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How to Setup Telecommunication Business in Bangladesh
As Bangladesh continues its aspiration to become an upper-middle income class country moving forward into the 21st century – one of the major economic drivers has been the availability and development of telecommunication services all over the country.” Digital Bangladesh” pushes internet growth all across the country and reasonable steps have been taken for all government services to be online based. There is a radical change in the lifestyle as more and more people use social media communication platforms like Facebook, WhatApp, Viber, TikTok etc along with content streaming like Youtube as integral essentials of their lives.
The Bangladesh Telecommunications Regulatory Commission (BTRC) is the governing body in the country in charge of issuing and regulating all licenses that would be needed to operate and deliver telecommunication services. Voice call services and mobile internet data are the two key services being offered by the telecommunications industry. With 60% of the population of Bangladesh being young and middle-aged people using mobile communication devices – smartphones are now increasingly affordable for them. Easy and fast access to internet is bringing significant positive changes to the structures of communication that the country has been accustomed to, especially in urban Bangladesh. Launching of more e-commerce, e-agriculture, e-education, ridesharing and other on-demand services – both privately and government owned – is contributing to growth of the telecommunications sector in Bangladesh.
The escalating demand of the telecommunication services are attracting both local and foreign investments and investors are now keen to invest in this sector in order to eradicate monopoly and introduce competition in the market with the intention to establish a national sound telecommunication infrastructure as well.
Here is a diagram of the general model of the telecommunication regulatory framework in Bangladesh:
LICENSE AND REGISTRATION PROCESS
Any new telecommunication service provider who wishes to put its step in the telecommunication industry, has to apply to the Bangladesh Telecommunication Regularity Commission/BTRC for the granting of licenses. BTRC only has the exclusive authority to issue licenses for the establishment & operation of telecommunication system in Bangladesh.
Category of License/Registration Certificate:
1. International Gateway (IGW) Licenses
2. Interconnection Exchange (ICX) Licenses
3. International Internet Gateway (IIG) Licenses
4. Mobile Number Portability (MNP) Licenses
5. Broadband Wireless Access (BWA) Licenses
6. Cellular Mobile Telecom Operator Licenses
7. 3G Cellular Mobile Phone Services Operator Licenses
8. 4G/LTE Cellular Mobile Phone Services Operator Licenses
9. International Terrestrial Cable (ITC)Licenses
10. Tower Sharing Licenses
11. Public Switched Telephone Network (PSTN) Operator Licenses
12. VoIP Service Provider (VSP)Licenses
13. Nationwide Telecommunication Transmission Network (NTTN) Service Provider Licenses
14. National Internet Exchange (NIX)Licenses
15. Vehicle Tracking Services
16. Internet Protocol Telephony Service Provider
17. Internet Protocol Telephony Service Provider
18. Internet Protocol Telephony Service Provider
19. Internet Service Provider –Nationwide Licenses
20. Internet Service Provider –Central ZoneLicenses
21. Internet Service Provider –Zonal Licenses
22. Internet Service Provider –Category A Licenses
23. Internet Service Provider –Category B Licenses
24. Internet Service Provider –Category C Licenses
25. VSAT User Licenses
26. VSAT Provider Licenses
27. VSAT Provider with HUB Licenses
28. TelecommunicationValue Added Services (TVAS)Registration Certificate
29. Call Centre License
30. Call Center Registration Certificate, etc.
As per the requirement of the BTRC, the applicant maybe required to supply necessary documentation and information as mentioned below with the application fee in the form of pay order/bank draft, and the BRTC upon its own may also examine the site, installations and apparatus proposed by the applicant. After submission of the application to the BRTC, it shall take a decision whether to approve or discard the application and it shall inform the applicant of its final decision within a specific time.
The BTRC has the power to disqualify the applicant from obtaining the license on the grounds that;
• The applicant is an insane person;
• The applicant has been sentenced by a court for a term of 2 (two) years or more, and a period of 5 (five) years has not elapsed since his release from such imprisonment;
• The applicant he has been sentenced by a court for commission of any offence under this Act and a period of 5 (five) years has not elapsed since his release from such imprisonment;
• The applicant has been declared bankrupt by the court and has not been discharged from the liability of bankruptcy;
• The applicant he has been identified or declared by the Bangladesh Bank or by the court or by a bank or financial institution as a defaulter loanee of that bank or institution;
• The applicant’s licence has been cancelled by BRTC at any time during the last 5 (five) years;
Nevertheless, it is essential to bear in mind that the licenses require renewal after its expiration. It is the duty of the BTRC to notify the licensee regarding the expiry date of the licensee and the license holder must make an application for renewal to the BTRC. The application form must be provided with an application fee by the applicant in the form of a pay order or draft issued from any scheduled bank to BTRC. If permission for renewal is granted by BTRC then it shall be for a specific period.
