Draft e-commerce bill is finally prepared, but has too many issues, stakeholders sayThese include lack of clarity, privacy concerns and accountability. Officials admit flaws and say suggestions are welcome for the final bill but there is no House to pass it into law.
Recently Manish Ghimire of Maharajgunj, Kathmandu bought a steam vaporiser from a well-known e-commerce platform for Rs1,500. He later found that the vaporiser he bought was available at Rs1,000 in the market.
“I purchased the vaporiser online because a discounted price was offered and I thought it was worth buying,” Ghimire told the Post. “I did not think of complaining because it was already late when I came to know about the actual price. I was also unaware of the policy on returning.”
In the absence of a law governing e-commerce, there have been customers like Ghimire who have complained of being cheated in terms of getting damaged products, getting a product other than the one they had ordered, price differentials, and the lack of return and refund policy of sellers.
But now the government has finally drafted the e-commerce bill and asked stakeholders for their feedback on it, a decade after muncha.com pioneered e-commerce in the country targeted at the Nepali diaspora who wanted to gift people in Nepal.
“We made the draft public so that we can get suggestions to improve the draft bill,” said Ganesh Prasad Pandey, joint-secretary at the Ministry of Industry, Commerce and Supplies. “After getting suggestions, we will make improvements in the draft accordingly.”
But, according to consumer rights activists and entrepreneurs, the government’s plan to introduce the law has come late and there are many problems with the draft bill.
“It’s already late to introduce e-commerce law in the country and whatever has been prepared has a lot of things lacking,” Prem Lal Maharjan, president of National Consumer Forum, told the Post.
According to him, there was the need for such a law as long as five years ago when online shopping started taking off in the country.
Industry insiders say, and government officials admit, that the e-commerce market has been growing manifold in the last few years due to a growing middle class, a surge in the number of internet users and smartphone users.
According to the latest management information system report of Nepal Telecommunications Authority, internet penetration in Nepal has reached 77.91 percent of the total population as of mid-October 2020.
According to Nepal Rastra Bank, 112,706 e-commerce transactions worth Rs8.2 billion were made through online payment using just debit and credit cards in Mangsir (mid-November to mid-December) alone.
Besides cards, payments are also made through payment gateways like ‘digital wallets’, and cheques and cash on delivery, according to the industry.
“It would have been better if the e-commerce law had been prepared earlier as that would not have caused misunderstanding and hassles in operation,” said Amun Thapa, chief executive officer of Sastodeal, one of the leading e-commerce platforms in the country that partners with Flipkart of India.
It lacks clarity on many issues like unnecessary service charges on the basis of weight of goods, quality assurance and service to customers, among other things, according to Maharjan.
E-commerce entrepreneurs too see a lot of holes in the draft bill.
“The draft bill needs lots of revision. Each topic needs to be discussed and defined properly so that the final law will be a good one,” said Kiran Timsina, co-founder of UG Cakes, which delivers cakes, and Urban Girl, a women’s online fashion store.
This revision seems to be necessary despite multiple discussions having been held while preparing it, according to Timsina.
“It seems to have been prepared in a rush although it is already late to introduce e-commerce law in the country,” he told the Post. “Policymakers seem to lack understanding regarding the e-commerce business model and the processes involved.”
According to Thapa of sastodeal.com, three significant points need to be clearly provisioned in final e-commerce law: precise definition of e-commerce, data privacy of customers and a way to formalise small informal e-retailers providing e-commerce service via social media.
“The suggestions that were provided while preparing the draft have not come out clearly,” Thapa told the Post. “Definitions on what constitutes e-commerce and its operating model like marketplace and inventory model or both are not clear.”
The draft bill defines e-commerce as selling and buying of goods and services through the internet or computer network or any other electronic system as well as commercial transaction, data transfer, the supply of goods and services, lease, hire purchase, exchange and professional and other services provided through an electronic medium.
The marketplace is defined as an inter-mediatory business that facilitates deals between the sellers and buyers through the network of the electronic medium and includes wholesalers, retailers, commercial agents, brokers and distributors that perform business through e-commerce.
But, there is a concern among consumer rights activists who say a lack of specific provisions in the law to address the roles and responsibilities of online marketplaces has meant that these companies are not accountable to anyone, despite making money as middlemen.
E-commerce insiders, on the other hand, say they cannot be held accountable and cannot take the responsibility of defective goods delivered or warranty and guarantee of goods if provided by the company as they act only as a marketplace.
According to the draft bill, the e-commerce company should clearly mention details of goods and services like final price including tax, details of goods like shape, manufactured date, brand, quantity, expiry date, and the date for warranty and guarantee if provided on goods and services.
If buyers want to return the goods found defective, the product should be exchanged or the money returned, according to the draft. And if the product and services have warranty and guarantee, then the e-commerce platform should offer it too.
The platform should be liable to manage the complaints and cannot step back saying that the company is not the manufacturer of goods and services and is a marketplace only.
The penalties are not clearly defined, according to Madhav Timilsina, a consumer rights activist.
There are also problems on who can be counted as inter-mediatory.
“There are people who have set up shop on social media,” said Thapa. “There is no mention of fines for anyone doing something like that.”
An e-commerce firm must be registered at the Department of Commerce, Supplies and Consumer Protection, as per the draft, but the requirements for registration are tough.
The e-commerce company should have a secure electronic equipment system with a secured socket layer, a small data file installed on a web server that allows for a secure connection between the server and a web browser for data privacy, but industry insiders say this may not be possible for smaller firms.
There have already been instances of data breaches in Nepal’s nascent e-commerce industry.
Foodmandu, an e-commerce company providing food delivery service, encountered a data breach in March last year. The company detected a cyber-attack by a hacker which resulted in unauthorised access to customer data.
If the buyers have to submit the personal details while buying goods and services, the firm should protect the details of the person and should not provide it to anyone for any purpose and the company also should not use it for any other purpose.
The issue of data privacy has been raised but it needs to be elaborated properly and criteria on it need to be set, according to Timsina.
“For instance, the use of data for transactional purposes such as sending marketing mail to buyers on customer’s permission can be sent or not is not clear,” he said.
But for Ghimire, who got duped with the vaporiser, the government’s efforts to bring the law come too late.
The government prepared a national strategy related to e-commerce development and use in Nepal in 2018.
But it was only during the budget announcement this fiscal year that prioritised the e-commerce business due to its growing demand during the lockdown.
Subsequently, the Department of Commerce, Supply and Consumer Protection prepared a preliminary draft on the e-Commerce bill and sent it to the Ministry of Industry, Commerce and Supplies at the end of June 2020.
Panday, the joint-secretary, admitted that there might be shortcomings while preparing the draft and that is why the ministry has made it public so that it can be improved upon.
But even if the feedback is incorporated and a bill finalised it is unclear when it will be passed into law.
“The House has been dissolved. The final draft will not go to the House unless the new House is formed after the next election,” said Urmila KC, spokesperson for the Ministry of Industry, Commerce and Supplies.