Freelancing Remittances and ‘Bangladesh First’: Vast Opportunities and Banking Barriers

In today's digital age, online freelancing and the ICT sector have emerged as one of the most promising and practical sources of income for millions of young Bangladeshis. After the ready-made garment industry, the sector has every potential to become one of the country's largest sources of foreign exchange earnings within a relatively short period. At the heart of the government's "Bangladesh First" policy lies the vision of self-reliance—empowering young people to earn from the global marketplace through their skills rather than relying solely on traditional employment. To translate this vision into reality and simplify the process of bringing freelance earnings into the country, Bangladesh Bank has recently introduced several landmark policy reforms. Yet, despite these progressive measures on paper, freelancers continue to face significant obstacles due to poor coordination within the banking sector, disparities in exchange rates, and the limited availability of high-value international projects.

Bangladesh's Position in the Global Freelancing Market

The global outsourcing and gig economy has been expanding rapidly. Today, the freelancing market is worth several billion dollars, and international research projects that it will exceed US$30 billion by 2034. If the broader project-based digital services market is considered, its value already runs into hundreds of billions of dollars.

Where does Bangladesh stand in this rapidly growing landscape?

According to Bangladesh's ICT Division, the country has approximately 650,000 registered freelancers, of whom around 500,000 are actively working. Together, they remit an estimated US$500 million to US$1 billion annually. Despite this achievement, Bangladesh still accounts for less than one percent of the global freelancing market.

The Oxford Internet Institute (OII) has identified Bangladesh as the world's second-largest supplier of online freelancers, behind only India. However, in terms of total earnings, Bangladesh still lags considerably because most freelancers remain concentrated in lower-value conventional services.

Where We Work—and Where We Fall Behind

Bangladeshi freelancers primarily serve clients from the United States, Canada, the United Kingdom, Germany, and Australia.

The country's strengths include:

• Website design and general web development (such as WordPress and Shopify)
• Graphic design
• Social media marketing
• Search Engine Optimization (SEO)
• Data entry
• Virtual assistance

However, Bangladesh has only limited participation in the highest-paying segments of the global digital economy, including:

• Artificial Intelligence (AI) and Machine Learning (ML)
• Cybersecurity
• Cloud computing
• Blockchain technology
• Enterprise-level data science

This skills gap is compounded by limited proficiency in English communication, business negotiation, and professional presentation skills, making it difficult for many freelancers to compete for premium international projects.

How Competing Countries Are Moving Ahead

Countries such as the Philippines, India, Pakistan, and Vietnam are strengthening their positions in the global gig economy at a remarkable pace.

The Philippines has introduced a Freelancer Protection Act and developed a seamless cashless payment ecosystem that allows freelancers to receive payments directly through platforms such as PayPal and Payoneer with minimal friction.

India offers access to IT parks, provides tax incentives for software imports, and allocates dedicated funding for AI-related workforce development.

Pakistan has simplified access to international payment platforms through initiatives such as e-Rozgaar and e-Residency, while also providing direct cash incentives on every dollar remitted through formal banking channels.

What Bangladesh Bank's New Circular Offers Freelancers

Bangladesh Bank's Foreign Exchange Policy Department (FEPD-1), through Circular No. 22, has introduced several important reforms for freelancers.

First, the previous requirement to submit a complicated EXP Form for online service exports has been abolished. Freelancers can now receive export earnings simply by providing supporting documents such as emails, digital contracts, online invoices, or platform statements.

Second, remittances of up to US$20,000 no longer require submission of Form-C. For amounts exceeding US$20,000, digital submission through banking applications has also been permitted.

Third, freelancers can now receive up to US$10,000 per transaction directly through Online Payment Gateway Service Providers (OPGSPs).

Fourth, freelancers are now permitted to retain up to 50 percent of IT and software export earnings and 30 percent of other service export earnings in Exporters' Retention Quota (ERQ) accounts denominated in foreign currency.

These retained funds may later be used to pay for software subscriptions, domain registrations, web hosting, cloud servers, and other legitimate business expenses. Bangladesh Bank has also opened the door for dual-currency freelancer cards and cash withdrawals through Mobile Financial Services (MFS) and Payment Service Providers (PSPs) such as bKash and Nagad.

