Through a robust e-commerce legislation, Nepal can confidently embark on a digital future, echoing the dynamic spirit of the global e-commerce landscape.

The buzz about the E-commerce Bill is increasing day by day since the bill was tabled in parliament for deliberation. Though the buzz started back in 2021, the bill remained stagnant due to political changes in Nepal.

Some major features of this bill are:

1.      Setting up a platform: The bill has mandated setting up an e-commerce platform in order to operate business in Nepal. The e-commerce business can operate via their own platforms or through intermediaries.

2.      Mandatory listing of the platform: The bill further requires listing of the platform in the e-commerce platform as established by the Department of Commerce, Supplies and Consumer Protection.

3.   Obligations of seller/intermediaries: The bill has a provision for the obligation of the seller/intermediaries including but not limited to disclosure of details of the products/services, final selling price (including any taxes), methods of payments, guarantee or warranty and time period for such details etc.

The preamble of the bill provides that the intent of the bill is to regulate the e-commerce business and make it trustworthy. However, a different law to achieve this objective is still a debate whose discussion is a must as we already have a Consumer Protection Act which has clearly provided for the circumstances where any product can be returned and in what circumstances a refund or replacement can be made.

E-commerce simply is an act of buying or selling goods and services online. However, one of the fundamental principles that must be fulfilled by any transaction to be considered as e-commerce business is that the transaction must be completed through an automated computer network, meaning that there should be less or no human intervention. Further, such automated transactions should ensure that any person can sell or purchase goods or services without human intervention; however, the method of payment and delivery may be conducted offline too.

However, the bill has not provided such a definition as such and includes all services provided online as e-commerce. It is a notable thing that businesses like auditing/consultations etc. may not fall under the purview of e-commerce merely because of providing such services online. This is because these services require maximum human intervention (numerous exchanges of emails between clients and consultants) which are merely automated.

Further, there are various existing models in Nepal which have been providing services in various ways through the internet and do not fall under any of the above categories. For instance, Hamrobazar is a kind of e-commerce website where individuals can consummate the transaction individually and Hamrobazar does not take any amount/fee either from the buyer or the seller. The seller just uploads its contact details and products which it desires to sell and the buyer directly contacts the seller without undergoing any registration in the platform.

The bill has mandated listing of the e-commerce business in a portal to be prescribed by the Department. This has created an additional compliance burden to e-commerce platforms. As there are already several existing compliance requirements (for instance: company registration at the Office of Company Registrar, Industry Registration at the Department of Industries, PAN/VAT registration at concerned tax offices etc.), this extra listing requirement will create additional compliance requirements.

Further as e-commerce being an international business, the international e-commerce platforms will be also required to list in the portal if they deliver any goods or service in Nepal. Given the market size and less international transactions, it is doubtful if such a platform will be interested in listing in the portal.

Looking at the bill, it is merely the repetition of the existing provisions and does not provide for any new issues which are to be covered by the e-commerce laws. Some major issues that must be considered for development of e-commerce businesses are as follows:

Logistics and transportation

Poor logistics remain a barrier to e-commerce in Nepal and investment in infrastructure is a must for the development of e-commerce. If people can order something online in one click, parcel delivery also needs to be reasonably quick and predictable. In this context, initiatives to strengthen the capacity of the postal sector can be relevant for facilitating e-commerce.

Unfair contract terms

The regulation of the terms and policy is an important factor to ensure the fairness in use of the contractual terms which ensures that the consumer is aware of the key terms which largely impact the consumer if they were not assessed prior to the consummation of the e-commerce business transaction.

Business model

It is significant to consider the emerging e-commerce business model and decide what models are to be included within the definition of e-commerce and what are to be excluded from its periphery. For example, the regulation of those people (individuals selling products without registration) performing e-commerce businesses by way of setting up shops on social media.

Data privacy

The lack of a secure electronic equipment system does not ensure secure connection along with privacy of data of the user. The more elaborate privacy chapter is to be incorporated addressing data breach, unauthorized access, system security etc.

Counterfeit product and exemption from liability

Generally, service providers like Daraz, Hamrobazar provide a platform to individuals, business or legal entities. Especially service providers like Hamrobazar provide a platform to individuals where the buyers and the sellers can consummate the transaction themselves. In this scenario, the user may offer such a product in sale which may be counterfeit or stolen and as the service providers are primarily responsible for the operation of their electronic system (platform), the question may arise as who should be responsible for such an act.

Competitive policy

There are discussions and policies outlined internally with an intention to promote a fair and competitive business environment with the development of e-commerce businesses as the question has been raised as to whether the traditional competition/anti-trust mechanism can regulate the modern digital business approach.    

The major issues being faced in the competitive market is predatory pricing (selling products below the cost to reduce/eliminate competition), major discounting offers, product favorability (showing result of those products paying more etc).

In conclusion, the E-commerce Bill represents a vital step towards regulating Nepal's e-commerce sector. To succeed, the law must adopt a comprehensive approach, addressing the existing gaps and encouraging innovation. Through a robust e-commerce legislation, Nepal can confidently embark on a digital future, echoing the dynamic spirit of the global e-commerce landscape.

 
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