The e-commerce bill is not perfect but it is a stepping stone for a digital future

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With the e-commerce bill being tabled in the parliament, there has been a lot of talk about it in the country. Even though the buzz about the bill started in 2021, it faced delays and stagnation due to political shifts in Nepal.

The e-commerce bill contains several significant provisions that will have an impact on various businesses. Here are some key highlights to be aware of regarding the bill:

  1. Setting up a platform: The e-commerce bill has mandated setting up an e-commerce platform in order to operate a business in Nepal. The e-commerce business can operate via its own platforms or through intermediaries.
  2. Mandatory listing of the platform: The e-commerce bill further requires a 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 e-commerce bill has provisioned 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 etc.

Moreover, the preamble of the e-commerce bill provides that the intent of the bill is to regulate the e-commerce business and make it trustworthy. The necessity of a separate law to achieve this objective remains a topic of ongoing debate. Despite the existence of the consumer protection act, which clearly outlines the circumstances for product returns, refunds, and replacements, the discussion is imperative to determine the best approach for addressing e-commerce-related concerns.

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 an 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 notable that the businesses like auditing and consultations 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 internet and do not fall under any of the above categories. For instance, Hamrobazar is an e-commerce website where individuals can consummate the transaction individually and Hamrobazar does not take any amount/fee either from buyer or seller. The seller just uploads its contact details and the product which it desires to sell and the buyer directly contacts the seller without undergoing any registration in the platform.

The e-commerce bill has mandated the listing of the e-commerce business in a portal to be prescribed by the department. This has created an additional compliance burden on the e-commerce platform. 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 is an international business, the international e-commerce platforms will be also required to list in the portal if they deliver any goods or services in Nepal. Given the market size and fewer international transactions, it is doubtful if such a platform will be interested in listing in the portal.

e-commerce bill
The e-commerce bill aims to regulate e-commerce business in Nepal.

Looking at the bill, it is merely the repetition of 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 the development of the e-commerce business 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 were not accessed to the consumer prior to consummation of the e-commerce business transaction.

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

Data privacy: Lack of secure electronic equipment system ensures secure connection along with the privacy of data of the user. The more elaborate privacy chapter is to be incorporated addressing data breaches, unauthorised access, system security etc.

Counterfeit product and exemption from liability: Generally, service providers like (Daraz, Hamrobazar) provide a platform to individuals, businesses or legal entities. Especially service provider like Hamrobazar provides a platform to an individual where buyer and seller can consummate the transaction themselves.

In this scenario, the user may offer such 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 to who should be responsible for such 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 business as questions have been raised as to whether the traditional competition/anti-trust mechanism can regulate the modern digital business approach.   

The major issues faced in the competitive market is predatory pricing (selling product below the cost to reduce/eliminate competition), major discounting offers, and product favorability (showing a 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 existing gaps and encouraging innovation. Through 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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Suman Siwakoti is a corporate lawyer dealing with matters relating to e-commerce, information, and technology. He is an associate at Pioneer Law Associate.

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