The government is introducing e-commerce regulations to supervise the online marketplace which is growing steadily despite a late start.

Industry insiders and government officials said that the e-commerce market would grow manifold due to a swelling middle class and a surge in the number of internet users. The Nepal Telecommunications Authority claimed that internet penetration in Nepal had reached 63 percent of the total population as of 2017 following a smartphone boom.

Another reason behind the burgeoning e-commerce market is the large number of Nepalis living abroad—for work, study and business—where they gain exposure to international brands. When they return home, they prefer to purchase international products online.

Toya Narayan Gyawali, joint secretary of the Ministry of Industry, Commerce and Supplies, told the Post that the draft regulations would be given final shape within a month. “After the draft is finalized, it will be submitted to the Cabinet for its approval to implement it.”

The absence of regulations has led to an increasing number of consumer complaints. One of the key features of the regulation would be consumer protection. E-tailers and marketplaces will be made liable for fraudulent sales and substandard or defective products, Gyawali said. Besides checking fraud and business misconduct, the regulations will properly manage electronic transactions, regulate foreign currency transactions and promote Nepali products through online stores on the global market, said Gyawali.

There are no exact statistics of the size of the e-commerce business in Nepal, but market insiders estimate annual turnover to be in the neighbourhood of $25 million.

They said that the number of online buyers had been increasing rapidly in recent years, particularly in the Kathmandu Valley, as they can buy a wide range of national and international products with a few clicks of the mouse. Normally, it’s a cash on delivery business model that reduces hassles and saves time for customers.  

The government doesn’t have the exact date for online marketplaces. According to a government official, there are a large number of unregistered online shops. Daraz, Sastodeal, eSewaPasal, Metro Tarkari, Bhatbhateni Online, Mero Kirana, Foodmario, Foodmandu and Urban Girl are some of the popular online stores in the country.

Several rounds of discussions have been conducted with the private sector to prepare the draft, said Gyawali. The proposed regulation focuses on promoting e-commerce in Nepal by easing the process of doing online business.

“Our neighbours India and China have made great strides in the development of e-commerce, and Nepal also needs to move ahead by improving services,” he said.

India’s e-commerce market is expected to grow more than fourfold to $150 billion by 2022, fuelled by rising incomes and a surge in internet users, according to a report by software industry lobby group Nasscom and consulting firm PwC India. The e-commerce market was valued at $36 billion in 2017.

China’s online retail market is expected to hit $1.8 trillion in 2022, buoyed by local tech titans Alibaba and JD.com, according to a report by Forrester.

“E-commerce has massive growth potential, so proper regulations are necessary for the development of this sector,” said Gyawali. Nepal lags behind in e-commerce because of a poor information and technology infrastructure, he said. “With regard to IT friendly people, Nepal falls in the average category among the least

developed countries.”

Nawaraj Dhakal, spokesperson for the Ministry of Information and Communications Technology, said that the new regulations would contains provisions for electronic transaction management and international transactions in foreign currency. The government doesn’t have a separate mechanism to monitor online stores.