Mahbub & Company | A BOLD STEP TOWARDS BOLSTERING INVESTMENT IN E-COMMERCE
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A BOLD STEP TOWARDS BOLSTERING INVESTMENT IN E-COMMERCE

A BOLD STEP TOWARDS BOLSTERING INVESTMENT IN E-COMMERCE

The Covid-19 induced lockdowns and movement restrictions have been the catalysts e-commerce in Bangladesh has been waiting for. From groceries to clothes to essential Covid-related supplies, e-commerce is fast conquering life in urban Bangladesh.

Amidst this trend, the Government has made a remarkable amendment in the National Digital Commerce Guideline. The National Digital Commerce (Amendment) Guideline-2020 amends the National Digital Commerce Guideline-2018, where it was stipulated that foreign owned Digital Commerce businesses cannot operate in Bangladesh without being in joint venture with a local company. A foreign partner in the JV could own only upto 49pc stake while the rest would have to be owned by the local entity. The new amendment removes this cap and now foreign entities can establish digital commerce businesses in Bangladesh holding 100 percent stake.

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The protectionist move limiting foreign investment in the sector was apparently to protect and nurture local e-commerce players which is certainly a valid approach. However, on the other hand, with the encouragement of foreign direct investment in e-commerce companies and the expansion of the sector, opportunity is created for small manufacturers and importers to sell to a larger customer base.Opportunities are also created for promising startups to be acquired by multinational players.

The e-commerce sector has seen a 100 percent growth in the last three years with an expansion to USD 2077 million in 2020 from USD 1648 million in 2019. The move is certain to please e-commerce giants like Alibaba, who has already entered the market through its acquisition of Daraz, and like Amazon, who may enter in the near future.

Update by Wahid Sadiq Khan, Associate