Making the most of our e-commerce sector
The e-commerce sector of Bangladesh witnessed significant growth since the outbreak of Covid-19 in March 2020. This growth, however, was not to last long. From mid-2021, the sector was mired in controversy surrounding scams by multiple actors—including Evaly, Eorange, Alesha Mart, and Dhamaka. These e-commerce players offered unsustainable and unrealistic discounts and cashback offers on advance payment to lure customers, and then failed to deliver the products or return the customers' money, or even pay the merchants.
As a result, customer confidence in the overall e-commerce sector has taken a hit, leading to a substantial decline in transactions. A local daily, citing a Bangladesh Bank e-commerce transactions report, revealed that transactions in October 2021 witnessed a 41.53 percent fall—to Tk 743 crore—in comparison to the transaction in June 2021, when it was Tk 1,277.4 crore.
In addition, the authorities' failure to stop the misadventures of the unscrupulous players on time (despite these having been reported multiple times since the end of 2020), lack of a concrete policy framework to regulate the sector, and the authorities' inability to trace the customers' money and ensure refund have also added to the customers' fears, many of whom now feel uncomfortable making online purchase.
While these scams still remain a major concern for the authorities, they must now also focus on taking preventive and curative measures to bring the e-commerce sector back on the growth trajectory, which, according to a November 2020 forecast, was anticipated to be worth USD 3 billion by 2023.
One of the first steps in this regard should be to track the money trail to be able to refund the affected parties. The financial regulators, especially Bangladesh Financial Intelligence Unit (BFIU), should take a closer look at the money laundering aspect.
It has recently been reported that the managing director of Dhamaka had transferred Tk 84 crore to his personal account from advance payments the platform had received from the customers.
SMD Jasim Uddin Chishti, Dhamaka's managing director, also lent Tk 25 crore to other companies he owns, in addition to misappropriating Tk 20 crore, in the name of software procurement. The company, now having only Tk 45.28 lakh in its account, had taken Tk 736 crore as advance payment from its customers, and paid only Tk 557 crore to the merchants. The company now owes Tk 480 crore to its customers and the merchants. Evaly, Eorange, and others have similarly conned their customers and merchants and owe them crores of taka.
Now the question is: Where is the missing money? Is the money still within the country? Where in the system are the loopholes, because these multiple cases could not have been the result of chance or coincidence? Why could the regulatory and law enforcement bodies not identify the problems earlier? Why did the authorities not take preventive measures before?
More importantly, who are the primary and secondary beneficiaries of these scams? By beneficiaries, I mean not only Dhamaka's SMD Jasim Uddin Chishti, or Evaly CEO Mohammad Rassel, and his wife and company chairman, Shamima Nasrin, but the masterminds who moved the pawns from behind the curtains—if there are any—and every single individual, body or syndicate who have benefitted from these scams—whoever they may be or however politically well-connected they are.
These are questions that need to be thoroughly scrutinised by unbiased relevant agencies, because in a corrupt system that enables such scams to go on for months, not a single page should remain unturned in order to identify the rotten elements that are eating at the core of the system, making it dysfunctional and ineffective. The answer to these questions would not only help in tracing the money trail, but would also help in formulating a comprehensive policy framework that would safeguard the interests of not only the customers or the e-commerce players, but the sector overall.
With the pandemic set to stay for the long haul, e-commerce has become one of the preferred options for customers worldwide. And with mobile financial services and banks facilitating online, cashless payments, e-commerce has become a more convenient marketplace. We need to utilise these opportunities.
For now, the commerce ministry has issued the Digital Commerce Operation Guidelines, 2021, pursuant to the National Digital Commerce Policy, 2018 (as amended in 2020), in order to ensure transparency and accountability in the sector, among other objectives. And while the guidelines are comprehensive in nature, its effectiveness will only depend on how well these are being enforced. If the regulators and law enforcers apply the guidelines selectively, it will be a self-defeating act and will only be detrimental to the growth of the e-commerce sector.
"While the Digital Commerce Operation Guidelines, 2021 is a welcome move in the face of the crisis we have been through, we must keep in mind that it is only a stop-gap measure. In order to truly create a conducive environment for long-term growth and much-needed sustainability of the e-commerce industry, the government, in alignment with its high profile aspiration of creating a Digital Bangladesh, must focus on formulating a comprehensive policy framework, which will also define the roles and responsibilities of each actor involved, especially to ensure proper implementation," suggested Dr Iftekharuzzaman, executive director of Transparency International, Bangladesh (TIB) while talking to this writer. He added that it is also important that relevant stakeholders are involved in developing such a policy.
As we move forward in 2022, with the aim to create a bigger scope for the e-commerce sector, we need to take learnings from the setbacks of 2021, and reset the system to make the most of what this sector has to offer.
Tasneem Tayeb is a columnist for The Daily Star. Her Twitter handle is @tasneem_tayeb