Facebook Commerce Shops Will Soon Require Trade License to Operate

Digital Commerce Operation Guidelines 2021 by the Commerce Ministry, scheduled to be issued as a circular next month, is set to change how digital commerce companies, both large ecommerce companies, and much smaller f-commerce shops, operate in the country. 

The policy currently is in the draft. The commerce ministry is set to hold a meeting with stakeholders on 21 March for further discussions and collect feedback on the draft policy. Necessary changes will be made before issuance based on additional feedback received at the meeting. 

Some of the proposed changes are: 

• Trade licenses are going to be mandatory for small e-commerce businesses otherwise known as f-commerce operating on Facebook and other social media platforms. According to several estimates, there are some five lakh f-commerce companies in the country.
• The regular e-commerce companies such as ecommerce marketplaces and DTC ecommerce sites selling products on digital marketplaces and have their own websites will have to register for VAT (value-added tax) apart from trade license.
• E-commerce companies have to deliver a product within a maximum of five days of the order in the same city and within 10 days if it is in other cities or village areas.
• The buyers can file cases with the Directorate of Consumer Protection or any other court seeking redressal if the right products are not delivered on time.  
• Failure to comply with the provisions of the guideline may result in the authority taking legal actions, including revoking the trade license, company registration, or VAT registration of the seller and banning the business platform. 

Regulatory motivations

• The commerce ministry official said the draft "Digital Commerce Operation Guidelines 2021" is prepared with an ambition to prevent frauds in e-commerce and building the confidence of consumers. 
• The guideline is expected to streamline the sector while also earning revenue for the government by issuing trade licenses to f-commerce companies.

What industry insiders have to say: Naturally, industry insiders oppose imposing stringent regulatory burdens on the nascent sector. Many have voiced the concern that too early regulatory pressure could stifle growth and cause more harm than good. Others said obtaining trade licenses and similar regulatory permissions are too time-consuming and difficult for solo entrepreneurs who run small f-commerce operations forcing many to shut down their small business. 

The bottom line: On a broader level, tech is increasingly becoming a regulated industry across markets. It means we will see more regulations pertaining to technology companies. 

Digital Commerce Operation Guidelines 2021 is, however, not so much about tech regulation than establishing some ground rules for the ecommerce industry in Bangladesh. While the sector has grown meaningfully over the past years and apparently is in need of some regulatory intervention to protect consumer rights and ensure the long-term growth of the sector, regulation is always a tricky and balancing act — regulating without hampering the growth.