EDEN BUILDING TO STOCK EXCHANGE Published: 12:43 AM, 03 June 2018
Encouraging foreign investment in e-commerce M S Siddiqui Electronic Commerce (e-commerce) is a very recent phenomenon developed in the late 1990s. OECD (2011) defined e-commerce as "the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders." There are five generally accepted types of e-commerce: business to business (b2b), business to consumer (b2c), consumer to business (c2b), consumer to consumer (c2c), and business to government (b2g). Bangladesh is on its quest to fast becoming a digital nation. The 'Vision 2021' aims at developing Bangladesh into a resourceful and modern and digital economy through efficient use of information and communication technology (ICT). It is very much in line with global shifting towards digital economy will keep continuing according to the emarketer.com. E-commerce retail sales worldwide will be 2.5 Trillion USD by the year 2018.The era of ICT technology have consequence of development of e-commerce. E-commerce in Bangladesh is in nascent condition and is presumed around Taka 2,000 crore in 2016-2017 fiscal year and created employment by 50,000 people. According to a study, Bangladesh will experience around 72 percent growth a year in the e-commerce industry in the coming years. There is an assumption of losing jobs with introduction of e-commerce and the business will be taken over by global giants in ICT sector. A survey in France shows that for every lost job due to operational efficient nature of e-commerce, 2.4 new jobs are created. E-commerce induces the productivity development of firms through higher competition and innovation. Developing countries has much better opportunities to gain the benefit from internet technologies due to efficient young generation with excess to technology. An effective, competitive national and international trade logistics environment is vital for achieving e-commerce success. E-commerce has many challenges due continuous technological change and it should be evolved every time. According to the UNCTAD, there are eight pillars of a successful ecommerce policy framework- ICT Infrastructure, E-Payment, E-Commerce Platform, Skill Development, Awareness Raising Program, E-Security, E-Procurement and Trade and Logistics facilitation. Since Bangladesh entrepreneurs are at start-up stage. They have technical and financial difficulties. Banking sector is not ready to finance such sector. Generally banking sector is reluctant to provide finance to companies with less than 3 to 5 years experiences backed up by physical asset. Ecommerce companies are unique in this nature and they need finance in starting years of the initiatives and all most all the assets are logical or intellectual assets.
Another challenge is ever fast changing technology and environment. IT demands to understand market variables, market changing components, technology feasibility, product feasibility, sector wise growth, exploring market opportunities and threats, create market analytics etc. Bangladesh needs continuous research and development to cope with fast change technology and market culture. To promote and continuous develop; a national e-commerce research center is a must. As technology changes business-to-consumer transactions, new opportunities for both sides of the sphere are emerging as technology helps entrepreneurs make stronger connections with consumers and build their brands faster. Knowledge of Social media, mobile, and cloud technology are enhancing entrepreneurs' ability to get businesses off the ground faster. A meticulously designed delivery logistics equipped with technological innovation to provide a new level of consumer experience. E-commerce is trading in products or services conducted via computer networks such as the Internet. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. The sector needs update technology. It has been reported that at least 150 start-up businesses in Bangladesh that are vying to receive investment required for expansion of business and acquiring technology despite having formidable goods and services to offer in the local and overseas market. The technology transfer is possible through joint venture and entry of e-commerce companies from other countries. Bangladesh's IT sector is increasingly becoming an attraction for global companies. Recently, there is some encouraging news of overseas investment. bKash is presently valued at $640 million with overseas investment from Motion LLC, International Finance Corporation, and Bill & Melinda Gates Foundation. It is the leading mobile financial services (MFS) provider of the country, and Ant Financial Services Group, operator of China-based Alipay, announced a strategic partnership on April 26. In less than three years since its inception, shares of bKash were bought by World Bank's financial concern IFC and American private organisation Bill & Melinda Gates Foundation in 2013 and 2014 respectively. bKash continued on its course to be named in the Fortune Change The World 2017 list, a recognition awarded to companies that have a positive social impact through their core business activities. There is no doubt that Ant Financial's partnership will strengthen the company further. Alipay have purchased of 20 per cent of bKash's stakes by the latter thus increasing bKash's financial and technological capabilities. Alipay is the online payment platform of Alibaba Group. After overtaking PayPal as the world's largest mobile payment platform in 2013, Alipay had more than 54 per cent share of China's US $ 5.5 trillion mobile payment market by the fourth quarter of 2016. The company's local entrepreneurs will retain 51 per cent share of bKash, Ant Financial, Alipay's parent company, will purchase from 49 per cent shares of bKash owned by Money in Motion LLC, International Finance Corporation, and Bill & Melinda Gates Foundation. The deal also entitles Ant Financial to subscribe to a further 10 per cent share of the company. Another motorbike-taxi ridesharing entity Pathao announced that it raised a "pre-series B" investment, a round of capital venture financing, led by the $4.5 billion-valued Indonesian ridesharing start-up Go-Jek. According to technological news journal TechCrunch, this investment
may be more than US$ 10 million. Earlier, Go-Jek had invested $2.0 million in Pathao's "Series A" investment in 2017. Ant Financial and Go-Jek have studied the potential of the two Bangladeshi companies before taking the decision of investing in them.The new investor is leading this deal along with participation from existing backers Openspace Ventures, Osiris Group and Battery Road Digital Holdings. Bdjobs.com, the country's leading online employment marketplace, has sold its 25 percent stake to the Australian number one job portal, SEEK International, at Taka 38.5 crore. Bdjobs has 90 percent market share in Bangladesh. SEEK is operating in twelve countries including Australia, New Zealand, China, Brazil, Mexico, West Africa, Nigeria, Hong Kong, Indonesia, the Philippines, Singapore and Thailand. Daraz, founded in 2012, was purchased from Rocket Internet, a Berlin-based incubator of online startups.Its key markets are Pakistan, Bangladesh, Sri Lanka, Myanmar and Nepal, claiming 30,000 sellers and 500 brands on its platform, according to a statement by Alibaba. Products available on Daraz include consumer electronics, household goods, beauty, fashion, sports equipment and groceries, a report said. The remarkable investment started last year. The global IT firm Accenture bought 51 percent stake in GPIT, an IT wing of the country's top mobile operator Grameenphone, at $10 million. There are some more investment by large foreign companies like Carmudi, foodpanda and Kaymu. "Carmudi, foodpanda and Kaymu are portfolio companies of Europe's largest technology firm. The recent foreign investment in existing companies such as Daraz, Pathao, bdjobs, bKash and Pathao should give confidence to local investors, government and financial institutions to encourage start-ups in the country, Time has come for us to change the traditional mindset towards small and start-up business ventures. The foreign direct investment in Bangladesh has been reduced to Taka 225 crore in 2017 from Taka233 crore in 2016. But the ODI in e-commerce is remarkable. Again the Asia is the most promising market for e-commerce. By 2018, they estimated that 42 percent of global online buyers will come from Asia and Oceania, which was only around 15 percent in 2013 . Bangladesh can get ready with technology and investment backed by ICT educated young generation to take the benefit from the emerging Asian market. The writer is a legal economist. mssiddiqui2035@gmail.com