Of course, there are other licenses to operate the business such as incorporating limited liability company under the Registrar of Joint Stock of Companies (RJSC/Company House), obtaining trade license to run the business, obtaining VAT registration certificate and TIN (Tax identification number) from Nation Board of Revenue (NBR), etc.
LEGAL ISSUES
The legal areas in relation to telecommunication industry cover Telecommunication Act 2001, the Information and Communication Technology Act, 2006, Digital Security Act 2018, Contract Act 1872, Bangladesh Labour laws etc.
After the legal entity has been formed to run telecommunication business with proper trade license, VAT registration certificate & TIN, it needs to ensure that separate employment agreements have been executed with each employee regardless of whether their nationality. If the companies have recruited foreign employees at their establishment then they must be employed as per the labour and the Immigration laws of Bangladesh. There is no difference in to the application of labour laws to the foreign and local employees. However, as per the immigration laws each foreign employee shall be required to have a proper employment visa and a valid work permit.
The Information and Communication Technology Act, 2006:
The Information and Communication Technology Act, 2006 (ICT Act 2006) covers the legal validity of the information and communication technology in Bangladesh. The ICT Act 2006 covers some important subject matter such as:
a. Legal recognition of electronic records,
b. Communication of Electronic Records,
c. Authentication by Digital Signature,
d. Legal recognition of Digital Signature
e. The introduction and legal recognition of Certification Authority
f. Electronic/digital Gazette
g. Confidentiality of the electronic records, etc.
Digital Security Act 2018:
The government has introduced Digital Security Act 2018 to identify digital crimes and ensure national digital security in Bangladesh.
If any person commits fraud by means of any digital or electronic medium then that activity of that particular person will be an offense under this Act. Digital or Electric Fraud means, if any person intentionally or knowingly or without permission changes any information, deletes, adds new information or creates distortion and reduces the value of any computer program, computer system, computer network, digital device, digital system, digital network etc. and trying to gain benefit for himself/herself or for others or trying to harm others or to deceive others.
If any person without any legal authority collects, sells, takes possession, supplies or uses any person’s identity information, then, that activity of that person will be an offense under the Act. Identity Information”, means any external, biological or physical information or any other information which singly or jointly can identify a person or a system, his/her name, address, Date of birth, mother’s name, father’s name, signature, National identity , birth and death registration number, finger print, passport number , bank account number , driver’s license , E-TIN number, Electronic or digital signature , username, Credit or debit card number etc.
If any person in any website or through any digital medium intentionally or knowingly sends such information which is offensive or fear inducing, or which despite knowing it as false is sent, published or propagated with the intention to annoy, insult or humiliate a person then that activity of that particular person will be an offense under this Act.
If a person commits hacking then it will be considered as an offence under this Act.
If any person or group intentionally or knowingly with the aim of hurting religious sentiments or values or with the intention to provoke, publish or broadcast anything by means of any website or any electronic format which hurts religious sentiment or values then such activity of that person will be considered an offence under this Act.
Introduction of FMA and its legal services
Anyone who is stepping into this industry must keep each of their steps carefully in order to safeguard themselves from penalties. There have been newspaper headlines on mobile operators being heavily penalized for not complying with the acts, guidelines, directives and regulations of the BTRC.
FM Associates being a full serviced law firm has come to the rescue of many mobile operators from being penalized by providing their exemplary knowledge and skill in this field of Telecommunication. They have provided opinion on the interpretation of acts, rules, directives. guidance of the BTRC and each of their mandatory compliances along with the penalties.
FMA can also provide assistance in the entire procedure of the incorporation of the company starting from the drafting of the AOA and MOA including all other relevant forms to obtaining name clearance and submission of all the documents to RJSC. FMA supports companies in the renewal procedure of the Trade Licenses as per their sector.
In relation to the immigration services required for foreign employees employed by the companies, FMA’s immigration law team can asset the Company to obtain the E-visa (employment visa) recommendation letter and work permit on behalf of the foreign employee and can also assist to obtain the extension of the work permit and the E visa for the foreign employee. The service shall include drafting all the necessary application and documents and collecting the relevant documents from the foreign employee and the Company; and submitting the same to the relevant government authorities and also liaise with them to obtain the necessary work permit and visa extension.
FMA has been assisting the companies in drafting and reviewing of service agreements executed between mobile operators and venders ensuring that none of the terms and conditions are disadvantageous to the mobile operators.
