Retail export by digital commerce

Digital platform for trading is available in global virtual market place. Online orders are executed by physical delivery against online payment. Goods are delivered by express operators within the stipulated time. Bangladesh is to a great extent an export oriented country. The sector, particularly readymade garments (RMG), employs huge manpower. The mode of export is executed under wholesales process based on importers’ orders. In addition to wholesales export, retail export is to be explored through virtual platform.

Web based platform is easily available where products can be kept on display. This is found in e-commerce website or virtual market place. People can get access and place orders for buying goods through payment by cards or digital wallets. Whether such way of sales is possible or not to people residing abroad, is a question. We need to identify the problems, if any, to explore the potentiality.

With regards to export trade, exporters need to have registration certificates, inter alia, issued by the office of chief controller of import and export. This is a mandatory regulatory document for exporters. Foreign exchange regulations require exporters to make a declaration to the effect that they will arrange repatriation of export payment within the stipulated time from date of shipment. Transport documents need to be issued to the order of exporters’ banks in case of export by sea. For air shipment, the documents will be issued in favor of importers’ bank abroad. This practice to issue title documents in the name of banks is not applicable for export against advance payment and export under foreign payment guarantees.

In the context of declaration by exporters, a form known as EXP Form is issued as per foreign exchange regulations of the country. The recent reforms adopted by central bank show that exporters can give online declaration without physical visit to banks. Another notification of central bank shows that online declaration is also applicable for e-commerce business to customer export, including Business-to-Consumer (B2C) export by hosting goods on e-commerce website accessible through internet to foreign buyers. Banks can provide acquiring services to eligible exporters for repatriation of export proceeds against sales orders of exportable goods received on e-commerce website for small value export up to USD 5,000 per transaction of value in Cost and Freight (CFR) term.

The central bank has given regulatory waiver to issue transport document by for career companies for shipment of the goods having EXP Form in the name of foreign buyer. Reporting formalities have been simplified, it is reported. Exporters are allowed to retain a portion of export proceeds in retention quota account in foreign currency, known as exporters’ retention quota. The fund held in this account can be used by exporters for meeting legitimate needs. This may work as a space to promote export abroad.

With the observance of above simplified procedures, retail export is easily possible to be executed through virtual market place accessible to consumers abroad by internet. The ecosystem of global banking transactions is compatible to acquire the payment settled by international credit cards or other payment mechanisms.

The central bank also allows banks to make arrangements with online payment gateway service providers (OPGSPs) abroad. The OPGSPs are basically providing digital wallet services as our mobile financial service providers (MFSPs) do. OPGSPs are intended to repatriate against small value income against IT related services provided to nonresident customers abroad. Central bank has already allowed banks for small value export under e-commerce at cash on delivery terms for which foreign payment service providers like OPGSPs may work.

Local e-commerce is found well operative in Bangladesh. The payment is settled by MFSPs or cash on delivery or through escrow accounts. Goods are delivered generally by nominated courier service providers. There are two types of models found operational: one is inventory based virtual trader and another one is non-inventory based. Under non-inventory based model, virtual market platform works as facilitator to execute the transactions between sellers and buyers. They are basically technology companies. Global giants are found operating within this framework. Our neighboring country officially restricts technology companies to operate as inventory based e-commerce traders. This policy facilitates traders to sell goods direct to buyers through the orders executed on virtual market platforms provided by technology companies.

In cross border e-commerce, order execution is based on payment. This is basically a method of selling goods against advance payment. Payment is credited to retailers’ account by acquiring services provided banks and digital wallets, technology companies are paid service charges. There is every possibility of disputes with regards of delivery of goods such as non-delivery of goods, quality issues, etc. If such cases take place, retail export trade through virtual market place will not be sustainable. As such, suitable arrangement needs to be devised. This may be included in the digital commerce policy of the country. Alternatively, virtual market places may be self- regulated through disclaimer. This may be: (a) delivery of goods within defined time, (b) payment back in case of default in delivery, (c) quality claim lodgment policy, etc.

Online payment is acquired by banks through merchant agreements. The fund so received is credited to merchant accounts. In case of dispute, banks are not liable to pay back to senders unless merchants request. To resolve the issue, payment to merchant accounts needs to be conditional. These may be: (a) acquired fund to be placed at parking account, (b) banks need to be confirmed about execution of shipments to destination through documentary evidence, (c) waiting time for claim lodgment, etc. On completion, merchant accounts should be credited with fund acquired by banks. These issues may be considered by central bank to avoid expected dispute after completion of orders with payment.

Digital wallets are found well used globally. Transactions through digital wallets are found increasing day by day globally, including in Bangladesh. Individual buyers abroad may make payment through their digital wallets. As said earlier, recent regulations allow banks to have support from payment service providers abroad for executing the transactions. Banks are found reluctant to transact small value deals. As such, prevailing framework should be expanded to local wallet service providers so that small value transactions can be well facilitated. Authorities concerned should think of it.

It is true that wholesales export like export of RMG will not take place through virtual market places. Such bulk shipments need to be executed to virtual market places having inventory base-model operations under Business to Business to Consumer (B2B2C). There are some challenges in B2B2C. It is like consignment-type export – exporters will be paid on sales by consignees (importers). In this model, exporters will face working capital problems unless longer term facilities are made available through policy supports. But there is every possibility to promote retail exports by B2C e-commerce model of goods like panzabi, fotua, etc. manufactured by micro and cottage industries. Durable light engineering goods like television, refrigerator, washing machine and other white goods made in Bangladesh at competitive price are also possible to be sold on virtual platform. Trade bodies should initiate awareness programs and promotional activities. They should also bring the different issues as discussed above to the notice of concerned authorities for facilitating cross border transactions. 

The writer specializes in international trade and finance