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In the guise of rules, let’s not kill the golden goose

The e-commerce sector needs to be regulated in a way that does not hamper growth
Sayed Arafat Zubayer and Md Gias Uddin Khan
Local e-commerce platforms have experienced exponential growth in recent years due to improved living standards and changing shopping behaviour. The fast rate of internet adoption, improvement in logistics and communications, and the rise of online banking and mobile financial services have played crucial roles in this trend. The tech-adaptable younger generation (over 50 percent of the population are under 35 years) and the growth of the middle and affluent classes are also contributing factors. While the Covid-19 pandemic has had massive repercussions on most other businesses, it has helped the e-commerce sector expand dramatically. According to the e-Commerce Association of Bangladesh (eCAB) and industry insiders, sales on e-commerce platforms rose by about 70 percent in 2020, and the industry’s market size stood at nearly USD 2 billion in August 2020, as opposed to USD 654 million in 2016.
However, the steady growth of e-commerce platforms has also brought with it numerous complaints and accusations of irregularities. According to several law enforcement agencies, between January 2016 and August 2021, about 20,000 e-commerce-related complaints had been lodged with the Directorate of National Consumer Rights Protection. The most common complaint is of the products not delivered on time, even after the payments have been cleared. While these complaints have tarnished the e-commerce sector’s progress, it has also led to questions on the role and effectiveness of the relevant regulatory bodies. There have been concerns over the business model, transparency, and operational conduct of various e-commerce companies for quite some time, but there has also been a total absence of a proactive role among the regulators of this industry.
The usual charade of attempting to conceal the mistakes made by the authorities concerned, which is commonly observed in most such cases, is now being witnessed again after various controversies related to the e-commerce sector came to the surface. Instead of acknowledging their faults, the regulators are busy pointing out the flaws in the existing laws and system, and even shifting the blame onto the victimised customers and the media houses that previously promoted these platforms. Undoubtedly, gullible consumers and media houses do bear a certain responsibility for falling for the recent scams. However, the authorities cannot deny liability for their mismanagement, as well as the complete lack of collaboration among regulatory agencies, which heavily contributed to this state of affairs.
It is incomprehensible that a sector, which is predicted to achieve a market size of a whopping USD 3 billion by 2023, has been operating without any specific operating guidelines for such a long time. Although a digital trade policy was enacted in 2018, it did not have clear guidelines for e-commerce sites. Last year, when complaints of misconduct and consumer rights violations started to emerge against numerous companies, this absence of proper e-commerce guidelines sparked much debate. In July 2021, the authorities finally issued the Digital Commerce Operation Guidelines, as well as numerous additional rules, in an attempt to stabilise the sector. The guidelines provide proper instructions for the delivery, pricing, and showcasing of products. Following these new directives, the Bangladesh Bank has already started applying the escrow service, where it acts as a third party by receiving the payment against the transaction and transferring it to the selling party after the delivery of the product. However, this service has also been blamed for delays in clearing the payments due to the manual method of verifying receipts. Nevertheless, the introduction of these operating guidelines has, to a certain extent, brought the mismanaged e-commerce sector under some control. But the damage has already been done.
After the embezzlement and irregularities of various e-commerce sites came to light, numerous cases were filed by aggrieved customers demanding reimbursement. The authorities are now carrying out investigations related to suspicious transactions, and have formed a 16-member panel to make recommendations that will help to establish a properly regulated e-commerce sector.
While a well-regulated e-commerce sector is definitely the need of the hour, we must also be careful so that the regulations do not have the unintended effect of hampering growth. Standing on the brink of LDC graduation with the possibility of reaping demographic dividends, there are still a number of issues plaguing the country, of which unemployment is a core concern. The e-commerce sector has the potential to create a significant number of jobs to overcome this challenge. According to eCAB, 100,000 new jobs were created in the e-commerce sector during the pandemic, and within the next three to four years, there will be 500,000 jobs in this sector. Many young entrepreneurs are also becoming self-reliant through trading their products on social media platforms like Facebook (there are around 100,000 Facebook-based digital shops). These numbers are likely to continue to increase.
The recent turmoil in the e-commerce sector was a long time coming. Many experts had been making predictions about such consequences and had issued warnings, most of which were ignored. As a result, the accused companies continued to exploit loopholes in the system, while the regulatory authorities failed to take timely actions. Now, the confidence of consumers in e-commerce companies is shaken. Regaining this confidence should be the topmost priority, since the sector cannot function without it. There is no point in passing new rules or issuing guidelines if they are not going to be implemented. For this, cooperation among the relevant bodies, such as the Ministry of Commerce, Bangladesh Bank, eCAB and the law enforcement agencies, is mandatory. In addition, the authorities need to focus on faster clearance of payments made through escrow services by incorporating advanced tools to check invoices.
Finally, consumers also need to be more cautious when offered unrealistic lucrative deals by dodgy e-commerce companies. With collective efforts from all stakeholders, we can ensure that the prospects of this burgeoning sector, and the gains that it has made so far, do not simply vanish.
Sayed Arafat Zubayer and Md Gias Uddin Khan are student and assistant professor, respectively, at the Department of Economics in Shahjalal University of Science and Technology (SUST), Sylhet.
Illustration: Collected