The convergence of technology, information, and commerce is ushering in an incredibly exciting new world of economic power before us. E-commerce has become a crucial part of modern life and has transformed the way we all shop and do business. This evolution has created new opportunities for entrepreneurs, businesses, consumers, and job seekers. It has also forced the digital transformation of all economic actors. The growth of this new economic engine is going to be critical to the future of our country’s economic development.
However, the increasing popularity of e-commerce has also brought up several challenges including fraudulent activities, data privacy concerns, unfair competition, and content control. At the other end of the spectrum is the need for innovations in Internet commerce to continue for its vast potential to develop and benefit society.
On the side of the government, e-commerce is a relative greenfield. Most of its current laws and regulations are meant for a brick-and-mortar business environment. A regulatory issue of increasing concern is the ability to implement policies in a borderless internet world. The internet made commercial borders superfluous. There is also a need today for the government to revisit its taxation policies to ensure that it can collect the right taxes from online merchants. E-commerce in the Philippines is nascent and is expected to become the dominant way of doing business in the country very soon.
A pending legislation, the Internet Transaction Act (ITA), was passed by the House late last year and has now reached the Senate plenary. It establishes a code of conduct for e-commerce transactions and creates an e-commerce bureau under the Department of Trade and Industry, which will have the authority to regulate commercial activities conducted over the Internet. The business sector and most trade organizations, including the Alliance of Tech Innovators for the Nation (ATIN) of which this author is the Lead Convener, support the passage of this bill.
The ITA, in general, provides the necessary mechanisms to ensure that the rights of both consumers and online merchants are protected and the privacy of personal information is maintained. It provides a redress mechanism that institutionalizes a notice and takedown process to address erring merchants and products. It also creates an online business registry to make it easier for consumers, e-commerce platforms, and regulatory bodies to make verifications. It also mandates the creation of an online dispute resolution platform to provide a venue for both buyers and merchants to settle fulfillment issues. Another important provision is the establishment of the Philippine e-commerce Trustmark which will be implemented by DTI and is meant to help build more trust and confidence in the e-commerce ecosystem.
Some provisions of the proposed legislation can be further improved. For example, the provision on liability should be worded in such a way that it encourages good behavior on the part of the merchant and not just hide behind the platform. It also puts a high regulatory burden on the platforms, like verification, which they are not capacitated to do and may entail higher costs for them to comply with which eventually will be passed on to the consumers. We all need to be mindful of the fact that e-commerce is not just about the platforms. Another concern is the enforceability of some of the provisions because of the borderless internet world. These are areas where the platforms can provide further insights.
A thriving e-commerce landscape would bring in more jobs, revenues for the government, drive entrepreneurship, and help our MSMEs become more competitive. For this to happen, we need to see the government, e-commerce players and consumers work together. The regulatory scope can be an issue because of the enormous size of the market and the current capacity of the government. The e-commerce space is very dynamic and fast-changing. The nature of regulations that will be imposed will need to be flexible enough to adapt to the changes.
It is in the interest of businesses to provide consumers with safe transactions, proper handling of personal data, and secure business practices to win their confidence. This is the reason why the business sector generally supports the early passage of the ITA. They see it as a way of removing ambivalence in rules and processes to allow e-commerce in the country to really grow and keep pace with global developments.
We all want to see an ITA that would help us benefit from the emergence of e-commerce as an engine for economic growth. Our legislators should be reminded of the words of the former CEO of Cisco Systems John Chambers “We need to be very careful not to rush in and stifle the opportunity e-commerce brings to our country in terms of job growth and economic growth by just applying old-world regulations to this new world.”
(The author is the lead convenor of the Alliance for Technology Innovators for the Nation (ATIN), vice president of the Analytics Association of the Philippines, and vice president, UP System Information Technology Foundation. Email: email@example.com)