The government has backtracked on its policy and will now allow foreign companies to own 100 stakes in local e-commerce ventures.
The cabinet had approved a digital commerce policy on July 16 which stipulated that the foreign investment could not be over 49 percent.
Bangladesh Investment Development Authority, the commerce ministry and the ICT division were given the responsibility to materialise the policy, which was supported by local entrepreneurs and business houses.
However, a good number of foreign entities raised their concerns, saying it contradicted the national investment policy.
Taking that concern into consideration, the ICT division recommended that the commerce ministry amend the policy.
The national investment policy gave freedom to foreign investors to own 100 percent of any business entity of Bangladesh, said Mustafa Jabbar, telecom and ICT minister.
The digital commerce policy contradicts it, for which they want to amend it, he said.
“The national investment policy is the mother strategy for any commercial issue and we cannot let another policy come in conflict with it, as no other could be the final say when it came to investment issues,” said Jabbar.
The telecom minister said the e-commerce segment could not be left out when the government was allowing foreign companies to own 100 percent stakes in other sectors.
Industry insiders, however, are against the change.
Related trade organisations had recently raised their concerns after attending a joint meeting of the Bangladesh Association of Software and Information Services (BASIS), Bangladesh Computer Samity, e-Commerce Association of Bangladesh (e-CAB) and Bangladesh Association of Call Center and Outsourcing.
They said they had welcomed the government's initial decision and that the new initiative would go against them.
“If the government gives 100 percent access to foreign investors, it will badly hurt the industry at home,” said AKM Fahim Mashroor, founder of ajkerdeal.com, one of the leading local e-commerce ventures.
There are lots of examples in telecom and ICT where foreign investors have been restricted, he said. “So how could it be a problem for the digital commerce policy?”
“If the government wants to amend the policy and increase foreign investment, it should only allow venture capital to invest more than 50 percent,” he added.
“If there is full access, we, the local players, cannot win the battle with companies like Uber or Alibaba,” said Mashroor, also a former president of BASIS.
BASIS is also not in favour of the change but it is not willing to make any comment right at this moment.
Syed Almas Kabir, president of BASIS, said they would organise a meeting with other trade bodies, especially e-CAB, next week and then would speak out officially.
A top BASIS official said the government should not accept any pressure and allow companies who only plan on selling their respective country's products by establishing an e-commerce channel here.
Muhammad Abdul Wahed Tomal, general secretary of e-CAB, said any such amendment would go against the local industry and give an advantage to foreign investors.