Digital Commerce Act

Framing of the Digital Commerce Act has reportedly passed the drafting stage. The draft "Digital Commerce Act 2023" has been sent to different stakeholders by the commerce ministry and a committee has been formed to review it. Explaining the need for the law, the ministry is of the view that in the absence of any regulatory control to oversee and stop irregularities in the field of digital commerce, a legal framework is necessary.

The Act, according to the ministry, aims at facilitating expansion and maintaining discipline by 'preventing, suppressing and prosecuting fraudulent activities' in the sector. A Digital Commerce Authority is set to be established to this end. According to the draft, online platforms will be fined three times the value of goods and services sold if they fail to deliver them within the stipulated time. In addition, failure to pay such fines will result in a maximum of three months of imprisonment. The proposed law also makes it mandatory for online platforms to disclose accurate information about the description, size and measurement of goods and services in the digital marketplace.

Clearly, the government has been pressed into framing the law due to widespread scams centring around the e-commerce sector as some fraudulent platforms embezzled thousands of crores of taka from customers and merchants a couple of years ago. The problematic platforms reportedly include Evaly, Dhamaka, e-Orange, Aladiner Prodip, Boom Boom, Adyen Mart, Qcoom.com and Alesha Mart among others. Of these, the most talked about name is Evaly. In a report to the commerce ministry, this scam-hit platform revealed that it had owed more than Tk 2.058 billion to its merchants until July 15 last year.

There are mixed reactions from the stakeholders on the upcoming law. A large section of the e-commerce players has expressed displeasure regarding the proposed law, saying it would cause unnecessary intervention, even hassle, and that the existing legal framework is sufficient to ensure discipline, if the authorities are determined to stop foul-play.

Speaking from a broad perspective, there is no denying that electronic commerce has already proved its potential to radically alter economic activities and the social environment. It has left its mark on such large sectors as communications, finance and retail trade. It holds promises in areas such as education, health and government. The largest effects may be associated not with many of the impacts that draw the maximum attention (e.g., customised products, elimination of middlemen) with less visible but yet more pervasive routine business activities.

E-commerce has definitely changed the way business used to be conducted. Traditional intermediary functions are being replaced, new products and markets developed, and new and far closer relationships are created between business and consumers. The widespread adoption of e-commerce as a business platform is mainly believed to be due to its non-proprietary standards and the open nature of its functioning. A key reason why electronic commerce, especially the business-to-business segment, has grown so quickly is its significant impact on business costs and productivity. Moreover, many of the applications are quite simple. E-commerce is thus expected to result in productivity gains and growth and to be a source of many new products as well.

It is well known that during the peak pandemic period on-line shopping caused a huge watershed for households as well as trading communities, flourishing the scope of e-commerce in the country as elsewhere. The overall performance was found to be mostly satisfactory. However, as regards big purchases including those of machinery and equipment that required procurement from overseas manufacturers, there were serious complaints of non-performance. The victims were individual buyers as well as business entities.

In their response to the new law, most stakeholders agree that while there is the urgent need to stop malpractices in this fast developing marketplace, existing watchdogs of the country can take care of the problems including bringing the criminals to book. They are obviously not comfortable with a new state agency breathing down their necks all the time. They also opine that the emergence of digital marketplace in the country was more than just a new business model but a need-based novelty that grew up backed by their goodwill and consumers' trust. So any attempt from any unscrupulous quarter has to be reined in iron-handedly.

The question is if the existing system is capable of handling the malpractices? The authorities will argue that since the mechanism of e-commerce operations is internet-based, monitoring the activities and detecting wrongdoings, if any, will need a digitised framework as well as technical skill. Going through the reactions of the government and the e-platforms to the upcoming Digital Commerce Act, it seems imperative that the latter be given scope for more interactions with the former before working out the modus operandi for rendering e-commerce operations in the country safe and secure.

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