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E-Commerce Framework & Governance-Rethink

The e-commerce business has been experiencing an oscillating moment in Bangladesh. Some deem the e-commerce sector as the future for Digital Bangladesh, and others see challenges in the growth of this industry.  Md Kafi Khan, Company secretary of The City Bank Ltd. writes on how the e-commerce sector can sustain itself within a framework that works best for all involved.

Md Kafi Khan, Company secretary of The City Bank Ltd

The Internet is an extremely important new technology, and it is no surprise that it has received so much attention from entrepreneurs, executives, investors, and business observers. Caught up in the general fervor, many have assumed that the Internet changes everything, rendering all the old rules about companies and competition obsolete. That may be a natural reaction, but it is a dangerous one. It has led many companies, dot-coms and incumbents alike, to make bad decisions. That has eroded the attractiveness of their industries and undermined their own competitive advantage. The time has come to make a clearer view of the Internet. Internet technology provides better opportunities for companies to establish distinctive strategic positioning than did previous generations of information technology. 

Contract law provides a framework within which economic relationships can be established and administered, while electronic commerce (e-commerce) provides tools for reducing the costs of those activities. Application of traditional contract law concepts to e-commerce may result in uncertainty which may diminish the efficiency gains from technological innovation. The impact of e-commerce on the governance structures of commercial relationships generally, and in three specific major areas of commercial activity that have been most affected by e-commerce in recent decades. With regard to business-to-consumer electronic commerce and issues related to the security of e-commerce, Liberal Market Economies such as the US have treated the growth of e-commerce as an opportunity for further deregulation of markets, while Coordinated Market Economies include most EU members have responded with significant new regulations. By contrast, both Liberal Market Economies and Coordinated Market Economies have allowed market forces to determine the direction of business-to-business e-commerce developments.

The spread of e-commerce within market institutions has created pressure for legal institutions to adapt to technological innovation. Early reforms carried out in the 1980s and 1990s to remove irrational impediments to the adoption of e-commerce technologies enjoyed widespread success. As a result, the sophisticated businesses that were early e-commerce adopters are no longer demanding any law reforms. For B2B commerce, attention has shifted to the development of ICT standards as a form of e-commerce regulation and as part of the process of optimizing supply chain operations. By contrast, the regulation of e-commerce in consumer markets has been the subject of intense political controversy and diverging regulatory strategies. 

In the developed country, it has adopted a strategy of incremental deregulation through statutory obsolescence. A considerable body of judicial decisions upholding standard form contracts that would be unenforceable allows merchants engaged in Internet commerce to decide unilaterally what rights consumers should have. 

The recent scams of E-Commerce in Bangladesh prevail that many are doing business without following rules and regulations. A large number of them do not even have a trade license. They just take orders for non-existent products after opening an f-commerce page on Facebook. There are also many courier companies operating without licenses. There are more than 500,000 entrepreneurs but only 1500 are members of e-CAB, so it is very difficult to monitor them. Needs not to tell that for such a booming and prospective sector establishing good governance and setting up a policy in this sector are obvious. There are some laws that are applicable to e-commerce platforms. There are, for example, the Penal Code 1860, the Contract Act 1872, the Sale of Goods Act 1930, the Special Powers Act 1974, the Bangladesh Standards and Testing Institution Ordinance 1985, the Consumer Protection Act 2009, and the Trade Marks Act 2009, etc., which are and can be used to resolve e-commerce fraudulence issues. How extent the victims are getting remedies having such a volume of laws. It might be an issue of victims’ awareness and enforceability of laws.   

It is always prudent that the business environment adopts technological platforms such as e-commerce but there is a need to ascertain the risks involved to optimize the benefits. At the same time, it is important to protect the buyers’ interests. However, with the hype in e-commerce, the corporate governance and ethics are affected for the reason that corporate entities and financial institutions tend to maximize profits by ensuring that their business performs at its best by adopting the technology thereby enhancing lower cost structure, increased scope in scale of services, faster transactions and increased government performance.

