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Bangladesh Tech Briefing #03: Bangladesh Bank Plans New Entity to Monitor Ecommerce, Regulating Ecommerce, Praava Health, SHAREit's Bangladesh Plans, and More

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Aug 3, 2021

Bangladesh Tech Briefing: Issue 03 covers:

  • Bangladesh Bank looks to set up new entity to monitor ecommerce, regulating ecommerce and technology policy
  • Praava Health
  • SHAREit Bangladesh Market Plans
  • Coca-Cola and WhatsApp commerce and more

Bangladesh Bank Plans to Create New Entity to Monitor Ecommerce, Regulating e-commerce and technology policy follow-up  

What is going on: Bangladesh Bank is planning to set up a separate company to monitor e-commerce platforms to ensure proper customer service from ecommerce platforms and thus help improve customer confidence in ecommerce. 

Once created, the company will put together a new technology stack called Universal Escrow Service (UES) to handle digital payment and monitor e-commerce platforms. UES will connect banks, non-bank financial institutions, e-commerce platforms, and the national payment switch and will be free for all ecommerce related stakeholders. 

The details: Bangladesh Bank has already formed a committee to create the entity but the committee could not meet yet due to the ongoing strict lockdown. The company will operate as a payment system operator (PSO). Banks, payment service providers, and e-commerce platforms may be allowed to invest in the company. The central bank may also invest to create the entity. 

Who will run the entity: A board of directors will govern the company — investors in the company will be allowed to hold directorship and a Bangladesh Bank high official will be appointed as chairman. 

The context: The idea is that UES will hold payment of ecommerce companies from customers and will only release after confirmation from the customers that they have received the product. 

Several ecommerce companies came under fire of late over poor customer service, extensive delay in product delivery, and refund to customers in the case of fulfillment failure. Some of these companies took as much as 4-5 months and in some instances more than that to deliver products to customers after taking advance payment. 

The regulators opine that this has created an extensive risk for the entire ecommerce sector of the country and new regulatory initiatives are needed to improve customer trust in the sector. 

While details of the new entity and its potential operational scope remain unclear, many industry insiders suggest that only risky actors should be put under observation and monitoring and regular players should not be put through additional regulatory challenges. 

Previously, the Bangladesh Association of Software and Information Services (BASIS) recommended only applying escrow services to high-risk e-commerce merchants and not to regular online merchants. The Association rightly pointed out that ESCROW is not a regular mechanism and is mandatory nowhere in the world. 

Regulating ecommerce companies and technology policy

Ecommerce has seen excellent growth in the past two years. Per Bangladesh Bank, transactions through e-commerce platforms stood at BDT 1,183 crore in May. Bangladesh Bank data further shows the sector saw a 164% year-on-year growth and is growing at 30% MoM. 

While these numbers are exciting, the sector remains under-penetrated. Ecommerce, in every meaning of the word, is just getting started in Bangladesh. Putting additional unnecessary regulatory burdens on the sector may increase friction and significantly slow down the growth and penetration. 

I’m generally skeptical of unnecessary extensive regulatory interventions, particularly when it comes to nascent markets. I wrote in Ride-hailing Guidelines, The Business Of Ride-Hailing, And Tech, Aggregator and Technology Policy

“I'm skeptical of the need for any regulation without significant evidence that it is absolutely necessary. It is more so when an industry is in the development phase which applies to ride-hailing in Dhaka.

I consider ride-hailing in Dhaka to be in a very early stage. When we try to design policy for an industry that is not fully matured yet, we run two particular risks: 1) we can’t foresee what the industry will look like in a few years when it will fully mature thus fail to address that in the policy 2) and we run the risk of doing something that can hamper the growth of the nascent industry because while every regulation does evolve over the time, it often takes time.

For instance, almost all the ride-hailing companies in Dhaka now have logistics operations and on-demand food delivery operations. While it is possible that they run these logistics operations with a separate license, it is absolutely possible to connect two services technologically and that is where leverage is for the ride-hailing companies. I don’t think the approved guideline has considered this reality.

Every regulation comes with certain limitations. Although regulations are prepared with utmost good intentions; at times, they end up not serving the purpose.

When you prepare a regulation, it is always about tradeoffs. You choose a policy over another, meaning you gain some benefits and face some disadvantages. When policymakers often see the benefits from a certain regulation, there are chances that they overlook the shortcomings both in the short-term and long-term.” 