These reforms represent one of the most significant policy shifts in recent years for Bangladesh's freelance economy. However, as many freelancers have already experienced, progressive regulations alone cannot guarantee success unless they are effectively implemented at the operational level.

Bangladesh Bank's Foreign Exchange Policy Department recently introduced several significant reforms for freelancers through FEPD-1 Circular No. 22, aiming to simplify the receipt and management of export earnings from digital services.

The key provisions include:

• No mandatory EXP Form for internet-based service exports. Freelancers can now receive payments by submitting digital documents such as emails, online contracts, invoices, or platform statements instead of completing the previously required export declaration.
• No Form-C requirement for inward remittances of up to US$20,000. For amounts exceeding this threshold, reporting can be completed digitally through banking applications.
• Higher limits for international payment gateways. Authorized Online Payment Gateway Service Providers (OPGSPs) can now facilitate inward remittances of up to US$10,000 per transaction.
• Retention of foreign currency earnings. Freelancers engaged in IT and software exports may retain up to 50% of their export income in Exporters' Retention Quota (ERQ) accounts, while exporters of other services may retain up to 30%. These retained funds can later be used to pay for software subscriptions, domain registration, web hosting, cloud services, and other legitimate business expenses. The circular also opens the way for dual-currency freelancer cards and enables withdrawals through mobile financial services (MFS) and payment service providers (PSPs) such as bKash and Nagad.

The Gap Between Central Bank Policy and Branch-Level Implementation

Despite these progressive reforms, many freelancers continue to struggle in practice. The primary challenge lies in the disconnect between Bangladesh Bank's policy directives and their implementation at commercial bank branches.

Several issues remain widespread:

Unnecessary Form-C Requirements

Although the circular explicitly exempts transactions below US$20,000 from Form-C requirements, many local bank branches still ask customers receiving as little as US$500 or US$1,000 to complete the form, creating unnecessary delays and frustration.

Limited Access to ERQ Accounts

Although freelancers are entitled to retain a portion of their income in foreign currency, many branches outside Dhaka cannot open ERQ accounts because they lack Authorized Dealer (AD) status. Freelancers are often forced to travel long distances simply to access services they are legally entitled to receive.

Unnecessary Verification and Tax Deductions

Many branch officials have limited understanding of digital exports and freelance business models. As a result, freelancers are frequently subjected to unnecessary eligibility checks. Even though many IT export earnings qualify for tax exemptions, some branches still deduct Tax Deducted at Source (TDS) incorrectly, discouraging freelancers from using formal banking channels.

Lack of Monitoring and Complaint Mechanisms

There is currently no dedicated complaint cell to monitor whether branch offices are complying with Bangladesh Bank's directives. Consequently, freelancers often have no effective avenue to report improper practices or seek timely resolution.

The Real Challenges: Hundi, Legal Constraints, and Double Taxation

Although freelancers contribute valuable foreign exchange to the national economy, many continue to face significant structural obstacles.

1. The Exchange Rate Gap Encourages Informal Channels

One of the biggest concerns is the difference between official banking exchange rates and informal market rates. If banks offer approximately BDT 118 per US dollar while unofficial markets pay BDT 122–129, freelancers lose BDT 4–11 per dollar by using formal channels. Such disparities naturally encourage some individuals to use informal remittance systems such as hundi, ultimately reducing officially recorded remittance inflows.

2. Restrictions on Maintaining Overseas Funds

Bangladesh's Foreign Exchange Regulation Act, 1947 restricts maintaining foreign currency abroad without authorization. However, many freelancers and digital agencies operating internationally must keep business accounts overseas to pay marketing expenses, software subscriptions, and operational costs. The requirement to repatriate all earnings immediately can limit their ability to scale internationally.

3. Incentive Issues for Payoneer Transfers

Although earnings received through legitimate platforms such as Payoneer are fully documented, many freelancers report delays or inconsistencies in receiving the government's 2.5% cash incentive on export earnings.

4. Double Taxation Problems

Many freelancers working directly with overseas clients have withholding tax deducted by the client's country before payment is made. Subsequently, additional fees or taxes may be imposed during the banking process in Bangladesh due to the absence of effective digital coordination regarding Double Taxation Avoidance Agreements (DTAAs) between the National Board of Revenue (NBR) and financial institutions. As a result, some freelancers effectively pay taxes twice on the same income.

