as businesses are increasingly relying on data with increasing digital transformation and easier global digital trade, risks of data misuse, data privacy, and security concerns have increased.

Consequently, countries, including Bangladesh, are beginning to consider policies that regulate data privacy, security, and CBDP, he said, adding that such measures also include blocking the transfer of data across borders (data localisation) and/or place conditions on the flows of data and its storage and processing.

The recently released draft Data Protection Act also restricts the transfer of sensitive data, user-generated, and classified data, outside Bangladesh without prior approval of the government, he noted.

Bangladesh's ICT sector had an impressive annual growth facilitated by CBDF and the ICT exports of Bangladesh stood about at $2 billion in 2021 and experienced an impressive growth over the past decade.

The country envisages achieving $5 billion in ICT exports, employing two million professionals by 2025 and making the ICT industry the next growth engine for the country's economy, he noted.

Speaking on the occasion, GED member Kawser Ahmed stated that Bangladesh is moving towards 'Smart Bangladesh' according to Vision 2041 as an evolution from 'Digital Bangladesh'.

He added that government is implementing several projects to promote digitalisation including CUET digital incubation centre, new digital university in southwest Bangladesh and incentivizing polytechnic education.

He emphasized on the need for comprehensive cost-benefit analysis to understand the impact of cross-border data restriction. He also stated given the nascent IT sector, Bangladesh should consider imposing any restriction in 5 years down the line.

In his presentation, Razzaque highlighted those empirical studies have indicated that such restrictive policy measures could adversely impact digital trade, affecting innovation, economic growth, and foreign direct investments (FDI).

Industry associations, government, experts, and IT companies, among others, highlighted the understanding of the estimated impact of CBDF restrictions on businesses.

However, many stakeholders underscored that quality of services in Bangladesh could be negatively impacted if CBDF restrictions mandate choosing local service providers, which could also increase operational costs for their businesses and could adversely affect small businesses.

Shedding light on the resultant implications for Bangladesh, he also put forward several policy options that can be dealt with the data flow issues from the trade and development perspective of the coutnry.

Dr Razzaque also underscored that with the increased use of ICT, the world is becoming more linked through data sharing.

To boost and sustain information-driven economic development and stimulate innovation, free flow of data across borders would be essential.

This will facilitate the exchange of ideas and information as well as the dissemination of knowledge, insightful analysis of the data available for informed decision making, along with cooperation and cross-pollination between individuals and businesses. Innovation is likely to be hampered due to severe restrictions data flows.

In his concluding remarks, Dr Razzaque noted that a research-based pragmatic policy towards data regulation must be the way forward for Bangladesh, so that it maintains the potential of the industry to grow, bolsters its position as an attractive destination for ICT/ITES sector, and most importantly, achieves the full potential of the Digital Bangladesh Vision 2041.

Raisul Kabir, Co-founder and CEO of Brainstation-23, noted that data flow restriction might indeed be detrimental for growth of ICT sector.

He stated that Bangladesh has a higher talent pool and growing local IT sector. However, the market size is not large enough to attract foreign investment needed for data localization.

Tawhidur Rahman, Senior Technical Specialist of Bangladesh Computer Council, highlighted that considering the economy wide impacts on data flow restriction and other concerns the government is updating the draft law.

Kyle Gardner from Google emphasized on the net positive impact on global economy from free data flow. He noted that Google is interested to build partnership with local IT sector and government of Bangladesh to work on data flows.