The government on Tuesday approved the foreign e-commerce entities for sole investment in Bangladesh, dropping the previous condition of a joint venture with local companies.
This enables the global e-commerce giants such as Alibaba or Amazon to invest and own a 100 percent stake. The Ministry of Commerce said the decision came in the wake of growing importance of online shopping amid the coronavirus pandemic.
According to National Digital Commerce Policy-2018, the foreign e-commerce entities were not allowed to invest and run businesses on their own. The investors had to team up with local players for a joint venture, where a foreign investor had a 49 percent stake and a local company would own the remaining 51 percent.
The commerce ministry issued the National Digital Commerce (Amended) Policy-2020 scrapping the condition.
"The previous condition was contradictory to the investment policy. From now on, foreign e-commerce entities will be able for sole investment and business complying with the country's laws and regulations," Commerce Secretary Dr Jafar Uddin told The Business Standard.
In the meantime, Ministry of Commerce WTO Cell Director General Md Hafizur Rahman said the previous term had been hindering foreign investment in e-commerce.
"In many cases, foreign companies are not interested in a joint venture. Besides, the condition allowed the highest 49 percent stake which limited their participation," he added.
E-commerce sites across the globe are witnessing more and more customers as the Covid-19 continues racing around with no sign of stopping. In Bangladesh, customers are opting for online sites to avert contamination risk.
The WTO Cell director general thinks e-commerce will rule the future even if the situation returns to normal.
"We need big investments to meet the local demand while the foreign investors are also interested in pouring in money here. Therefore, the condition has been dropped, and we hope the country's e-commerce sector will see more foreign investments in the upcoming days," he explained.
The e-Commerce Association of Bangladesh (e-CAB) President Shomi Kaiser also believes the move will attract more foreign investment.
"The Ministry of Commerce has been discussing with us the matter for the last couple of months. We asked for the condition of mandating 100 percent foreign-owned companies to build warehouses in Bangladeshi with locally-made products. Hopefully, this condition will be implemented," she added.
Commerce ministry officials said the sector has been showing 100 percent growth for last three years. Around 7,500 entities are doing online business currently while Alibaba has entered the Bangladeshi market as it bought Daraz, a popular e-commerce platform.
Amazon is also showing interest in the Bangladeshi market as the local sector has Tk700 crore monthly and more than Tk8000 crore annual turnover.
According to Statista, the size of the local e-commerce market was $1648 million in 2019. It expanded to $2077 million in 2020, and the predicted size will reach $3077 million in 2023.