Cross-Border E-Commerce – Problems and Policy Proposals
By Jahangir Alam Shovon
Cross-border e-commerce in Bangladesh is brimming with potential, yet existing digital commerce regulations often fall short in accommodating its distinctive nature. A one-size-fits-all regulatory approach is holding back innovation, deterring investment, and making it harder for entrepreneurs to scale globally. This chapter sheds light on the critical issues and proposes practical solutions to align policy with global best practices.
Inflexible Guidelines Need Reform
The current “Digital Commerce Guidelines 2021,” particularly those released on July 4, impose several limitations incompatible with cross-border realities. For instance, the restriction allowing only 10% advance payment from customers poses a significant risk to sellers who must pay 100% upfront, including import and logistics costs. If a customer refuses the product, the entire burden falls on the entrepreneur—because these items are often personalized or imported for specific customers.
Likewise, the mandate to deliver products within 10 days is unrealistic in international trade. A flexible timeframe is essential, as cross-border shipments frequently face delays due to customs, transit, and international logistics processes.
Currency Limitations and Foreign Exchange Policies
The $10,000 annual transaction cap for e-CAB members is wholly insufficient for cross-border trade, where suppliers are often located overseas, and product acquisition requires substantial foreign exchange. A revised foreign currency framework is needed, free from tight limits that restrict growth and competitiveness. Separate policy slabs must be introduced specifically for cross-border sellers and digital exporters.
Lack of Transparent Customs Charges
Unpredictable customs charges add another layer of uncertainty. The Bangladesh Post Office, in particular, lacks a transparent and standardized customs duty structure. There should be clear minimum and maximum customs rates. Without this, businesses incur unexpected losses when bringing in goods already priced for sale to customers. Subsidies and incentives from the government for export-oriented e-commerce could help offset these costs.
Responsibility and Accountability in Postal Services
Many imported parcels are lost or damaged during transit via the national postal service, with no clear accountability mechanism in place. Since shipping charges are collected, the postal service must be held responsible for compensating businesses—perhaps covering 80% of the item’s value in case of loss. Globally, countries have adopted robust e-supply chain systems; Bangladesh must follow suit.
Double VAT on Facebook Ads
Running ads on Facebook from Bangladesh currently incurs a double VAT—15% twice—making every 100 BDT ad cost 130 BDT. Given the razor-thin margins (often below 10%) in e-commerce, this discourages legitimate ad spending and encourages alternative, unofficial channels. This not only reduces government revenue but may also fuel money laundering. An immediate circular is needed to resolve this, particularly offering VAT waivers for foreign currency-earning e-commerce players.
PayPal and Payoneer Integration
International payment gateways remain a challenge. Creating a Payoneer account from Bangladesh is still complicated, and transaction flexibility is limited. Unlike PayPal—which offers built-in escrow protections—Bangladeshi merchants are left without global-standard tools to ensure secure transactions. Bangladesh must allow full operational access to PayPal and Payoneer, as this would foster trust among global buyers and sellers.
Unlocking Print-on-Demand Potential
Print-on-demand is a promising model for cross-border trade, especially for creative and customized goods. Yet, a lack of structured platforms and export processing systems has stunted growth. With proper infrastructure and policy backing, this sector could contribute significantly to digital exports.
Single-Product Export Facilitation
There’s a dire need for a centralized, export-ready inventory system and web-based platforms that showcase locally made products. Establishing a standard product catalog—maintaining at least 1,000 SKUs in compliance with global guidelines—could streamline exports. Custom warehouses and provisions for return shipments would boost buyer confidence and reduce seller risk.
Packaging Must Meet Global Standards
Products often get damaged due to subpar packaging, tarnishing the brand image of Bangladeshi exporters. Developing world-class, durable packaging standards is non-negotiable if Bangladesh wants to compete globally.
Missing Ecosystem for Cross-Border E-Commerce
The absence of a structured import-export ecosystem is preventing job creation, despite high demand. With the right environment, dropshipping and print-on-demand models could employ thousands. Unlike traditional exports, cross-border e-commerce receives no financial incentives—even though it earns foreign currency. Export-oriented digital businesses deserve the same 10% cash incentives as physical goods exporters. Likewise, dropshipping entrepreneurs should receive a 2% incentive similar to remittance earners.
Other Bottlenecks
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Airport Server Downtime: System failures at the airport delay product clearance by days, sometimes even leading to spoilage.
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Tariff Rate Distortion: Exorbitant import duties push some traders toward fake invoicing to reduce costs—causing revenue loss to the state.
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Hidden Charges: Unexplained service costs often deter foreign buyers, hurting long-term partnerships.
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Bureaucratic Friction: Sometimes customs and NBR regulations unintentionally promote under-invoicing or unofficial transactions due to red tape and slow processing.
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Supplier Payments: Managing payments to hundreds or thousands of overseas suppliers is infeasible through traditional LC systems, requiring simpler and faster alternatives.
Cross-border e-commerce is not merely a sector—it’s a gateway for Bangladesh to expand its economic footprint globally. The current regulatory landscape must evolve to recognize its unique dynamics. A parallel, customized policy framework—with automated services, reduced costs, and export-grade benefits—is vital. With the right support, Bangladesh can unleash a new era of digital trade and become a key player in the global e-commerce ecosystem.