Compliance is the observance of norms which include legislation, industry standards, and statutes by an organization The focus in this E-commerce compliance is targeted on specific areas of risk. These areas are mainly financial market surveillance and insider trading. However, this has evolved outside specific legal issues to include antitrust, anti-bribery, and labor to incorporate the electronic communication stage known as e-compliance. E-compliance is mandated with the adaptation of the legal system to digitization. E-compliance, as an aspect of e-commerce, has been identified to include the organization’s ethical behavior or its corporate citizenship. As far as redesigning business processes and well-designed governance mechanisms for the sustainable and well-protected E-commerce business model, obviously needed the phases of development are (1) IT governance (2) IT Governance as Allocation of Decision Rights (3) IT Governance as Strategic Alignment (4) Implementing IT Governance (5) IT Outsourcing Governance (6) Knowledge Management in Governance. As a way of right strategic move further needed to review the following situations again- Holistic review of the current situation, the desired situation, analyze the needs for change (focus specifically on the e-commerce, e-business, knowledge management, and IT outsourcing challenges facing the company), search for alternative actions, 5. Select actions and make an action plan, think about the implementation challenges the company will face, and well-formulated ways out. 

Like all other flourishing sectors, there are challenges plaguing this sector as well, one of which is an inadequate and inefficient legal and regulatory framework able to cope with ensuring rights and obligations of the contracting parties. It needs more regulations for making E-commerce transactions fairer and achieving a more consumer-friendly E-commerce environment in Bangladesh. With the ever-increasing pace at which e-commerce is growing in the country, a dire need can be felt for a proper framework.

To protect the consumers’ rights and the framework concerned, there are many areas that require focused attention, discussion, with stakeholders and concrete policies in order to facilitate e-commerce business in Bangladesh. These may include, for instance, the establishment of independent regulators, to help the orderly growth of e-commerce business in Bangladesh but also protect consumers from being exploited. The regulator should have an effective grievance system and legal remedies if anything goes wrong with respect to online transactions. Also, may an alternative dispute resolution [ADR] mechanism need to resolve e-commerce disputes, for instance, drawing very effective results in the European Union and other nations are increasingly using online dispute resolutions for resolving many aspects of e-commerce disputes. Therefore, it can be said that the growth of e-commerce activities has given birth to new challenges that need to be taken care of in order to facilitate and support e-commerce businesses in Bangladesh. As most of these challenges relate to the lack of appropriate regulatory infrastructure, the regulator needs to come forward to initiate various legislations related to online transactions.

Bangladeshi retail market is estimating huge growth from year to year even having a huge scope of cross-border as well. Still plenty of room for growth. Even though efforts like Digital Bangladesh, there are some challenges to full potential as an e-commerce destination will be achieved.

Internet store purchasing, web sale market and delivery service, Vector illustration

The doctrine of Caveat Emptor is an integral part of the Sale of Goods Act. It translates to “let the buyer beware”. It lays the responsibility of their choice on the buyer themselves. It is specifically defined by the Act as “there is no implied warranty or condition as to the quality or the fitness for any particular purpose of goods supplied under such a contract of sale”. However, the exceptions were given to this provision in a section of the Act stating that the goods must be reasonably fit for purposes for which the purchaser desires them, and goods must be of merchantable quality. These exceptions will be applied when the purchaser makes known to the seller explicitly or impliedly, the particular purpose of the goods as they desire in order to show that he depends on the seller’s skill or judgment, and the goods were supplied in the course of the seller’s business. There is an implied condition that the goods shall be reasonably fit for such a purpose. In the context of e-purchaser, certainly, the purchaser will rely on these implied conditions so as to obtain their rights in requiring goods that are acceptable quality and fit for such purpose they want them. The doctrine of caveat emptor has certain specific exceptions as well.

To resolve disputes arising from online transactions it is needed to develop its highly innovative Public Review Mechanism which canvasses public views on whether or not proposed rules to discourage certain online behavior are considered reasonable. Needed the charge, e-commerce enterprises require to develop an innovative framework of e-commerce governance that combines proactive prevention and control measures with effective complaint handling and dispute resolution and it is needed a model for IP governance in e-commerce seeks to protect IP rights by integrating technology, business models, and the law. And the model is needed well referenced to implement by other e-commerce platforms. Its strength lies in the fact that the technology it uses can be easily adapted to areas beyond e-commerce to support the protection of IP rights across a broad range of sectors. In this way, it supports efforts to build greater respect for IP rights across the economic and social spectrum.

Above all, it is empirically proven that where law and order are weaker in terms of enforceability, the digitization and e-commerce business model might be very difficult to execute successfully. Top of the story, it is needed to draw the line that earnest ethical empowerment and a well-designed governance framework are obvious.

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