When we started Sastodeal.com back in 2011, there were no government policies to regulate ecommerce. I was 24, ambitious and driven to start what we had planned with or without the government’s green flag. Fast forward eight years, in 2019, the government of Nepal has just started to draft e-commerce policies. If we had waited for the government to tell us what to do and how to operate back in 2011, we would still be waiting.

Granted, the government has millions of on-going activities to take care of. For them, startups like Sastodeal are simply out-of-the-bush surprises. But rather than indulging in a game of ‘hide-and-seek’, I wish they would just enjoy this game and not feel threatened. Or, at the very least, anticipate startups so they are better prepared.

The recent case of Tootle and Pathao versus the Government of Nepal is a mind-boggling one. The government is right in its own way; red vehicle number plates are for personal use and black for commercial use. The thousands of riders in their red number plates giving and accepting rides in return for payment are clearly violating the law. While it is easy for the public to demand the government to ‘change laws for innovation to happen’, it is equally, if not more, difficult for the government to do so.

The government works for the greater good of the public and cannot favour a specific sector in the name of innovation. In this context, the government is posing some important questions to ride-hailing companies including concerns about accident liabilities, tax payment, insurance, price determination, and issues of safety. There are hundreds of unanswered questions that, at the end of the day, are not just for the government or for the company—but essentially, are in the interests of all citizens.

But at the same time, companies like Tootle, Pathao, Sastodeal and many emerging startups are not at all trying to hide from these questions. In fact, startups want the government to shift their attention towards these unaddressed gaps; they want these regulations to be clearer so that everyone is aware of how things work.

Heralded as one of the best innovations of our time, platforms like Uber and AirBnB, which are valued at billions of dollars,are still restricted in many parts of the world—including one of the most advanced cities like New York. Clearly, cluelessness about how to approach innovative startups is a phenomena experienced by even the world’s leadings governments.

I was recently summoned at the Ministry of Industry, Supply & Commerce and they had genuine questions about e-commerce; Questions about liability when there is a defect in a product, questions regarding customers’ data and privacy, inquiries pertaining to fraud cases, payment, returns, market rate, and so on. The government is asking all the right questions. It just took them eight years.

Clearly, the government’s’ role is best served when it becomes a catalyst for innovation. Yet, at many junctures, it has become a blockade; killing many startups and discouraging the mass to try out anything new.

Ajay Shrestha, Chairman and Managing Director at iCapital recently recalled how the Nepal government killed his promising startup: ‘We disrupted the capital market industry by introducing the first ever web platform in Nepal (easydemat.com.np), where investors could check and monitor their shares online...in a year, our site would be visited regularly by one fourth of the Nepali population…[But] after about six months, we received a letter from the government saying our website was illegal and it should be closed immediately citing data privacy concerns. For the next few months, we visited a lot of power centers and did hundreds of meetings but couldn’t save our startup. One year later, the government launched a similar site called ‘meroshare’, where all Nepali people now go to check their stock market holdings. Although our startup died, our idea still lives on stronger than before. We moved on to create better and bigger ventures based on this experience.’

Shrestha’s experience with the government bewilders startup entrepreneurs. Should entrepreneurs wait for the government to have clear policies and then execute startups or should they just go ahead without policies like I did with sastodeal.com?

Another startup category, peer-to-peer lending (P2P) is gaining momentum in China and India and is likely to become popular in Nepal within a decade. Startups in P2P can disrupt the industry and have positive impact on the economy or it can also be devastating. Just recently in China, “Yoglibao,” a P2P lending company, disappeared after amassing  $1.1 billion in transactions. The platform had millions of users, many of whom had put up their life-savings in the company to make small gains. All that was lost, causing the nation to panic. Had the government regulated this sector more closely, this wouldn’t have happened. Therefore, no denying, government policies are there to protect citizens.

I am optimistic about our government’s’ intention towards startups. It is easy for government officials not to take risks, stay in their comfort zones and let things operate as they did for decades. But I do not find that to be the case today.

I find our government to be supporters of new ideas, curious about new technologies, open for feedback and comments, and positive for change. At their level, it just takes time for them to understand, analyse, research, lobby and implement new policies. Startups and governments should both work together at expediting this process: the government can start by anticipating startups and new ideas, and startups can do more to educate the government at every phase of their journeys. The relationship shouldn’t be viewed in terms of a binaries or dichotomies; for genuine progress, we must move beyond the ‘startups versus the government’ frame of thinking. Startups and government are similar to the clichéd ‘chicken and egg’ story. While the government prefers policies before actions, most startups will have to jump in to action before the policies.

- Thapa is the founder of Sastodeal.