Want to shop at Amazon? Cross-border digital trade coming

The commerce ministry is drafting a set of policies on cross-border trade which will allow Bangladeshi and global consumers, entrepreneurs and businesses to buy and sell goods and services on the Internet without opening letters of credit (LCs) with banks.

According to the draft of "Cross-Border Digital Trade Guidelines 2023", a copy of which has been obtained by The Business Standard, traders along with e-commerce companies in Bangladesh will be able to import and export goods in retail and wholesale forms using online platforms.

Likewise, traders and digital commerce companies around the world, such as Amazon, Alibaba, and BestBuy, will be able to buy and sell products from and to Bangladeshi consumers and traders in retail and wholesale forms directly.

But in order to engage in cross-border digital trade, all domestic and foreign companies have to obtain a Digital Business Identity Number (DBIN).

Md Sayed Ali, the officer-in-charge of the Central Digital Commerce Cell of the Ministry of Commerce, told TBS, "The draft of the cross-border digital trade guidelines has been prepared. A meeting will be held after Eid-ul-Adha to finalise it. Once the draft is finalised, it will be gazetted after Cabinet approval."

He said, "Once implemented, Bangladeshis will be able to buy products from foreign digital platforms, and Bangladeshi digital platforms will also be able to export products abroad."

Cross-border digital trade can also be done through LCs, as well as letters of request or contracts executed between importers and exporters.

However, all payments must be made through international financial services or banks authorised by the Bangladesh Bank, according to the draft.

Conventional exporters get cash incentives against exports. The digital trade system will also offer similar incentives to exporters along with different types of policy support.

Business-to-consumer (B2C) and consumer-to-consumer (C2C) cross-border trade volumes have been increasing worldwide since the Covid pandemic hit the globe.

Aside from local e-commerce companies, the United States has also asked Bangladesh to launch cross-border digital trade with their companies at various times.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has asked the government for Tk100 crore to establish global platforms such as Amazon, eBay and Alibaba here for directly selling clothes made by local brands of Bangladesh in the international market.

The government has taken the initiative to launch cross-border digital trade to facilitate and expand trade in line with the global pace, said an official of the commerce ministry.

Prospects of cross-border trade

Bangladesh imported goods and services worth $82.50 billion in 2022. The growth in the country's economy under the current context now depends on the expansion of cross-border trade through digital platforms. 

A large number of small and medium entrepreneurs will be able to engage directly in cross-border trade.

International transport and delivery companies will be connected with domestic logistics companies to expand digital commerce. 

The Central Logistics Trucking Platform (CLTP) will be launched for the delivery of goods and services. This platform will be connected to all payment systems.

A wide range of support will be offered to boost exports.

According to the draft policy, exports of domestic goods and services will be encouraged by simplifying export-related provisions. Even the rules for exporting small parcels through digital commerce will be eased.

In the case of export through the digital trade system, there will be a provision for the repatriation of export proceeds within six months.

Exports through digital commerce will be given the same financial incentives as normal exports. In this case, deemed export and entrepôt export will also be brought under incentives, according to the draft policy.

Exporting companies will be given special tax benefits including VAT rebates for exports through digital commerce.

According to the draft policy, necessary warehouses or godowns will be constructed outside the country by government and private initiatives to accelerate exports. Necessary policy assistance will be provided in case of drop shipping and entrepôt export.

In addition, necessary policy support will be given in buying and selling through necessary value addition in the country and outside the country.

Digital Trade Export Zones will be established for the export processing of goods and services in areas near the country's ports for export through digital trade. These zones will get all the facilities like EPZs in terms of import and export.

If a foreign company sells goods and services in Bangladesh, it must take measures to provide the necessary infrastructure and services within Bangladesh to ensure after-sales service. In this case, foreign companies can enter into an agreement with any valid digital trading company in Bangladesh for providing after-sales services.

According to the draft policy regarding the advertisement of products of foreign digital trade companies in Bangladesh, advertisements of foreign companies can be published on any online platform within the country in accordance with the prevailing laws and regulations related to the advertisement.

After importing any foreign goods and services, advertisements can be published on online platforms within the country, paying applicable taxes.

Restrictions

According to the draft policy, no product prohibited by the country's import policy order and export policy can be bought and sold.

In addition, no fictitious goods or services can be bought and sold. Lottery, gambling, and betting cannot be organised or its tickets or tokens cannot be issued or exchanged through cross-border digital commerce.

No gift card, gift voucher or any card or digital number that can be used as a substitute for money can be bought and sold without the approval of the Bangladesh Bank.

Muhammad Abdul Wahed Tomal, the general secretary of the e-Commerce Association of Bangladesh (eCAB), told The Business Standard that if this policy is effective, small and medium entrepreneurs will be able to sell their products directly to foreign buyers.

"We will create linkages with internationally renowned platforms, which will contribute to increasing Bangladesh's exports," the eCAB general secretary added.