Immediate and future challenges for e-commerce in Bangladesh
Commerce issuesEasy access to credit and a well-developed
financing mechanism is essential for Bangladesh to compete in the
highly competitive export market. There are three types of export
financing in Bangladesh: pre-shipment financing in local currency
by commercial banks; pre-shipment financing in foreign currency by
commercial banks through the Export Development Fund (EDF); and
back-to-back letter of credit (L/C) facilities. Studies have
reported that lack of access to trade financing, caused by a weak
commercial banking system and foreign exchange scarcity, has
constrained Bangladeshs export expansion. The insistence by
commercial banks on the use of L/Cs for export financing and the
existence of interest rate ceilings on export loans has had
negative effects. Indirect exporters are forced to give inter-firm
credit for their sales of indirect export items to direct exporters
because they do not have the option of sight or advance payments
from direct exporters.
Restriction on issuance of international credit cards prevails.
Lack of internationally accepted credit card facilities sends wrong
signals to their foreign counterparts about the inability of
Bangladeshi businessmen to make speedy payments through
international credit cards. Restrictions on foreign currency
remittance imply that many businessmen make foreign payments
through the illegal but extensively used system of Hundi. According
to the Evidence Act (The Negotiable Instrument Act, 1881; Revised
up to 1999), a physical signature is necessary to make any contract
valid in the eyes of the law. This makes electronic contracts void
under Bangladeshi law. The Evidence Law should be revised to
recognize the validity of a digital signature.
Governance issues
Bangladesh since its inception has the problem of poor
governance. This has been manifested in the form of continued
active involvement of politicians and public officials, often in
collusion with the private sector, in adopting unfair business
practices. As a consequence, institutions continue to remain weak
and legal and regulatory reforms are difficult to implement.Rent
seeking activities galore, discouraging competition and promotion
of efficiency. Poor governance can be both a cause and an indirect
effect of ineffective e-commerce development. If the cost of doing
business remains high, characterized by bottlenecks, bureaucratic
red tape and corruption, the efficiency gains from e-commerce
becomes mute. Trade and commerce through e-commerce assumes
business norms and practices that are mutually acceptable or
understandable between buyers and sellers. Poor governance
discourages trade in general and e-commerce in particular.
The major reasons for poor Foreign Direct Investment (FDI) in
Bangladesh are its small domestic market, poor infrastructural
facilities, weak governance and poor law and order conditions.
Bureaucratic red tape and corruption also dissuades domestic
investment. Ecommerce and FDI are likely to reinforce each others
presence and growth. Acceptance and successful application of
e-commerce would enhance the business environment, sending signals
to foreign investors that it is becoming easier to do business in
Bangladesh.
Lack of EducationThe main issue in implementing e-commerce is to
have its perceived usefulness among the people. In comparison with
the developed countries, the rate of literacy in Bangladesh is
lower. Because of this lower rate of literacy, it is extremely
difficult to make the mass people understand the effectiveness of
electronic commerce. Since, success of electronic commerce is
indicated by the utmost success in implementation as well as the
awareness, activity and use of the services by the people, which
greatly depends on the level of literacy and mentality of the
people, it is to some extent a fate that, implementation of
electronic commerce would face communication problems because of
lower literacy rates in its application phases. Fragile EconomyOne
of the important criteria of defining lifestyle is economical
status. For the developing countries, it is a fate that the fragile
economy resists individuals from investing a threshold amount in
transforming the commercial activities to a different dimension. As
a consequence, even easier and potential attainment of development
becomes impossible. In case of transforming traditional commerce
into electronic commerce, certain transformational requirements
like computer infrastructure, internet facility, power supply and
most importantly an e-marketplace support arises, which are subject
to investment. Even though the hardware infrastructure may be
attained, support for software i.e. e-marketplace becomes the
greatest problem.Power ShortageAmong the infrastructure issues,
power is an important point of concern. Power shortage is one of
the burning problems in Bangladesh. Since the services offered by
electronic commerce should must be accessed through computer and
internet for which the driving force is electricity, it is
necessary to have proper and reliable energy supply. Though the
cost of computer and related accessories has already become lower,
without the supporting power facilities, it is completely unusable.
Still now, large portions of rural areas are far away from the
touch of electricity. Even in urban areas, the power supply is
unreliable.Connectivity coverageFor a spectacular growth of
ecommerce in Bangladesh connectivity is the very basic need.