5. AI Tools and Payment Limitations

Modern freelancers increasingly rely on premium AI and cloud services—including OpenAI, Midjourney, and Amazon Web Services (AWS)—to remain competitive. However, existing foreign currency spending limits on freelancer cards and credit cards are often insufficient to cover these recurring subscription costs. Delayed payments can interrupt projects and even lead to suspended international service accounts.

6. ERQ Accounts Offer Limited Financial Benefits

Although ERQ accounts allow freelancers to retain foreign currency, they generally do not earn interest. Moreover, when converting retained dollars into Bangladeshi taka, banks often offer exchange rates below prevailing market levels. These factors reduce the attractiveness of holding export earnings in foreign currency.

7. Absence of Full PayPal Services and the AI Challenge

Bangladesh still lacks full access to PayPal, creating additional obstacles in receiving international payments. At the same time, advances in generative AI are automating many lower-value freelance services such as basic content writing and data entry. Unless freelancers upgrade their skills into higher-value areas, they risk losing competitiveness. Challenges such as unreliable high-speed internet and limited access to business credit further compound these difficulties.

What Must Be Done to Realize the ‘Bangladesh First’ Vision

Freelancers are bringing valuable foreign exchange into Bangladesh without requiring major public infrastructure investments. They are creating employment, stimulating local economies, and strengthening the country's digital export sector through their own skills and initiative. Yet, lacking strong institutional representation, many of their practical challenges remain overlooked. To fully realize the vision of "Bangladesh First," several policy actions deserve serious consideration.

1. Invest in Advanced Skills and Digital Identity

Through public-private partnerships (PPP), high-quality boot camps should be established across districts and sub-districts focusing on artificial intelligence (AI), data architecture, cybersecurity, and software development. At the same time, freelancers should receive a government-recognized smart digital identity, enabling easier access to bank loans, trade licenses, preferential financing, and tax incentives for purchasing professional equipment such as laptops.

2. Strengthen Banking Services for Freelancers

Every bank branch at the district or sub-district level should designate at least one officer trained specifically in freelance and digital export transactions, supported by a dedicated Freelancer Support Desk. Head offices must actively monitor branch compliance to ensure that unnecessary Form-C requirements are not imposed and that taxes are not incorrectly deducted. Foreign currency spending limits on freelancer and credit cards should also be increased to reflect the growing costs of AI tools, cloud platforms, and modern digital infrastructure.

3. Build Stronger Institutional Coordination

Research organizations such as the Digital Commerce Research and Advocacy Forum (DCRAF), together with industry bodies including BASIS, BACCO, and e-CAB, should work collaboratively to identify policy gaps and recommend practical solutions. Acting as bridges between freelancers, Bangladesh Bank, and the National Board of Revenue (NBR), these organizations can help resolve banking-related difficulties and improve coordination on issues such as double taxation.

4. Modernize Foreign Exchange Policies

Bangladesh should move toward a more market-oriented exchange rate for remittance inflows through formal banking channels. Exporters' Retention Quota (ERQ) accounts should offer interest on foreign currency balances and provide fair exchange rates when funds are converted into local currency. The government's 2.5% export incentive should be credited automatically for eligible transfers received through recognized international payment platforms. Furthermore, accelerating the introduction of full PayPal services in Bangladesh would significantly improve the country's digital payment ecosystem.

Bangladesh's freelance workforce has become an increasingly important pillar of the national economy, generating valuable foreign exchange through knowledge, creativity, and entrepreneurship rather than traditional physical exports. However, issuing progressive regulations alone is not enough. Effective implementation, efficient banking services, and policies aligned with the realities of the global digital economy are equally essential.

Eliminating bureaucratic obstacles, strengthening banking capacity, modernizing payment infrastructure, and equipping freelancers with advanced AI-era skills will not only improve their competitiveness but also strengthen Bangladesh's position in the global digital marketplace.

If the "Bangladesh First" vision is to become a lasting reality, policymakers must ensure that freelancers are supported not only through well-crafted regulations but also through practical reforms that remove unnecessary barriers and enable them to compete confidently on the world stage.

Author: E-commerce Analyst and Founding Member, e-CAB

Disclaimer: The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of Digital Bangla Media. In keeping with the principles of pluralism, the article has been published without editorial alteration. Any offence or disagreement arising from its contents remains entirely the responsibility of the reader.