The initiative to create a new entity to monitor ecommerce companies from Bangladesh Bank makes sense given the widespread malpractice in the ecommerce industry by certain players. But I don’t exactly agree with everything it aims to cover. As mentioned above and BASIS agrees, it could complicate operations for regular ecommerce companies with good behavior who played no part in causing the current situation. 

The need for regulatory measures arises because bad actors in a certain ecosystem behave badly and they need to be restrained in the interest of the ecosystem. But if it is done without enough deliberation, it could end up harming the innocent ones and the entire industry. While the regulators should go to extra lengths to curb the bad behaviors in the ecommerce industry, they should also be mindful of the fact that it should not harm good actors of the ecosystem and the momentum of the industry. 

While ecommerce has grown significantly in the country, it remains highly under-penetrated. Only a small segment of the overall potential customer segment uses ecommerce today. The sector has a long way to go and it will. We must not jeopardize that trajectory with our good intention. 


Tech and startup happenings we’re watching 

1/ DGHS asks Praava Health to temporarily suspend all activities. The Directorate General of Health Services has asked Praava Health to temporarily suspend all its activities over alleged "anomalies." The Hospital and Clinics Section of the DGHS sent a letter to Praava Health authorities on Monday.

The context: The DGSH conducted an investigation after a complaint made by former law minister Shafiq Ahmed's son Mahfuz Shafiq. DGSH said there have been complaints against Praava Health including providing faulty reports and subpar services. 

According to several media reports, Mahfuz Shafique’s wife and two daughters gave samples to Praava Health for the Covid-19 test on 7 July in the afternoon as they were scheduled to travel to the United States two days later. The result came out positive at night. Mr. Mahfuz reconfirmed the report with Praava. Not convinced, a day later, on 8 July, Mr. Mahfuz Shafique gave samples of 20 people including all family members to the Institute of Epidemiology Disease Control And Research (IEDCR). The results came negative the following day.

The bottom line: Praava Health started its full-fledged operation in Dhaka with one healthcare center in Banani in 2018. The company raised $10.6 million in total investment. Before this, the company had a reputation for excellent quality and customer service. The event is likely to damage that. 

Regulatory challenges remain high for health-tech startups in Bangladesh. Moreover, it is a sensitive service and customers remain skeptical of healthcare service providers. The Praava Health event is likely to alert other healthcare startups operating in the country. 


2/ Coca-Cola on WhatsApp and WhatsApp commerce. Coca-Cola has introduced a new ordering service for retailers via WhatsApp. The retailers now can order Coca-Cola products via WhatsApp from Coca-Cola distributors. The service will connect retailers and Coca-Cola distributors in Bangladesh and ensure the availability of Coca-Cola products across outlets. 

This is an interesting development and in line with the evolving nature of commerce across markets. 

Messaging platforms are increasingly becoming the center of customer service and commerce. In many markets, WhatsApp commerce is already a big trend. As platforms like Facebook pushes to make these platform more business-friendly, digital commerce is moving to these messaging apps as well. 


3/ SHAREit Group eyes Bangladesh. SHAREit Group, a global internet tech company known for its popular file-sharing app SHAREit, is eyeing to expand its presence in Bangladesh. The company says it has users in over 150 countries, the SHAREit app is available in 45 different languages and the group’s various applications including SHAREit have some 2.4 billion installs worldwide. 

SHAREit app, while originally started as a file-sharing app, now offers several other features including streaming videos, gaming, entertaining and digital content, etc. 

While it does not have a physical presence in Bangladesh, SHAREit, the company’s file-sharing app, has a decent user base in Bangladesh. The company now looks to build a business around its existing user base as well as grow its users on the heel of the growing popularity of mobile and social videos and get into digital entertainment, brand marketing, and advertising solutions.

Digital advertising has seen tremendous growth in Dhaka over the last few years. The bulk of it of course goes to Google and Facebook. While channels like SHAREit will have to compete with existing players, the market is still in its early stage and there is certainly room for more players and growth. 


About Bangladesh Tech Briefing: 

Bangladesh Tech Briefing is a newly launched newsletter from Future Startup covering everything you need to know about the fast-evolving tech industry in Bangladesh, from the companies to the people to the deals. Start reading for free and share if you enjoy it. 

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Ruhul Kader is a technology and business analyst based in Dhaka, Bangladesh. He is also the co-founder and CEO of Future Startup and author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about internet business, strategy, technology, technology policy, and society. He can be reached at [email protected]

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