Without the presence of internet it is impossible to run ecommerce
businesses. Even the mobile network can be used for accessing
internet, due to insufficient spped, high price, unstable service,
lack of compatible devices etc Bangladesh is put in the list of
worlds least internet using populations by World Bank. The WB says
that only 5 persons in every 1000 people in Bangladesh is actually
using internet (in 2011).Connectivity speed Due to huge coverage of
mobile phone network, internet is accessible from most of the parts
of the country. But the speed that mobile phone internet can
provide is very much insufficient for accessing ecommerce based
services and the delivery of digital goods. Without high speed
internet connectivity it is impossible to establish ecommerce in
Bangladesh on solid ground. In a recent study by Net Index,
Bangladesh is ranked 169th in terms of low internet speed. Along
with this low speed, another issue which is hurting the speed and
that is artificially lowering down the upload speed. ISPs like
Qubee and BanglaLion are forcing their users to use only 1/4th of
the maximum allowed speed.Price of bandwidthPrice of internet
bandwidth is another problem for the forward march of ecommerce in
Bangladesh. Potential customers along with ecommerce business need
internet high speed internet connectivity. Both the parties are
facing the high price of bandwidth in Bangladesh. This causes
avoidance of internet based shopping and thus hurting ecommerce in
Bangladesh. Despite the fact that price of 1 Mbps line dropped from
80,000 BDT to 18,000 BDT per month, the ISPs are not ready to
decrease their retail price.Improper standardization of Bengali
SoftwareOne of the main barriers of implementing electronic
commerce is the lack of standardization of software development
with Bengali interface and local content. Since, e-commerce
indicates access of information regarding trade and commerce;
without accurate perception and understanding of the conveyed
information, it is about meaningless to have the access on that
information. This complete understanding may only be possible
through the adaption of Bengali in the graphical user
interfaces.Miss management In this digital age technology based
services means nonstop service delivery round the clock. But the
service providers whose services are necessary to run an ecommerce
outlet successfully fail to comply with the requirement of nonstop
service delivery. This instability causes customers to think that
online based services are not yet reliable. Sudden failure of
internet service and inexistence of any backup connection in a shop
means customers will not be able pay using their card. Again sudden
POS terminal failure and the inexistence of replacing device will
also create the same problem. Such mismanagement hinders the
growing confidence on ecommerce. One of the prominent banks in
Bangladesh was seriously accused of miss management after account
holders lost money from their accounts. It was discovered that the
bank did not offer any security options like sending verification
code to authorize transactions. Even transaction completion
messages are some time not sent to the account holders mobile
phone. Such disastrous miss managements are very much against the
interest of ecommerce in BangladeshSecurity issues Hacking is a
global phenomenon. In finance related sectors like ecommerce it is
very crucial to safeguard its all of the data from destruction,
from falling in wrong hands. The incident of hacking an ecommerce
related outlet may cause serious panic among customers which in
turn cause serious lack of confidence on the business. The
consequence can be anything from shutting down the business to
losing huge amount of sales revenue. In Bangladesh series of
Hacking incidents took place. Fortunately most of them are not
e-commerce based sites. But stakeholders are very much concerned
about the recent hacking and forgery of ATM cards. Culprits used
their technological expertise to steal money from some of the bank
accounts. Such incidents may cause severe financial loss along with
customer dissatisfaction, which in turn hurts the ecommerce
industry.Again, when a banks website is hacked, that may not always
mean that the customer data is at risk, but it cause an impression
that the bank is not capable of even safeguard its own website.
General people feel insecurity in transacting money over net. Lack
of skilled employees Ecommerce is heavily dependent on
technological devices and technical knowledge. But still now
Bangladesh lacks in IT skilled professionals. Along with the
professionals who are precisely related to IT services, employees
who run day to day business operations based on the designed
ecommerce service are also in need of technological understanding.
Without well trained employees who handle the customers, ecommerce
in Bangladesh will not flourish as expected rate. Lack of proper
marketing initiativesAs ecommerce is a relatively new dimension of
business operations which includes traditional goods along with
electronic goods and service delivery, the marketing of the
businesses needs different approaches. Lack of proper marketing is
also hindering the local ecommerce in the way of reaching developed
markets like the EURO zone and the USA. Even though Bangladeshi
softwares are able to compete in the international market, lack of
marketing ability is putting the way back.Again, in local market,
ecommerce entrepreneurs seek for reaching more potential customers
but are locked down due to lack of financially feasible and
effective marketing tools
Implication of copyright law As an under developed country
Bangladesh is enjoying some sort of indemnity in using copyrighted
digital goods which are produced by developed countries. This is
necessary for the growth of an under developed country Bangladesh.
But in the cases of products that are produced within Bangladesh
are facing problem due to this lack of copyright implication
process. Bangladeshi songs, movies and books can easily create a
huge branch of ecommerce. But as they are now available as pirated
copies, ecommerce of those products are facing serious loss of
revenue.References:http://www.newagebd.com/detail.php?date=2012-06-14&nid=13735http://www.banglanews24.com/detailsnews.php?nssl=b64580c512d1d444d515f59e99226abf&nttl=18022013175335http://www.bracbank.com/Internet-Banking.php?drgn=1http://data.worldbank.org/indicator/IT.NET.USER.P2?order=wbapi_data_value_2008+wbapi_data_value+wbapi_data_value-last&sort=asc&cid=GPD_44http://www.netindex.com/download/2,138/Bangladesh/https://opennet.net/research/profiles/bangladeshhttp://www.thedailystar.net/beta2/news/bangladesh-next-bpo-destination/Skinner,
B. (November 12, 2005), e-commerce hampered by inadequate payment
systems, The Daily Star, Bangladesh.
Islam, R. (September 9, 2005), Challenges of Online Banking, The
Financial Express, Bangladesh
Hossain, N. (December 2000), E-Commerce in Bangladesh: Status,
Potential and Constraints, JOBS, IRIS, University of Maryland
