Unlocking potential of freelancing

It is disheartening that at a time when Bangladesh is in dire need of US dollars, many of the country's freelancers opt for keeping a significant portion of their income in foreign banks instead of remitting the money back home.  High-earning freelancers, particularly those making over $800 a month, reportedly keep 50 per cent to 70 per cent of their earnings in foreign accounts, potentially depriving the nation billions of dollars in annual revenue. In 2023, freelancers collectively earned approximately $1.0 billion; however, estimates suggest that if all earnings were repatriated, the total earning from this sector could reach as high as $3.0 billion. According to a Financial Express report, freelancers are discouraged from repatriating their earnings due to a host of factors such as unfavourable exchange rates, high VAT and source tax on outbound payments and a perceived disparity in treatment between freelancers and overseas workers.

Freelancers complain that while migrant workers enjoy a preferential exchange rate and a 2.5 per cent cash incentive, they receive neither despite making a similar contribution by injecting foreign currency into the economy. Moreover, when they need to use their earnings for international services - such as digital marketing or software subscriptions - they face a VAT at the rate of 15 per cent and a possible 25 per cent source tax. Thus the freelancers are forced to maintain foreign accounts and spend internationally using international cards simply to avoid excessive taxation.  Spending on promotion and essential software procurement is crucial for freelancers to remain competitive. So why impose steep VAT and source taxes on such vital services, especially when these measures favour keeping earnings abroad? This policy is not only counterproductive but also economically short-sighted.  Therefore, abolishing or rationalising outbound VAT and source tax on international promotional expenses along with extending the 2.5 per cent remittance incentive to freelancers, as is currently offered to overseas workers, would make repatriating earnings more attractive. The gig economy offers immense potential, and the authorities must not stifle its growth by enforcing outdated policies.

With over one million registered freelancers, Bangladesh is home to the second-largest number of freelancers in the world, yet it ranks only seventh in terms of freelancing earnings. This mismatch between the size of the workforce and the income generated clearly indicates significant untapped growth potential. As a matter of fact, most of the country's freelancers are engaged in low-paying work such as data entry, basic graphic design and web development, often earning as little as five to seven dollars per hour.  Moreover, many of these tasks can now be readily performed by Artificial Intelligence (AI). So, upskilling is a critical necessity for freelancers to survive in the globally competitive marketplace.

Freelancing has become a buzzword, generating considerable interest among the youth. However, opportunities for institutional training in freelancing are inadequate. Most freelancers have learned the trade on their own through online resources. Government IT training centers offer only a handful of basic courses, often limited to introductory topics. Each year, around 25,000 computer science graduates are coming out from the country's public and private universities. Where are they going and why are they not interested in freelancing? If even a portion of these talented and skilled graduates were engaged in freelancing, Bangladesh would not be a laggard in terms of freelancing earnings. To develop a skilled freelancing workforce, these graduates should be trained in specialised, in-demand areas and encouraged to pursue the vocation by removing regulatory hurdles. Such steps will raise the overall standard of talent in the freelancing ecosystem and secure Bangladesh's competitive position in the global digital economy.