Multiple obstacles hindering e-commerce business growth

The growth prospect of e-commerce business in the country is overshadowed by obstacles like complications in trade licensing and access to formal credit, industry insiders said at a dialogue on Saturday.

Although the number of such businesses keeps rising, they further said complications in charging VAT (value added tax) and unfavourable intellectual property policy were also hindering the business.

The concerns were raised at the dialogue on 'E-commerce Business by Women Entrepreneurs' at the conference room of Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) in the city.

Business Initiative Leading Development (BUILD), Ministry of Commerce (MoC) and International Trade Centre jointly organised the dialogue, moderated by BUILD chief executive officer Ferdaus Ara Begum. MoC senior secretary Md. Mofizul Islam was present as the chief guest.

In a PowerPoint presentation, BUILD gender consultant Mehruna Chowdhury said the trade license does not recognise e-commerce as a business category. Therefore, a section in this respect needs to be added for giving a legal framework of such businesses.

She said there is intellectual property policy that does not recognise e-commerce a business. Even, there is no provision for women entrepreneurs in the National Digital Commerce Policy-2018. "It (women entrepreneurs) needs to be included in the policies," she added.

Mehruna said that most of the women entrepreneurs have been operating their business from home. As the entrepreneurs do not maintain commercial addresses for their business, the commercial banks do not show interest to finance them.

The entrepreneurs were demanding co-working spaces like many other countries for accommodating the online traders, she said.

Speaking as the chief guest, MoC senior secretary Md. Mofizul Islam highlighted the importance of capacity building in the era of fourth industrial revolution.

"We don't have enough products in the stock. We've to innovate more so that we can expand our active presence in the cross boarder market," he said.

Giving example of Chinese e-commerce success, the government's senior secretary said the Chinese e-commerce entrepreneurs offer a wide  range of quality products at lower prices.

"We've to do the same. Don't think too much about profit margin. If you can create market base, you will sustainably grow even with low profit," he added.

Rezwanul Haque Jami, head of commercialisation (i-lab) and team lead of rural eCommerce under access to information programme, raised question about understanding e-commerce by the revenue board.

Because of the poor understanding, the e-commerce entrepreneurs in many cases are being subjected to multi-layer taxation, he said.

Dr. Mostafa Abid Khan, member (trade remedies) of Bangladesh Tariff Commission, said there are two forms of e-commerce businesses taking place - one is marketplace-based where traders can trade their products and another is inventory.

"Our online traders should understand which would be better for them," he said.

Talking about share acquisition by larger companies, he said the country needs to be well conscious about acquisition issue so that big companies do not eat up smaller ones and inject overseas goods here.

M Nawat Ashekin, head of e-commerce service of SSL Wireless, said some 15,000 to 25,000 trades are taking place online daily in Bangladesh, but top five global firms share 80 per cent of the trades.

"Hundreds of local companies are fighting for retaining the 20 per cent stake. This is our capacity, which needs to be enhanced further," he said.

Md. Abdul Kafi, chief executive officer of VAT solutions, said the tax rebate alone cannot help grow the business. "In fact, it largely depends on competitiveness. We've to compete with the global players. So, we've to enhance our capacity."

E-commerce is being considered one of the key business areas globally in terms of creating employment and generating profits in the era of information technology and the Bangladesh government is also paying serious attention to the online trading, according to the industry insiders.

They said the e-commerce market size here is estimated to be of Tk 18 billion, but it has the potentials to reach as high as Tk 70 billion.

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