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Foreign e-commerce entities to get conditional entry

Relevant policy makes formation of JV with local firms mandatory

Mehdi Musharraf Bhuiyan | April 21, 2018 00:00:00

Foreign e-commerce ventures are unlikely to be allowed to operate in Bangladesh without forming joint venture (JV) with local firms, as per the national e-commerce policy.

The policy is now at the final stage of formulation.

The stakeholders concerned said the provision is incorporated to protect the interest of numerous local e-commerce entities that have flourished in the country in recent years.

Information and Communication Technology (ICT) Division has formulated the policy in collaboration with the relevant trade-bodies and the government entities, and it is now waiting to be sent to the cabinet for final approval.

"We welcome investment from foreign e-commerce ventures, but it should come in the form of joint venture with local e-commerce firms," said an ICT Division high official, who has been directly involved with the policy formulation.

"Such provision is aimed at protecting and prioritising the interest of the local e-commerce firms," said the official, prefers not to be named.

Earlier, ICT Division shared a draft version of the e-commerce policy on its website for receiving feedback from the stakeholders concerned.

"We have already come up with a final draft of the policy with feedback from the stakeholders. Now it is ready to be sent to the cabinet for final approval," the ICT Division official said.

Although still at a nascent stage, e-commerce business has boomed in the country during the last one decade after Bangladesh Bank allowed online payment here in 2009.

Since then, numerous e-commerce sites have started doing business in Bangladesh, a few big names among which are entirely foreign-owned.

Sector insiders, however, observed that the provision of forming joint ventures with local firms may be applicable only for the foreign entities, which are purely e-commerce ventures.

"For example, a foreign consumer goods company, having its own e-commerce site for selling own products, would not come under the purview of this provision," said Abdul Wahed Tomal, general secretary of e-Commerce Association of Bangladesh (e-CAB), the leading trade-body of the country's e-commerce ventures.

The same clause in the aforementioned policy has also said the existing rules and regulations regarding foreign investment would be applicable for e-commerce business as well.

Razib Ahmed, former president of e-CAB, said: "Currently, there is no specific law or regulation in the country regarding e-commerce. However, once the policy is finalised, it would pave the way for formulating necessary laws and regulations, which would clarify these foreign investment or joint venture-related issues in detail."

"E-commerce is a highly potential sector in Bangladesh, and it is necessary to protect the interest of the local e-commerce entities to encourage more domestic entrepreneurship and investment in this field," he added.

Apart from prioritising local entities, the policy has also called for introducing 'escrow service' for ensuring greater security in e-commerce transactions in the country.

As with traditional escrow, internet escrow works by placing money in the control of an independent and licensed third party in order to protect both the buyer and the seller in a transaction.

When both the parties verify that the transaction has been completed as per the set terms, the money is released.

If at any point there is a dispute between the parties in the transaction, the process moves to dispute resolution. The outcome of the dispute resolution process decides what happens to the money in escrow.

"The provision of escrow service has been included in the policy to ensure that all the e-commerce transactions are safe and secured while the interest of the consumers is protected," the concerned ICT Division official said.

The draft policy has also called for maintaining net-neutrality of mobile operators when it comes to e-commerce.

"This means that the mobile operators will not be allowed to provide any particular technological advantage, like -- additional bandwidth, to any specific e-commerce site," said the e-CAB general secretary.

In addition, the policy also has a provision for establishment of a central cell under the relevant ministry for implementation of the policy guidelines and for ensuring necessary coordination among the government agencies concerned.

At the same time, it has also suggested forming an advisory committee, comprising representatives from both public and private sectors, for conducting necessary research on the e-commerce sector, identifying its possible challenges, and finding possible solutions to overcome those challenges.

The policy has also stipulated that all the relevant payment methods, like - mobile banking, prepaid cards and credit cards, need to be connected with national payment switch to ensure real-time fund transfer through e-commerce sites.

"It is important that the banks in the country comply with payment card industry data security standard to be e-commerce ready," said an expert.

In addition, the policy has also stipulated that all the e-commerce sites have to display detailed specifications of their products as well as the return, refund or replacement policies of those products on their websites.

Simultaneously, the policy has called for updating the existing legal framework to protect the patent, trademark and copyright of the products sold through the e-commerce sites, while also highlighting formulation of a 'code of conduct' for the consumers.

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