Furthermore, if they is any dispute between the vendor and the mobile operators, FMA’ dedicated teams shall be readily available to represent them in the Courts of Bangladesh
EFFECT OF COVID
As Bangladeshi authorities have shut down the country - with local administrations closing down public transport and all non-essential shops and offices, the economy of Bangladesh has come to a standstill. The country may be pushed to a crisis situation and significant economic loss. In these troubled times, the telecom industry has taken a low as well. The internet service has been affected by the extra usage of millions of users across the country due to mass of the population staying back at home in order to reduce the spread of Covid 19- coronavirus. The employees are restricted from attending their office by the government as a result of which business are being affected significantly. The employers finding no alternative are either laying off the employees or going directly for retrenchment. Under the layoff scheme, the employees who have completed at least 1 (one) year of service shall be entitled to the compensation which shall be half of the total basic salary of the employees and full amount of housing allowances. If the employers do not wish to retain the employees, they may terminate them on the ground of redundancy Another plausible solution may be to retain the employees and instruct them to work from home.
Trading in the Telecommunication Sector has also been intensely affected due to Covid-19. Any commercial agreement that has been executed by the telecommunication operator and any vender is either at halt due to the Force Majure Clause in the agreement since it includes catastrophes like pandemic and epidemic which would result in allowing additional time for the performance of the agreement or alternatively if it is impossible or unlawful for either or both parties to carry out their contractual obligations under the law governing the Contract, it entitles the parties to be released from further performance of the Contract. Upon notice by either party to the other party of such event or circumstance, the parties shall be discharged from further performance and the contract shall be held to be frustrated and hence terminated.
Taxation
General rate of tax is 45% currently in the laws of Bangladesh. Nominal requirements for a limited company formed locally includes a number of reporting to be done to NBR, such as: Opening a TIN, Monthly Tax deduction statement, Half Yearly Withholding Tax statement, Yearly statement related to tax return submission of its employees, Yearly statement related to salary disbursed from company to its employees, Quarterly Advance tax deposition, Yearly Tax return submission, attending appeal/hearing session as required on behalf of the company, Monthly VAT return etc. FMA can advise and assist to satisfy all regulatory compliances to enable the company to run smooth and hassle free.
Conclusion
In the recent times, Bangladesh has been making progressive approach in boosting the telecommunication industry. With 5g networks being on the verge of introduction in many of the major countries in the world, the Bangladesh government will also sell licenses for the 5G network soon. Bangladesh through foreign investment is attempting to launch new operators in the telecommunication market which will trigger competition in the market by providing internet services, domestic and international voice calls etc. at affordable cost to the mass population. All of these initiatives taken by the Government will make mobile networks available all over the country, even to the remote regions and internet penetration will allow us to achieve the “Vision 2020” that we are all eagerly looking forward to.
Summary:
Bangladesh, though being a small country, in terms of geographical area, is the eighth largest country in the world in relation to population. The initiative of the government, to digitalize the country in most areas, with a slogan of Digital Bangladesh, has allowed the telecommunication sector to flourish in order to play huge role in digitalizing Bangladesh. In the recent past the telecommunication service, which was deemed as a luxury service in the last decade, has reached to mass population of Bangladesh.
To operate in this sector requires huge investment, especially in infrastructure and marketing, which allows only handful of large operators, mainly MNCs to operate in this market and thus making it an oligopoly market, where the competition is very high.
The government, in order to protect and encourage local investment, restricts foreign investment, to establish a telecommunication entity, to a maximum of 60%. This, in future, shall allow local investors to establish their sole presence in this lucrative market. Since this sector generates huge government revenue, the government, in order to attract more foreign investment, shall reduce the restrictions on foreign investment as the local players gets established. Furthermore, an increase in the number of new operators in the telecommunication sector will make the market more competitive and make it customer friendly which would allow a further spread of such services, including more affordable internet services and internationals calls, to the mass population and result a positive impact on the human resource development skill as a lot of knowledge base course and tutorials starting from institutional education to technical education, sports to cooking lessons can be available to the mass population with free of cost due to the accessibility of cheap internet.
In the recent times, the Covid-19 pandemic has tremendously affected the global economy and Bangladesh is also a victim to such pandemic. Due strict measures by the government in order to reduce the spread of the pandemic, business has been hampered. The telecommunication sector is also facing the same, but the impact is far less compared to other trading sectors like RMG, agriculture. In fact, the uses of telecommunication services have increased in this lockdown period as normal offices are operated from home and thus it can be predicted that this sector can overcome the adverse effect of such pandemic in a shorter period compared other sectors.
It can be concluded from the above information and facts that in the upcoming future Bangladesh will be a hotspot for the telecommunication market.
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How to Incorporate a Business in Bangladesh
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