Our digital economy is growing more slowly than peers

Bangladesh is entering a decisive phase of its digital journey. With a new government soon to be in place and a young, ambitious population looking towards opportunity, the question is not whether technology will shape the future, but whether the ecosystem is ready to support that transformation.

Advanced technologies such as artificial intelligence are often described as transformative, but their real impact depends on the strength of the infrastructure, policies and skills that support them. In Bangladesh, telecommunications is the underlying operating system of the digital economy. It plays a central role through its contribution to GDP, job creation and foreign direct investment. Yet its ability to scale and evolve remains constrained.

In peer markets such as Malaysia, Thailand, India and Nepal, indirect telecom taxes range from 6 percent to 18 percent, far below prevailing levels in Bangladesh. Corporate tax rates of 20 percent to 35 percent in India, Sri Lanka and Thailand further strengthen their attractiveness for investment. Spectrum economics reinforces this gap. GSMA estimates that spectrum fees in Bangladesh already consume about 16 percent of operators’ recurring revenue and could exceed 20 percent in the coming years.

At the same time, mobile network operators and internet service providers operate within the same digital and consumer ecosystem but are governed by very different tax frameworks. Mobile operators face an indirect tax burden of about 39 percent, alongside corporate income tax rates of 40 percent for listed and 45 percent for non-listed entities. ISPs, by contrast, are subject to 5 percent VAT and much lower corporate tax rates of 22.5 percent and 27.5 percent.

This divergence is reflected in usage and growth trends. In 2025, Wi Fi traffic, largely carried by ISPs, accounted for about 64 percent of total data consumption. Over the same period, Wi Fi data volumes grew by more than 23 percent year-on-year, compared with mobile data growth of about 15 percent at the industry level. The widening gap shows how ISPs scale faster under lower fiscal constraints, while mobile operators grow more slowly as they absorb heavier tax burdens, spectrum costs and the responsibility of maintaining nationwide connectivity.

Telecommunications is a capital-intensive industry. Frequent policy changes, ad hoc directives and procedural complexity introduce uncertainty that discourages investment, slows deployment and weakens innovation. Over time, this affects service quality and network resilience.

Equally important is the need for regular, timely and technically sound audit exercises aligned with the regulations applicable to the relevant period. At present, telecom audits often take place after long gaps and without sufficient sector-specific expertise, leading to interpretational disputes and prolonged litigation. In contrast, the Bangladesh Bank has engaged globally reputed audit firms to review private banks. A similar approach by the telecom regulator would strengthen governance, reduce disputes and build investor confidence.

Operating telecom networks is also becoming more expensive. Unlike most industries, telecom cannot defer investment. Networks must be continuously upgraded, expanded and secured. When costs outpace reinvestment capacity, the impact is structural, resulting in slower rollout, constrained capacity and delayed readiness for future technologies.

The digital economy is a complex technological system. Advanced applications are only as effective as the core infrastructure beneath them. Bangladesh has the demand, talent and ambition to lead the next phase of regional digital growth. Success, however, will depend not on access to technology alone, but on whether the operating environment enables sustained investment in resilient and scalable infrastructure.

Experiences from comparable economies that recognise telecom as essential national infrastructure point to the importance of principle-based regulation and enabling policies. These must be supported by rational, globally benchmarked taxation and spectrum pricing, along with the timely resolution of long-pending disputes through transparent arbitration.

The decisions made today will shape Bangladesh’s digital trajectory for years to come. With the right choices, advanced technologies can drive productivity, employability and inclusion. Without them, the opportunity cost may be far greater than it appears.

The writer is chief corporate affairs officer of Grameenphone