-Sudeekshya Dwa
Ms. Dwa is a research intern at Samriddhi Foundation, an economic policy think tank based in Kathmandu. The views expressed in this article are the author’s own and do not represent the views of the organization. Author can be reached at Sudeekshya Dwa [email protected]
In recent times, there has been a notable increase in the use of e-commerce in Nepal due to which an E-commerce bill was introduced. The bill consists of a provision that unregistered goods and services cannot be bought and sold at the individual level through social networks such as Facebook, TikTok, and Instagram. The e-commerce market in Nepal growing by 12.4% each year leads both customers and businesses to ponder whether such bills will be beneficial to both parties in the long run.
For small businesses, the bill if authenticated into law may pose a major problem. In Nepal, it is estimated there are 923,027 businesses. Approximately 90 percent of those are MSMEs, accounting for 45 percent of all jobs. And about 12 percent are small and medium businesses, accounting for 40 percent of employment. Large businesses on the other hand that are already acting as intermediaries gain huge benefits but for example, a clothing business generating a majority of its revenue from TikTok, needing to register themselves on a government portal instead of being allowed to register their social media itself seems like a hassle. This seems to simply be adding another burden for such small businesses who are already struggling to make ends meet.
According to MP Sumana Shrestha, if the main motive of the bill is to protect the consumers from scammers, the bill may not be the best way to go about it since the bill does not specify neither the trust indicators nor how either consumers or businesses should exist in an online space. All this info leads to the question, are such bills actually necessary?
The protection of the consumers is also said to be one of the major reasons for the bill’s existence. However, amending the Consumer Protection Act 2075, such as the Electronic Transaction Act 2063 and Evidence Act 2031, could eliminate the need for additional directorates. Additionally, rather than encouraging such red tape, the Company Act 2063 can also be amended to make the process of registration easier for businesses which directly aids in the development of e-commerce practices in Nepal.
The price for setting up an e-commerce platform as mandated by the bill ranges anywhere from Rs. 1,00,000 to Rs. 5,00,000. The revenue generated by enterprises having a workforce of 9 people in Bagmati province is Rs. 4605 million and in Karnali province is Rs. 421 million. Knowing that the price of creating a website is similar across Nepal, the question of whether it is fair to pass the same bill for all the businesses in the different provinces comes to mind. The fine to be paid if a business is caught not adhering to this is a mere Rs. 10,000 to Rs. 50,000 which is still a large sum of money for such small businesses. This might lead the businesses to pay the fine rather than take the formal route and register their business. This shift in liability from the vendor to the platform may result in increased compliance costs and a reluctance on the part of businesses to offer a wide variety of products. The bill also stipulates that e-commerce enterprises must submit an online application for listing on the government-established “e-commerce portal.” Existing e-commerce enterprises must submit a listing application within three months of the act’s effective date and the failure to get listed within the allotted time frame may result in penalties or restrictions on conducting business, as well as fines. This causes us to question whether our country’s lawmakers are looking out for the consumers of such businesses, or abusing their discretionary power.